Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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It’s Official: The Chinese Are Selling U.S. Debt… and Buying Gold

The latest news is in… The Chinese are selling U.S. government debt… and they’re buying gold. So let me ask you… In your opinion, what will the signs be that the U.S. dollar’s heyday is ending? What will the signs be that China is giving up on the U.S. dollar as the world’s reserve currency? Specifically, we learned this week that the Chinese government shrank its holdings of U.S. government debt by $ 47.8 billion in December 2013, the most in two years. One message from this is that the Chinese government doesn’t want to hold any more dollars than it has to. In separate news, China imported, consumed, and produced more gold than any other country in 2013. China overtook India to become the world’s largest importer and consumer of gold, importing over 1,000 metric tons of gold that year (a truly massive amount). China is also the world’s largest producer of gold… nobody else comes close. Amazingly, China’s gold production is still increasing… while the countries in the next three places (Australia, Russia, and the U.S.) are comparatively stagnant in their production. So what does all this mean? Here’s what it means to me:  •   The data shows more and more that the Chinese prefer gold to U.S. dollars. Chinese buying like this could help create a new price floor for the price of gold.      •   It’s time to diversify some of your savings OUTSIDE the dollar and into China’s currency.      •   It’s time to add to your gold holdings now – and hold for the long run. I hope you don’t take this advice as extreme. I’m simply describing prudent (and potentially very profitable) actions… based on the latest facts. The new facts are important. And true. It is finally time to acknowledge these facts and prudently position yourself. You could potentially make a heck of a lot of money along the way… So don’t wait. Take action. Get some money out of the U.S. dollar and into gold and China’s currency… today. Good investing, Steve It’s Official: The Chinese Are Selling U.S. Debt… and Buying Gold Share and...

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NIA: Proof Gold Stocks Most Undervalued in History

On Sunday when NIA suggested January 2015 GDX $25 call options, we showed you a chart of the HUI/Gold ratio. The HUI index for the most part tracks the same exact stocks owned by GDX. The HUI/Gold ratio shows how undervalued gold stocks are vs. the price of gold. The HUI/Gold ratio has a 17 year average of 0.37 and currently is down to 0.164, the lowest it has been since 2001, at the very beginning of gold’s secular bull market.   However, this doesn’t tell the complete story. Gold miners have seen their expenses go through the roof – a fact that proves there is massive price inflation, despite what the gold bears say. A big portion of a gold miner’s expenses are related to energy. Therefore, the Gold/Oil ratio is another important chart to look at. In June/July of 2008, when oil soared to well over $130 per barrel, the Gold/Oil ratio declined to below 7. From year 1970 through today, the Gold/Oil ratio has averaged 15.19. Currently, we have a Gold/Oil ratio of 12.22.   A low Gold/Oil ratio is bad for gold miners, because their expenses are high relative to the gold they produce. The current Gold/Oil ratio, although below the long-term average, is not at an extreme level like in June/July of 2008. Oil prices, although expensive, are not high enough to severely hurt gold miners in a way that justifies a HUI/Gold ratio of less than half its long-term average. If we currently had a Gold/Oil ratio of 7, a HUI/Gold ratio of 0.164 would be justified, but right now there is no justification to the current artificially low HUI/Gold ratio.   Below, we are once again going to provide you with the HUI/Gold ratio chart we showed you on Sunday. After that we will show you a chart of the Gold/Oil ratio. Following those two charts is a chart of a new ratio that NIA has invented – the Gold/Oil to HUI/Gold ratio. NIA’s Gold/Oil to HUI/Gold ratio has a 14-year average of 37.68. A high Gold/Oil to HUI/Gold ratio of well above its long-term average indicates that gold stocks are undervalued relative to their potential profitability.   Historically, any extreme highs in the Gold/Oil to HUI/Gold ratio were an excellent time to buy gold stocks. In December of 2000, when it spiked up to above 60, the HUI was priced at 177.61. When the Gold/Oil to HUI/Gold ratio returned to a more normal level of 39.63 in June of 2001, the HUI was up to 276.24 for a gain of 56% in six months. In December of 2001, when it spiked up to...

