Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki


Simon Black – I’m amazed more people aren’t doing this. But soon, they will be.

April 11, 2014 En Route to Buenos Aires Every now and again, the universe presents us with opportunities that are so obvious we have to wonder why everyone else isn’t doing it too. This is how I felt yesterday while attending an invitation-only “Demo Day” for startup companies based in Chile. As we’ve discussed before, Chile is a top-20 Startup ecosystem worldwide. Entrepreneurs from all over the planet come to Chile to start their businesses, grow, and thrive. And there are a lot of reasons for this. First, the Startup Chile program provides $ 40,000 in equity-free seed capital to roughly 300 select entrepreneurs each year who make the cut. Plus Chile’s incredibly flexible immigration laws make it possible for business owners to import talent from just about anywhere in the world. This is an incredibly unique aspect of doing business in Chile that you’ll hardly find anywhere else. There’s no H-1B visa hassle here, no xenophobia accusing foreigners of stealing jobs. In Chile, small businesses are able to hire the right person for the job, no matter where he or she comes from. Just to give you an example, one of the companies I run here employs people from the US, Canada, Argentina, Slovenia, Lithuania, Ukraine, New Zealand, and Thailand. And obtaining residency for them was a very straightforward process. Not to mention, there’s quite a bit of wealth in Chile, especially in Santiago. So the potential in the consumer market is vast. Yet at the same time, there’s very little competition in the marketplace. This makes Chile ideal for startups, especially for disruptive businesses looking for a great test market. There are so many companies here doing some really, really exciting things. This became completely obvious watching presentation after presentation. I’m embarrassed to say that before I showed up, I had set my expectations very low. I was expecting a bunch of kids designing apps which make fart sounds. But I was blown away by the quality. These weren’t kids. Most were seasoned entrepreneurs in their 30s and 40s who were working on cutting edge stuff. One group was revolutionizing the already revolutionary 3D printing space. Another group had a medical device so advanced I joked with some friends later that it would replace the tricorder. Another group had developed software which I have no doubt will be acquired by Google at a hefty premium. Another by Microsoft or Apple. Cleantech. Robotics. Sustainable energy. There were so many great businesses there. Moreover, these weren’t just crazy dreamers with no hope of ever generating a profit. Many of them were already quite profitable; one entrepreneur told me they...

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Jim Rickards & Mike Maloney: Gold Revaluation & THE DEATH OF MONEY

Get Jim’s new book here: Jim Rickards has been featured in 4 out of the 5 episodes that we have released so far in the ‘Hidden Secrets Of Money’ series – and for good reason. Jim is one of the most articulate thinkers and teachers in the world when it comes to explaining what is really happening in the world of economics today, especially when it comes to gold and silver. Jim’s first book ‘Currency Wars’ was a bestseller and is highly recommended reading for anyone who wants to get an understanding of economics from ‘the inside’. As you’ll learn in this video, James G Rickards has a massive amount of experience in both the private and public sectors. Watch the video to learn why he thinks that we shouldn’t be surprised that at some point gold is quickly valued at $5000 per...

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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...

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Simon Black – The one investment you want to avoid at all costs

February 20, 2014 Sovereign Valley Farm, Chile 4.1%. I read it twice to make sure my brain had processed the number correctly. Yep, 4.1%. This was the annual yield promised on a new 5-year bond investment that a private banker colleague had sent to me. I couldn’t believe it. The bond issuance was by a state-owned company in India. And despite the Indian government having a -very- recent history of capital controls, price fixing, and asset confiscation, and despite the company being rated near JUNK status, the bond only carried a yield of 4.1%. This is really amazing when you think about it. Central bankers have destroyed money and interest rates to the point that near-bankrupt companies in shaky jurisdictions can borrow money for practically nothing. It’s an utter farce. The rate of inflation is -at least- 3% in many developed countries. Central bankers will even say they are targeting 3% inflation. This means that if investors simply want to generate enough income so that their after-tax yield keeps pace with inflation, they have to assume a ridiculous amount of risk. This is a really important point to understand given that the global bond market is so massive– roughly $ 100 trillion, with nearly $ 1 trillion traded each day in the US alone. This is almost twice the size of the global stock market. And even if people never invest in a bond themselves, they’re directly connected to the bond market. Your pension fund owns bonds. The bank that is holding on to your money owns bonds. The companies listed on the stock market that you invest in own bonds. Yet bonds are some of the worst investments out there right now. And that’s saying a lot given how overvalued stock markets are. Here’s the bottom line: adjusting for both taxes and inflation, bondholders are losing money, even on risky issuances. Think about it– if you make a 4% return and pay 25% in taxes, your net yield is 3%. If inflation is 3%, your entire gain is wiped out… so you have taken that risk for nothing. If inflation rises just a bit then you are in negative territory. There are those who suggest that deflation is a much greater risk right now than inflation… and that bonds are great investments to own in the event of deflation. But here’s the thing– even if deflation takes hold and prices fall, anyone who is deeply in debt is going to feel LOTS of pain. Instead of their debt burden inflating away, now they’ll be scrambling to make interest payments. So while bonds are a sensible deflationary investment in...

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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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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...

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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...

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The Single Biggest Reason Most Investors LOSE Money

It’s almost never openly admitted in public, but the reality is that few if any investors actually beat the market in the long-term. The reason for this is that most of the investment strategies employed by investors (professional or amateur) simply do not make money. I know this runs counter to the claims of the entire financial services industry. But it is factually correct. In 2012, the S&P 500 roared up 16% including dividends. During that period, less than 40% of fund managers beat the market. Most investors could have simply invested in an index fund, paid less in fees, and done better. If you spread out performance over the last two years (2011 and 2012) the results are even worsen with only 10% of funds beating the market. If we stretch back even further, the results are even more dismal. For the ten years ended 1Q 2013, a mere 0.4% of mutual funds have beaten the market. 0.4%, as in less than half of one percent of funds. These are investment “professionals,” folks whose jobs depend on producing gains, who cannot beat the market for any significant period. The reason this fact is not better known is because the mutual fund industry usually closes its losing funds or merges them with other, better performing funds. As a result, the mutual fund industry in general experiences a tremendous survivor bias. But the cold hard fact what I told you earlier: less than half of one percent of fund managers outperform the market over a ten-year period. So how does one beat the market? Cigar Butts and Moats. “Cigar butts” was a term used by the father of value investing, Benjamin Graham, to describe investing in companies that trade at significant discounts to their underlying values. Graham likened these companies to old, used cigar butts that had been discarded, but which had just one more puff left in them. Like discarded cigar butts, these investments were essentially “free”: investors had discarded them based on the perception that they had no value. However, many of these cigar butts do in fact have on last puff in them. And for a shrewd investor like Benjamin Graham, that last puff was the profit potential obtained by acquiring these companies at prices below their intrinsic value (below the value of the companies assets plus cash, minus its liabilities). Graham used a lot of diversification, investing in hundreds of “cigar butts” to produce average annual gains of 20%, far outpacing the S&P 500’s 12.2% per year over the same time period. So when I say that you can amass a fortune by investing in Cigar...

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