Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Peter Schiff Says Beware of Bitcoin!

In his latest video, Peter Schiff shares his thoughts on the bitcoin mania that is sweeping the world. After rising from less than $20 to more than $600 in one year, many investors are wondering if bitcoin might be worth the risk. Early adopters pitch bitcoin as “gold 2.0″ – a digital currency that cannot be manipulated like fiat money. Bitcoins are even “mined,” similar to physical gold and silver. However, Peter explains why bitcoins still fail as a substitute for gold and strongly urges investors to avoid this risky new currency. Bitcoin could very well have already hit its top, but Peter is confident gold is still well below its future record highs. Share and...

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Why can’t Germany get its gold back ! Interview with David Morgan

Gold was always considered as solid and save instrument. Many Countries currency was based on Gold reserves. People loved to make investment in Gold. But now this Gold is in crisis. These Gold crisis are linked with economic, financial, debt and currency crisis. Anyhow, too much dependence on one instrument always brings down fall. This video is showing What the Gold and Debt Crisis are? Share and...

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India’s Demand to Buy Silver Doubles on Gold Ban, Price Drop

Anti-gold rules force consumers to buy silver instead, imports double from 2012… DEMAND to buy silver amongst Indian households has pushed the country’s imports of the precious metal to twice last year’s level and may set a record in 2013, according to industry experts. Between January and September, silver imports to India totaled more than 4,000 tonnes, already beating full-year 2012 says the Thomson Reuters GFMS consultancy. The world’s largest end-consumer of silver bullion as well as gold, India’s current record demand to buy silver came at just over 5,000 tonnes in 2008. That figure equals some 16% of total global demand, put around 30,000 tonnes per year. India’s demand to buy gold, also the world leader, has been nearer 25%. But after July and August this year saw silver imports of 1,000 tonnes as gold imports fell to zero, “India could import 6,000 tonnes of silver this year,” reckons a special report from Japanese trading house Mitsui, “almost 1,000 tonnes more than the record imports seen in 2008.” “There has been a massive improvement in silver imports,” agrees Bombay Bullion Association director Harmesh Arora, speaking to Reuters today, “and we will continue to see more. “Investors are taking advantage of lower prices,” says Arora, “and the lack of restrictions on silver imports as of now.” Noting the surge in demand to buy silver as prices fell steeply in 2011 from near all-time highs, “The response of Indian consumers to price weakness in silver can be spectacular,” says Mitsui strategist David Jollie. Even though silver cannot directly replace gold in many areas of India’s cultural and religious culture, he adds, “The massive price decline for silver in April 2013 encouraged further buying.” Looking at the Indian government’s aggressive anti-gold measures, “I don’t think we will see any policy changes in silver,” says Rajesh Khosla, managing director with refiner MMTC PAMP – part-owned by the government. “There is less gold available, so rural people will gradually move to silver. It will be a more of a default option than a conscious choice,” he believes. India’s Demand to Buy Silver Doubles on Gold Ban, Price Drop Share and...

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The adverse effects of monetary stimulation

By Alasdair Macleod There are two indisputable economic facts to bear in mind. The first is that GDP is simply a money-total of economic transactions, and a central bank fosters an increase in GDP by making available more money and therefore bank credit to inflate this number. This is not the same as genuine economic progress, which is what consumers desire and entrepreneurs provide in an unfettered market with reliable money. The second fact is that newly issued money is not absorbed into an economy evenly: it has to be handed to someone first, like a bank or government department, who in turn passes it on to someone else through their dealings and so on, step by step until it is finally dispersed. As new money enters the economy, it naturally drives up the prices of goods bought with it. This means that someone seeking to buy a similar product without the benefit of new money finds it is more expensive, or put more correctly the purchasing power of his wages and savings has fallen relative to that product. Therefore, the new money benefits those that first obtain it at the expense of everyone else. Obviously, if large amounts of new money are being mobilised by a central bank, as is the case today, the transfer of wealth from those who receive the money later to those who get it early will be correspondingly greater. Now let’s look at today’s monetary environment in the United States. The wealth-transfer effect is not being adequately recorded, because official inflation statistics do not capture the real increase in consumer prices. The difference between official figures and a truer estimate of US inflation is illustrated by John Williams of Shadowstats.com, who estimates it to be 7% higher than the official rate at roughly 9%, using the government’s computation methodology prior to 1980. Simplistically and assuming no wage inflation, this approximates to the current rate of wealth transfer from the majority of people to those that first receive the new money from the central bank. The Fed is busy financing most of the Government’s borrowing. The newly-issued money in Government’s hands is distributed widely, and maintains prices of most basic goods and services at a higher level than they would otherwise be. However, in providing this funding, the Fed creates excess reserves on its own balance sheet, and it is this money we are considering.The reserves on the Fed’s balance sheet are actually deposits, the assets of commercial banks and other domestic and foreign depository institutions that use the Fed as a bank, in the same way the rest of us have bank deposits...