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New NIA Option Suggestion

In 2014, NIA believes we will see precious metals and agricultural commodities make their largest gains in history. NIA’s #1 way to play next year’s agriculture boom is its stock suggestion Agria (GRO), which broke out big on Friday rising $0.10 or 7.24% to $1.48 per share. In NIA’s opinion, new 52-week highs are coming for GRO very shortly. NIA would like to take this opportunity to announce its #1 way to play next year’s rally in precious metals. NIA suggests for its members to research the January 2015 Market Vectors Gold Miners ETF (GDX) $25 call option, currently priced at $1.92. GDX is a gold stock ETF with its top three holdings being GG, ABX, and NEM, three of the safest gold mining stocks. GDX is currently trading for $21.25 per share. Investors who buy the January 2015 GDX $25 call option at $1.92, will at least double their money if GDX rises by 35.7% to $28.84 per share within the next 55 weeks. If GDX itself rises by 100% to $42.50 per share over the next 55 weeks, NIA’s GDX call option suggestion will be worth $17.50 for a potential gain of 811.46%. The contract expires on January 17, 2015. GDX mostly tracks the same stocks as the HUI Amex Gold Bugs Index. To determine if gold stocks are undervalued or overvalued, NIA closely tracks the HUI/Gold ratio, which is the latest HUI price divided by the price of gold. The HUI/Gold ratio is currently down to 0.163, well below its 17 year average of 0.37. In fact, the last time the HUI/Gold ratio was this low, was all the way back in 2001 – at the very start of the current gold secular bull market. Gold’s secular bull market is far from over and NIA believes this is a once in a lifetime opportunity to make a fortune off of artificially low gold mining stocks. Although it’s true that many gold miners are losing money at this very moment, it’s already more than priced in! NIA has seen many gold miners in recent weeks take steps to reduce their expenses and focus on the production of high grade gold resources. The fundamentals of gold mining stocks are beginning to rapidly improve! In 2014, NIA believes large-cap gold mining stocks could rise 3-4X faster than the price of gold! If gold merely rises 23.5% in 2014 to $1,500 per oz, and the HUI/Gold ratio returns to its historical average of 0.37, the HUI would rise from its current level of 198.18 up to 555, for a gain of 180%. If the HUI rises 180%, GDX most likely...

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NIA: Gold’s Previous Bottoms vs. Today

Please disregard our email from Sunday evening, which stated that gold’s high of $850 per oz in 1980 is the equivalent of $5,301.24 per oz today after adjusting for growth in real U.S. money supply and above ground gold stocks. Gold’s 1980 high of $850 per oz is actually the equivalent of $7,944.83 per oz in today’s economy. Furthermore, gold’s 1976 low of $103.50 per oz is the equivalent of $1,096.12 per oz in today’s economy. Gold’s 1985 low of $285.75 per oz is the equivalent of $1,276.25 per oz in today’s economy.   The average of gold’s lows in 1976 and 1985 are the equivalent of $1,186.19 per oz in today’s economy. This is within 0.5% of gold’s June 28, 2013, low of $1,192 per oz, which gold once again dipped to last week. This could be a double bottom for gold.   During its 1971-1980 nine year bull rally, gold rose from a low of $35 in 1971 to a high of $195 in 1974 for a gain of 457.1%, followed by a dip to a low of $103.50 in 1976 for a decline of 46.8%, and then an additional gain of 721.3% to a high of $850 in 1980 – for a total gain of 2,329%. After the Fed raised interest rates to 20%, gold over the following five years lost 2/3 of its value, bottoming in 1985 at $285.75.   Mid-way through its secular bear market, when gold dipped 46.9% to a low on August 25, 1976, of $103.50 per oz: the real U.S. money supply as of August 23, 1976, was comprised of: 1) currency component of M1: $77.5 billion, 2) total checkable deposits: $219 billion, and 3) total savings deposits at all depository institutions: $185.9 billion – for a total real money supply of $482.4 billion.   Currently, the real U.S. money supply as of December, 16, 2013, is comprised of 1) currency component of M1: $1.1596 trillion, 2) total checkable deposits: $1.4828 trillion, 3) total savings deposits at all depository institutions: $7.1513 trillion – for a total real money supply of $9.7937 trillion. The real U.S. money supply has grown 20.30X in size since August 23, 1976.   According to the World Gold Council, the world’s total above ground gold stocks mined throughout history as of the end of 2012 were 174,100 tonnes, and after production from this past year – their figures will likely show total above ground gold stocks of approximately 177,000 tonnes. However, in recent days, several NIA members have contacted us with compelling evidence that the World Gold Council’s data is overstating above ground gold stocks by approximately...

