Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki


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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2014 – Helicopter Money is Coming! Jim Rickards, Currency War Update

PARTIAL TRANSCRIPT: Greetings and thank you for joining us at I’m here at the Casey Summit with Jim Rickards. He’s the author of Currency Wars. He has a new book coming out as well. What is it called? James Rickards: It’s called The Death of Money: The Coming Collapse of the International Monetary System. It’ll be out in April; April 8th is the publication date. I finished writing it about a month ago and we’re in editing. It’s a funny thing, Dan. We live in a world of what I call instant digital gratification, whether it’s YouTube or Twitter, everybody wants to put everything out there immediately, but a book is still an old-fashioned process. It takes a year to write it and edit it and bind it, so it’ll be out in April and I’ll be talking more about it between now and then. It should be very interesting because I’m sure some of your analysis will have either been proven right or proven wrong in the book, am I right? James Rickards: Well, that’s right, I mean it is forward-looking, so I say a lot of things in the book that I will be looking over in the years ahead, but sure. It’s something coming out in six months, it’ll be a good test to see how things play out. We’ll see if they play out as expected. That’s exactly right. I’ve always wondered in the dollar crisis scenario if right on the cusp of the market just melting down and going crazy that Obama and whatever Fed chairman of that time, say, next to him and they’re instituting a gold standard. Do you think it’s possible that they, right before a major crisis is about to happen, they come in and switch the currency? James Rickards: I don’t think so. I think there are several scenarios: one is that we get to a gold standard by design. In other words, people look at the system and they say that it really is not sustainable, it really is based on confidence, but we’re in the process of eroding confidence. There is no exit from quantitative easing. We should say there’s no good exit. You can back away from it, but then you’ll implode the economy in a deflationary crash. Or you can keep going and eventually cause a loss of confidence in the dollar and then have a hyper-inflationary crash, so you got a crash either way. One looks like the Great Depression, one looks like the late ’70s but worse. Those are the only two paths, but there’s no other path. There’s...

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How Fast is Your Money Moving?

For years, I choked when I heard such a question. I choked because I was at a loss for words. I was at a loss for words because such a simple question does not have a simple answer. So the answer I came up with was, "It depends." I tried this answer for awhile and soon noticed that this answer was unsatisfactory not only to the person asking the question – but also to me… Looking for a new answer, I came up with, "If you do not know what to do with your money, put it in a bank far away from you, with instructions not to let you touch it." I would add, "If you do not know what to do with your money, and you announce publicly that you are an idiot with money, many people will call and tell you what to do with your money…which is to give your money to them." This new answer was not a satisfactory answer, yet it was better than "It depends." Today, I am happy to announce that I have a new answer to the same question and that answer is, "Read my latest book, Who Took My Money?" After years of frustration and unsatisfactory short answers, the answer to that simple question is now in a book and I am very proud of this book. I am proud of this book because it takes the time to answer the question, "What should I do with $10,000?" The reason the answer to such a simple question is complex is because what a person should do with the money depends upon who the person is. For example, if the person has a limited financial IQ, then the person should definitely put it in a bank and keep the money secret and far away so no one; including that person, can touch it. If the person has a higher financial IQ, then he or she can invest, leverage, and speed up their money to achieve far higher returns than most people think possible. In my new book, Who Took My Money, there are three different examples of investing $20,000. Using exactly the same parameters of 5% interest, and a 7-year period: Choice #1: a mutual fund $28,142 5.8% Choice #2: real estate $101,420 58.2% Choice #3: real estate $273,198   180.9% The difference between real estate in choice #2 and choice #3 is that financial velocity is added to choice 3. If you would like further clarification on the causes of the differences, you can find this example on page 118 of the book. The point of this article is...

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Your Best CASHFLOW® Game Tips