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12 Reasons Why Gold Price Will Rebound and Make New Highs in 2014

Investor sentiment towards precious metals is at the lowest level in over a decade. Many analysts believe the bull market is over and are calling for sub-$ 1,000 gold in 2014. Even diehard gold bugs are losing faith, as the correction has been longer and more severe than most had anticipated. So, is it time to throw in the towel? Is the bull market in precious metals really over? In order to answer this question, I thought it would be constructive to re-visit the fundamental drivers of the gold price and determine if anything changed over the past two years to weaken the bullish case. My conclusion is that nearly all of the fundamental factors that have been driving the gold price higher in the past decade have only strengthened in the past two years. Now that the correction has most likely run its course, I expect gold to rebound into the close of the year and bounce sharply higher in 2014. Here are the 12 reasons why… #1 – Rapidly Growing Debt Just one day after President Barack Obama signed into law a bipartisan deal to end the government shutdown and avoid default, the US debt surged a record $ 328 billion, the first day the government was able to borrow money. The U.S. national debt has increased by more than a trillion dollars in the past 12 months. This pushed the total debt above $ 17 trillion for the first time in history. As the debt increases and GDP growth slows, the debt-to-GDP ratio will continue to rise at an accelerating pace. This is simple math and it dictates an ongoing slide in the purchasing power of the dollar and rise in the purchasing power of real assets and particularly monetary metals such as gold and silver. The following charts show the steepening rise in total public debt and the debt-to-GDP ratio of the United States. Many economists view a debt-to-GDP ratio of 100% as the point of no return. It is a slippery slope that is certain to push higher at an accelerated rate in the coming years. Note that alternate calculations of the total debt including unfunded liabilities and off-balance sheet items, puts the number somewhere closer to $ 100 trillion or more than 5 times the official figure. This equates to a debt-to-GDP ratio of over 500%, not the 100% charted below. Takeaway: The total level of debt and the debt-to-GDP ratio have both increased substantially in the past two years. This is bullish for gold, as precious metals have a positive correlation to total debt levels. #2 – Inept Government and Partisan Bickering...

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Gold, Silver and the Debt Ceiling

Commodities / Gold and Silver 2013 To paraphrase William Shakespeare, “the debt ceiling drama is a tale told by idiots, full of sound and political fury, signifying nothing.” We now have a reprieve for three months – the 11th hour deal, complete with payoffs and the usual corruption, will keep the world safe for more ineptitude, deficit spending, administrative hypocrisy and the guarantee of a sequel. All is well! Celebration! Champagne! Cut to a prime-time commercial promoting big government and Obamacare… And back in the real world where people work and support their families, life goes on, few noticed the lack of government “services,” and in three months we will be blessed with another episode of our “Congressional Reality Show.” Gold, Silver, and National Debt Examine the following graph. It is a graph of smoothed* annual gold and silver prices and the official U.S. national debt since 1971 when the dollar lost all gold backing and was “temporarily” allowed to float against all other unbacked debt based currencies. All values start at 1.0 in 1971. The legend does not show which line represents gold, silver, or the national debt. Why? Because it hardly matters! Government spends too much money to perform a few essential services and to buy votes, wars, and welfare, and thereby increases its debt almost every year, while gold and silver prices, on average, match the increases in accumulated national debt. Our 435 representatives, 100 senators, and the administration listened to their corporate backers and chose to increase the debt ceiling, continue spending as usual, not “rock the boat,” and carry on with the serious business of politics and payoffs for another three months. It is safe to say that, on average, gold and silver will continue rising, along with the national debt, as they all have for the past 42 years. Further, like the national debt, both gold and silver (and probably most consumer prices) will increase substantially from here, until some traumatic “reset” occurs. What sort of reset? A “black swan” event that is unpredictable, by definition. Middle East war escalation. Derivative melt-down. A dollar collapse when foreigners say “enough” to the dollar debasement policies pursued by the Fed and the US government. A collapse of the Euro or Yen for any number of reasons. A banker admits that most of the official gold supposedly held in New York, London, and Fort Knox is gone and has been sold to China, India, and Russia. You name the false flag operation. My guess: Gold and silver prices will rise gradually for a while, and then quite rapidly after one of the above “financial icebergs” smashes...