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Keiser Report: Gold, Silver, Bitcoin FTW! (E527)

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss QE as the meals on wheels for over-leveraged, consum-oholic debt addicts with Ben Bernanke as the pusher with a story to tell which is that ‘cheap money is good’ for buying depreciating assets like cars and where ‘gold slamdowns’ are meted out to those who refuse to stay intoxicated on that cheap money. In the second half, Max interviews Barry Silbert of Second Market and BitcoinTrust.co about the future of bitcoin in terms of regulation, market dominance and how the transaction network will change the way people think of money. Share and...

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Philip Judge on Phase Transition in 2014

The town of Lugano lies on Lake Lugano nestled in the Swiss Alps in Italian-speaking southern Switzerland, arguably one of the most beautiful old towns in all of Europe. Dinning in Lugano one evening last month with Alex Stanczyk and Jim Rickards, the conversation turned to ‘Complexity Theory.’ Jim spends several pages describing details of the Theory in Chapter 10 of his excellent bestselling book Currency Wars: The Making of the Next Global Crisis (1). One thing I learned from the dinner is that Complexity Theory is complex. However, the theory could be summarized as follows: Complex systems continuously produce surprising results. When systems are highly complex, emergent properties are far more powerful and unexpected. A great example Jim points out is climate which is one of the most complex systems humans can study. Despite thousands of years of observing and studying climate and weather patterns, and despite all the science and tools we have at our disposal today, it is still not possible for us to accurately predict the weather more than four days in advance due to its complexity. Another important aspect of Complexity Theory is what is known as ‘Phase Transition.’ Phase Transition describes when a complex system changes its state. Again, Jim uses two good examples from nature. When a volcano erupts, there is a Phase Transition in the state of the volcano from dormant to active. A second example would be an avalanche. Snow may fall on a steep incline for a long period of time; however, eventually the snow field will reach a critical state. Finally, one single snow flake will trigger a Phase Transition called an avalanche. Phase Transition demonstrates how catastrophic effects can be triggered from small causes; a single snow flake can cause a village to be destroyed through an avalanche. Yet another feature of Complexity Theory is the frequency of ‘Extreme Events.’ Conventional wisdom suggests that small events happen all the time, while extreme events happen rarely. Manmade systems grow in size and complexity all the time, while more manmade systems become connected and interconnected. As the group of manmade systems grow in size and complexity and as a whole move toward critical state, the risk of catastrophic Phase Transitions grows exponentially. “If the size of the system is doubled, the risk does not merely double – it increases by a factor of ten. If the system is doubled again, the risk increases by a factor of one hundred. Double it again, and risk increases by a factor of one thousand, and so forth,” states Jim. This leads to a point where Extreme Events are no longer happening rarely...

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Keiser Report Talks Silver – Jim Rickards – Dollar Collapse – E525

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the melt down in the art market as the filthy rich scramble for safe havens from the taxpayers angry at the billions in free money they’ve been given. They also discuss financial irrigation, amputated gold and a special mince meat pie and Jamie stew for Christmas. In the second half, Max interviews Jim Rickards, author of Currency Wars, about central bank vaporware, straws in the dollar wind and about how Janet Yellen is to Ben Bernanke as Miley Cyrus is to Lady Gaga – trashier than the original. Share and...