TIP #1: Never…Ever…Quit. I believe that there are many things to understand to succeed at the game. But, for me, the most important is: NEVER, EVER, EVER, EVER QUIT — ON YOURSELF! No matter how you feel, NEVER QUIT! – Kathleen M  TIP #2: Step Out of Your Comfort Zone. CASHFLOW 101 is so powerful because it reflects your true behavior and allows you to take risks in a safe environment. Step out of your comfort zone, and do things you may not feel comfortable doing in the “real world.” You’ll be amazed at how it changes your perspective. – Jack N  TIP #3: Celebrate the Joy of Success. The biggest ‘tip’ I have learned so far is that your way to wealth isthe joy- not the wealth- you achieve. This became very clear to me after playing dozens of times and realizing that I would actually SKIP the Dreams on the Fast Track! I was more interested in winning the game than ‘golfing around the world.’ – Jeff B  TIP #4: Focus on Your Goals. I found that while playing the game, I would focus on the ‘negative’ spaces- "Baby" or "Downsized" – and hope not to land there. I was focusing specifically on what I didn’t want, and, oddly enough, landing on those spaces most often. I began to repeat the numbers I WANTED to have come up, and just as oddly, those numbers seemed to come up more than mere chance would support. The lesson is simple: focus on your goals, not on what may go wrong. – Hugh C TIP #5: Only Take Advice from Successful People. When the Opportunity Card comes up, some people look to fellow players for guidance. Make sure that those you take advice from are having success and on their way to getting out of the Rat Race! – Cal J  TIP #6: Never Say “Can’t.” There is ALWAYS a way. Think outside the box. Find a way to make your “can’t” a “can.” – Grace N  TIP #7: Take Note of Your Overall Habits. After playing the game, take note of your overall habits- good and bad. Evaluate how those habits helped or hindered your game play. In the next game, make a concerted effort to change the habits that may have prevented you from getting out of the Rat Race. – Toni E  TIP #8: Get Rid of Bad Debt. The thing that has expedited my exit from the Rat Race: Paying off ‘bad debt.’ – Bridget S  TIP #9: Create Your Own Rules. Creating your own rules (or modifying the game rules) can make CASHFLOW 101 more...

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Business Plan Basics

Chapter 3: Business Plan Basics Winning business plans map out the major W’s of your proposed business – the who, what, when, why and where – to help you figure out that all important H – how. Who are the major players? Who are the owners, personnel, advisors, customers, competition, even the target audience for the plan itself? What do you want to achieve? What is your sustainable advantage? What do you offer? What do you produce? When did (will) the business start? When do you want to meet particular goals? Why are you in business? Why would customers want your product or service? Where is the business located? Where is the target audience? Where do new opportunities lie? And finally, how do you get from where you are now to where you want to be? Ideally, a business plan is the intersection of everything inside the business (costs, products, services, personnel, etc.) and everything outside the business (competition, market trends, political forces, etc.) Forces inside the company meet those outside the company and a business plan is born.  Many entrepreneurs put too much emphasis on the inside forces and ignore the outside. No business is an island; no company operates in a vacuum. Even as you are tackling all the tiny details that need to be included in your plan, be sure to keep a grip on the big picture.  A winning business plan outlines goals, clearly communicates strategies and establishes plans for both the best and worst case scenarios (as well as any and all scenarios in between) that might befall your company. Seasoned entrepreneurs and investors know to expect the unexpected and at the same time anticipate the challenges inherent in each particular business.  In great business plans, you not only sell your business concept, you sell yourself. Your entrepreneurial spirit and passion are critical factors to a potential investor. Communicating your team’s experience, abilities and track record will take you even farther. The key is showing how your experience and abilities will support your business and help it to excel.  A good business plan can help you determine what you need to make your business a success – from personnel to financing, location to advertising. But to truly make your company succeed, you must pay attention to what you find during plan preparation. Don’t do the plan, figure out you need $300,000 and then try to wing it on $150,000. Be realistic in your planning, then be just as realistic in following the plan.  The hardest part of crafting a good business plan (or even a bad one, for that matter) is overcoming inertia. Most...

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Government bailouts and school children

~ Marcus De La O There was something missing from the $700 billion taxpayer funded bailout that was signed into law. It seems impossible, I know. Congress spent several days making sure nothing was left out, including money for Puerto Rican rum makers, race track owners, wooden arrow manufacturers, and of course, the always under-funded wool researchers. It was painful to see the very people who caused the mess taking charge of fixing it. If it made you mad, it should have. The bailout amounts to over $2,300 from every American’s pocket, and there are no guarantees that it will work. Most of us would have preferred to stick it to the man and let those greedy Wall Street villains go bankrupt. If you watch TV or read the paper, you’ve heard that the problem was caused by our government loosening lending standards. This is a symptom of a larger problem, one that needs to be fixed now. The real cause of this disaster is not on Wall Street. It is much closer to home. Imagine if our children were forced to take money management classes starting in the third grade. Forced! Forced to take classes in money management? Why not? They are forced to take algebra. How many of us use that in the average day? They are forced to take biology, foreign language, health, and geometry. Sex education may soon be forced upon our children as well. Money management, however, is not even an elective. When offered an amazing loan to buy a house with little or none of your own money, a properly educated young adult might say “no thank you.” When tempted to run up the VISA debt to get that new plasma screen, the ghost from classroom past would say “No.” Every year a new batch high school graduates take to the street with no financial education. This is the real cause of the financial crisis. Instead of a couple thousand regulators teaching banks how to lend, let’s teach a couple hundred million Americans how to borrow. Rather than showing us how to spend our money, our government should show us how to save it. Our children need to come out of high school knowing that managing their money is just as important as earning it. Our government has let us down in this area for a long time and missed another chance. Financial education should be required in all public and private schools. Over the past few weeks, we did not hear one of our leaders speak about the importance of teaching money management to our children. Not Bush, Obama, McCain, Pelosi, Cox,...