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China and gold

Xinhua, China’s official press agency on Sunday ran an op-ed article which kicked off as follows: “As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.” China does have a broad strategy to prepare for this event. She is encouraging the creation of an international market in her own currency through the twin centres of Hong Kong and London, side-lining New York, and she is actively promoting through the Shanghai Cooperation Organisation (SCO) non-dollar trade settlement across the whole of Asia. She has also been covertly building her gold reserves while overtly encouraging her citizens to accumulate gold as well. There can be little doubt from these actions that China is preparing herself for the demise of the dollar, at least as the world’s reserve currency. Central to insuring herself and her citizens against this outcome is gold. China has invested heavily in domestic mine production and is now the largest producer at an estimated 440 tonnes annually, and she is also looking to buy up gold mines elsewhere. Little or none of the domestically mined gold is seen in the market, so it is a reasonable assumption the Government is quietly accumulating all her own production without it becoming publicly available. Recorded demand for gold from China’s private sector has escalated to the point where their demand now accounts for significantly more than the rest of the world’s mine production. The Shanghai Gold Exchange is the mainland monopoly for physical delivery, and Hong Kong acts as a separate interacting hub. Between them in the first eight months of 2013 they have delivered 1,730 tonnes into private hands, or an annualised rate of 2,600 tonnes. The world ex-China mines an estimated 2,260 tonnes, leaving a supply deficit for not only the rest of gold-hungry South-east Asia and India, but the rest of the world as well. It is this fact that gives meat to the suspicion that Western central bank monetary gold is being supplied keep the price down, because ETF sales and diminishing supplies of non-Asian scrap have been wholly insufficient to satisfy this surge in demand. So why is the Chinese Government so keen on gold? The answer most likely involves geo-politics. And here it is worth noting that through the SCO, China and Russia with the support of most of the countries in between them are building an economic bloc with a common...

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Anglo Far East – Flying by Sight Versus Instruments

Flying by Sight Versus Instruments “VFR”Visual Flight rules “IFR” Instrument Flight Rules As sponsor of a GATA presentation in Auckland by the chairman- Chris Powell over the weekend, I had the pleasure of spending time and picking his brain on many subjects. High on the list was the current correction in gold and its seeming long and sustained period of flat or lower prices. There are many measures to gauge the market but one of the best is outright sentiment and he said that for every 100 people that would have had contact with him in times past, the number is more like 20 now. If I take that same sentiment gauge and cross it over to the exploration/ junior mining sector and even the mid-tier and senior one you get a really sad story. Here is what a professional capitulation looks like from a seasoned mining writer that makes his living selling information 1/ convince me that the resource sector recovery expected this fall is no longer valid. Even the strongest companies are now weakening again and I think this is a strong indica­tion that our market troubles will continue well into next year. This unfortunate chain of events leads me to believe that we should not be buying any junior mining stocks right now. 2/ Many of us, including myself, beefed up positions in companies like “%$” thinking this would be the start of getting our portfolios back on track. It hasn’t happened and I have never felt more discouraged about anything I have dealt with in my entire life. It has felt like an emotional earthquake to my soul. 3/ Even during the 2008 meltdown situation, I felt more composed and confident because I knew we would rebound, which we did within a relatively short-period of time. But this current market situa­tion has gone from bad, to worse, to intolerable with further downside very likely. 4/ I even wrote many times in the last several years that before the screaming, parabolic market in our favour would happen we may have to deal with downside volatility that would shake us to the core. But what we are experiencing now is beyond even what I thought could happen. This is a wipe-out that will basically eliminate at least another 35% of the junior mining companies that are currently still in business. This is after those who have already shut their doors. Many more are hanging by their fingernails right now. I thought by moving towards those companies with the best assets or near-term production stories that we would protect ourselves until the dust you spoke about settled. I...