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More Nails In The U.S. Dollar’s Coffin – Mike Maloney

Government shutdown? Inefficient politicians? These things are nothing new, and pale in comparison to the real story developing quietly behind the noise and hoopla we receive from the press. The death of the U.S. dollar as the global reserve currency is the elephant in the room that nobody wants to acknowledge. It’s only been a short while since Michael Maloney delivered his keynote speech ‘Death Of The Dollar Standard’ in Singapore, where he showed the events that add up to conclusive evidence of a global move away from the U.S Dollar Standard. Bilateral trade agreements, avoidance of the U.S. Dollar in trade, repatriation of gold — Michael Maloney deemed them all to be ‘nails in the coffin’ of the dollar standard. You would have seen in Mike’s presentation that these events are speeding up. By the time Episode 3 of Hidden Secrets Of Money was released to the public, there were even more events that qualify as nails in the coffin. So to get up to speed with the big picture, please watch the accompanying video for a preview of Michael’s exclusive Bonus Presentation ‘Latest Nails In The Dollar Standard’s Coffin’. In this video Mike presents some jaw-dropping information that picks up where the timeline from Episode 3 finished. Share and...

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Final Plunge in Gold and Silver is Underway

Final Plunge in Gold and Silver is Underway Commodities / Gold and Silver 2013 Nov 22, 2013 – 11:40 AM GMT By: Jordan_Roy_Byrne Two weeks ago we penned Gold Bear to end with a Bang, and noted the increasing probability that precious metals could be headed for a plunge to new lows ahead of a final major bottom. Two weeks later we continue to hold that view. The forthcoming charts present levels at which the more than two year old cyclical bear market could end. At the least, these support levels can provide a point at which short positions and hedges could be liquidated. The chart below shows that Gold has major trendline support just above $ 1100. Also note that the 50% retracement of Gold’s entire bull market is $ 1087. Keep these strong targets in mind. Like Gold, Silver has major trendline support which could come into play in the coming days and weeks. Keep an eye on $ 17. Silver is currently underperforming Gold so pay more attention to Gold. It’s the “granddaddy” of the sector as some like to say and the most important component of the precious metals sector. Meanwhile, gold stocks are approaching what amounts to be nearly 12 years of support. The GDM index below, is the forerunner to the GDX ETF. Don’t be fazed if the metals and the shares make new lows. As you can see, the precious metals complex has very strong support nearby. Ignore the financial media and mainstream thought and get yourself in position to take advantage of this bottom. It’s the very smart money that is looking forward to buying this bottom. I suspect the coming bottom will be the one the typical huge rebounds originate from. Final Plunge in Gold and Silver is Underway Share and...

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Simon Black – The amazing disappearance of GOLD from the American psyche

November 22, 2013 Dallas, Texas In George Orwell’s seminal work 1984, there’s a really great scene early in the book between Winston (the main character) and Syme, a low-level functionary at the Ministry of Truth. Syme is working on the 11th Edition of the Newspeak Dictionary, and he explains to Winston how the Ministry of Truth is actually removing words from the English vocabulary. In Newspeak, words like -freedom- have been struck from the dictionary altogether, to the point that the mere concept of liberty would be incommunicable in the future. I thought about this scene recently as I was testing out Google’s new Ngram Viewer tool. If you haven’t seen it yet, Google has digitized over a million books that were printed as far back as 1500, and they’ve made the contents searchable within their own database. The Ngram Viewer allows you to search for particular keywords. And you can see over time how prevalent the search terms were for particular years. Out of curiosity, I searched for the term “gold” in English language books starting in 1776. As one would expect back in the 18th and 19th centuries when gold was actually considered money, the instances of the word ‘gold’ favored prevalently in English language books at the time. The trend continued into the early part of the 20th century. But then something interesting happened in the mid-1930s. The use of the word ‘gold’ in English language books reached its peak… and began a steep, multi-decade decline. Further investigation shows that the peak actually occurred in 1933. And as any student of gold in modern history knows, 1933 was the same year that the President of the United States (FDR) criminalized the private ownership of gold. It remained this way for four decades. And by the time Gerald Ford repealed the prohibition on gold ownership, the concept of gold being money had been permanently struck from the American psyche, just as the Orwellian Newspeak dictionary had done. By the mid-1970s (and through today), people have become readily accepting of the idea that money was nothing more than pieces of paper conjured at will by central bankers. The good news is that, according to Google’s data, there seems to be slight uptick in the number of instances of the word ‘gold’ in English language books over the last 10-years or so. No doubt, this probably has a lot to do with gold’s seemingly interminable rise relative to paper currency. One can hope that the trend will hold… that more people will wake up to the reality that the central-bank controlled fiat currency system is a total fraud. The...

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