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State issues in Massachusetts on the ballot

Tomorrow, statewide in Massachusetts, there are 3 ballot questions. They are elimination of the state income tax, decriminalization of small amounts of marijuana and elimination of dog racing. Here’s where I stand. No on 1, yes on 2 and 3. Question 1: I think, I hope, that the selfish insanity of libertarianism is finally starting to taper of. Question 1 is a libertarian ideal. What will happen if state income taxes are eliminated? Local aid with be eliminated and towns will have to replace that revenue from somewhere. Where you might ask? Property owners. Mitt Romney’s revenue cuts about 6 years ago caused property taxes to go up roughly $2B, even though reducing $50 per person less would have meant not police fire fighter or teacher layoffs and it would have meant that people would have died. Local aid was slashed as a result and property taxes went up. Question 2: I don’t like pot and I’m allergic to it. But it is absurd to to lock so many people up in jail, hurt their chances for jobs and education, etc. for using or possessing small amounts of marijuana. Nobody is going to buy it and use it because it’s a minor infraction now. And really, it’s banned because of hemp, which got lumped in because of the cotton trust which is absurd too. We have the highest rate of incarceration in the world, much of it because of minimum mandatory sentencing over what should be petty drug offenses. We’re building more prisons than schools. Let’s help stop this nonsense. Question 3: Dog racing should be banned. It’s true; I love dogs. I like them better than most people. Dog racing has cruel and inhumane conditions and for that reason, it needs to end. View post:State issues in Massachusetts on the...

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ECON 101: Credit Crunch for Dummies

By SCOTT MAYEROWITZ ABC NEWS Business Unit Is your head spinning these days trying follow what is going on with the economy? Subprime. Collateralized Debt Obligations. Liquidity. Every day it seems as if these words — which nobody you knew was using just a few months ago — are being thrown around. The stock market is down. Government officials are scrambling to find ways to help the economy. And a lot of people are talking about a recession. So what does it all mean? And how did this all begin, especially when just a few years ago the economy was booming thanks to the red-hot real estate market? Well, that’s where the problem starts. A combination of low interest rates and aggressive new lending practices in the late 1990s and early 2000s led to a buying frenzy. Many banks were enticing first-time home buyers into the market with pitches of “historically low interest rates” and “no down payment required.” In June 2003, the Federal Reserve had lowered its key Fed Funds interest rate to just 1 percent. Mortgage rates were of course higher, but were still considered a relative bargain. Banks had also changed the way they made loans, opening up the American dream of homeownership to a whole new group of people who had always considered themselves renters. The Mortgage Boom With rising home values, almost everyone believed they could get rich just by buying a home. And pretty much everyone — even those with terrible credit histories — could get a home loan. Many got adjustable-rate mortgages with low, introductory teaser rates that made their mortgage payments affordable. Those rates would eventually reset to higher ones, but many owners planned to sell first or refinance. Even high-risk borrowers — if they made their mortgage payments on time and built up a good credit history — could refinance into a more traditional fixed-rate mortgage before their interest rates reset. And since the home would undoubtedly be worth more than it was just a few years ago, the banks were willing to lend out more money because the collateral for a loan — the house — would theoretically be worth even more in a year or two. How Wall Street Profited To facilitate some of these new loans to riskier borrowers, lenders and those on Wall Street came up with new ways to package them up and sell them off to big pension funds, private equity firms, mutual funds, foreign investors and any other investors looking to profit from the housing boom. Gone were the good old days when everything was simpler, where a local bank manager who knew...