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That US debt ceiling and the Fed

Most likely, QE will have to be switched from financing the government to buying Treasuries already owned by the private sector. Any attempt to reduce the monthly addition of raw money will simply result in bond yields and then interest rates rising. And indeed, already this week we have seen yields on short-term T-bills rise in anticipation of a possible default. The market is naturally beginning to discount the possibility that the Fed may not be able to control the situation. The T-bill issue is very serious, because they are the most liquid collateral for the $ 70 trillion shadow banking system. And without the liquidity they provide securities and derivative markets, we can say that Round Two of the banking crisis could make Lehman look like a picnic in the park. This is the sort of event deflationists have long been expecting. According to their analysis there comes a point where debt liquidation is triggered and there is a dash for cash as assets collapse. But they reckon without allowing for the fact that deposits can only be encashed at the margin; otherwise they are merely transferred, and only destroyed when banks go under. This is the risk the Fed anticipates, and we can be certain it will move heaven and earth to avoid bank insolvencies. Furthermore the deflationists do not have a satisfactory argument for the effect on currency exchange rates. Iceland went through a similar deflationary event to that risked in the US today when its banking system collapsed and the currency halved overnight. Today a dollar collapse on the back of a banking crisis would also disrupt all other fiat currencies, forcing central banks to coordinate intervention to conceal the currency effect. This leaves gold as the only true reflector of loss of confidence in the dollar and therefore all other fiat currencies. Those worrying about deflation ignore the fact that it is the fiat currency that takes it on the chin while gold rises – every time without exception. This was even the experience of the 1930s, when Roosevelt suspended convertibility, increased the price of gold by 40% to $ 35 per ounce, and the banking crisis was contained. Of course there is likely to be some short-term uncertainty; but against the Fiat Money Quantity (FMQ) gold is down 30% compared with the price pre-Lehman crisis. This is shown in the chart below.   With gold at an extreme low in valuation terms, current events, whichever way they go, seem unlikely to drive it much lower. A wise man perhaps should copy the Asians, who know a thing or two about paper currencies, and...

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Valuing gold

The original article shows just how unsound currency has become since the banking crisis, with FMQ appearing to be hyper-inflating from that time. This article explores the implications for the price of gold. Firstly lets look at Chart 1, the chart of FMQ.   It differs slightly from the chart in my original article, in that I have recalculated the exponential growth curve at 5.859%, which was the average annual growth rate for FMQ between 1960 and 2008 before the banking crisis. This throws up a larger gap of $ 4.5 trillion between that long-term trend and FMQ today. Therefore, FMQ is now 62% over trend. This is a massive and potentially currency-destructive development going unrecognised. But since July 2008, the month before Lehman Brothers collapsed, gold has risen from $ 918 to about $ 1270 today, which is a 38% increase. Does this illustrate that gold is broadly discounting monetary developments? The answer is no, because the question ignores the accumulating quantity of above-ground gold and more importantly the expansion of FMQ. And while both have increased over the last five years, FMQ has expanded much more rapidly than the stock of gold. The net effect is illustrated in Chart 2, where gold at $ 918 has been indexed to a base of 100 as at July 2008.   This chart shows that at Friday’s nominal price at $ 1270, gold adjusted for increased gold stocks and FMQ has actually fallen to 68, 32% down from its pre-Lehman crisis level. Of course, any value we place on gold is entirely subjective; but in coming to that view we naturally assume that the quantities involved do not change. The more sensible thing to do in forming a judgement is to take changing quantities into account, particularly when the expansion of the currency is unprecedented and appears to be out of control. Before Lehman collapsed, there was a general lack of awareness of the risk that the whole financial system was in danger. In this context, a gold price of less than $ 918 was perhaps justifiable. After the event, while the Fed struggled to stabilise the banking system, the gold price initially fell to $ 656, or to 71 on our index, reflecting fears of a deflationary collapse. As the Fed showed signs of succeeding with monetary expansion, gold began to rise and in January 2009 regained the pre-Lehman crisis level in nominal terms for the first time. It wasn’t until September 2010 that gold recovered to pre-Lehman levels in real terms deflated by both FMQ and the increased stock of gold. The conclusion is simple: gold should logically...

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