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Meet Neel Kashkari: The Man With the $700 Billion Wallet

– Wall Street Journal | Oct 6, 2008  – – Posted by Heidi N. Moore  – A Goldman Sachs Group alumnus in charge of the nation’s economic rescue? How unusual. Except, of course, it isn’t. As The Wall Street Journal’s Deborah Solomon reported today, Treasury Secretary Hank Paulson is promoting Neel Kashkari, the Treasury’s assistant secretary for international affairs, to be the point man overseeing the $700 billion financial bailout as the interim head of Paulson’s Office of Financial Stability. The full appointment would need Senate confirmation, which is unlikely to come given the short remaining tenure in this Administration. The move essentially puts a new title on what Kashkari he has been doing since he joined Treasury in 2006–examining the consequences of an economic housing fallout. Kashkari was one of three Treasury staffers–including general counsel Robert Hoyt and head of legislative affairs Kevin Fromer–who stayed up until 4 a.m. last Sunday putting together the $700 billion bailout bill that was shot down by House Republicans the next day. Kashkari is an Indian-American who has a few things in common with Paulson . Both are former Goldman Sachs bankers, though Kashkari, at 35 years old, is much younger and was just a vice president-level banker in Goldman’s San Francisco technology banking effort when Paulson tapped him to join Treasury. Both also are Midwesterners. Kashkari grew up in Stow, Ohio, and earned a bachelor’s and master’s degree in engineering from the University of Illinois at Urbana-Champaign. Paulson was raised in Barrington Hills, Ill. And both sport similar hairstyles– or lack thereof. Kashkari didn’t take a conventional route into banking. He started out as an aerospace engineer at TRW, developing technology for NASA projects like the James Webb Space Telescope, the replacement to Hubble, which is scheduled to launch in 2013. He earned an M.B.A. at the University of Pennsylvania’s Wharton School of Business. While there, one of his professors was Michael Useem, who liked to put students through grueling, Outward Bound-type strengths of endurance and strategy. Kashkari participated in one Army simulation in 2002 at Fort Dix, where he was quoted in this 2002 Philadelphia Inquirer article in a comment just as applicable to today’s financial crisis as the project he was working on: “We were all taught to play nice,” Kashkari said. “So who’s going to fight in the sandbox?” After Wharton, Kashkari joined Goldman and worked in San Francisco, where he advised companies that create computer security programs like antivirus software. He and his wife, Minal, still keep a house in California. Paulson likes to surround himself with people he’s comfortable with: people, mostly, from Goldman Sachs. Paulson’s inner...

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Saving’s not enough, invest your money

When we hear the word money, what comes to mind — savings in banks, investment in mutual funds, investment in equity, investment in real estate, investment in antiques? In my opinion, it is a combination of all. Investment gurus call it the ‘diversification of portfolio’. We learn the discipline to manage money effectively outside the classrooms. It reminds me of an old incident. Once, almost 20 years ago, I visited my friend and we were busy talking when her young son entered happily, showing his mom a $100 note gifted by his granny. All he wanted to do with it is buy chocolate. His mother explained to him that chocolates are unhealthy and he should do something else with the note, preferably put it in his piggy bank. Reluctantly, he agreed. A few months later, I happened to visit her again. That day she was busy with her son, helping him open his piggy bank, overloaded with coins and notes. They both counted them and were delighted that the total was beyond their expectations. Again this time as a responsible mother, she advised him to put this fund into a savings account. She taught him to fill up the deposit slip. The boy tried, but could not. So his mom filled the slip and he left for the bank along with an office help. Years rolled by, and his mom is now proud of his saving habits. However, the amount is earning interest only in the bank. “To save must be a habit of childhood, but to invest must be the habit of adulthood.” My friend, as a responsible mother, could reach only her son’s childhood and not beyond. What is the count of your investment portfolios? Are you working for money or is money working for you? “The poor and the middle-class work for money. The rich get the money to work for them”- Robert Kiyosaki, the author of Rich dad poor dad said in the book. It’s generally seen that many people have the habit of switching off their minds when it comes to money matters. People in the other category have a habit of exercising their minds when it comes to money. The difference depends on many criteria. It doesn’t matter if the child doesn’t listen to you, or doesn’t obey you. The child always observes you. Since childhood, we listen to and observe many things in our parents, teachers, friends and others. This plays a vital role in developing our thinking patterns. I will explain two different thinking patterns by picking up some of the effective sentences from Rich dad poor dad. Generally, we veer...

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