If you know how the
world financial system works
you know the game that you're playing
and if you don´t know the game and the rules that we're playing by
you are going to get slaughtered,
you are going to get slaughtered.
Ever since the Federal Reserve was born, we have been living under a lie.
In order for us to mantain the levels we've got and to maintain
the prosperity
Obama has to be twice as far in debt when he leaves office than when he came in,
or the whole thing is starting to collapse.
The Federal Reserve, they're buying bonds directly from the Treasury.
This is Quantitative Easing, they're calling it,
and that means there's an emergency going on.
I can see that there was not anything
in history
as far as finances goes, that was as much as a sure thing
as gold and silver accounting for the expansion of the fiat currency supply.
There is absolutely no chance in hell that this won't happen,
right now it takes about 15000 to 20000 dollars an ounce of gold.
I believe that there's going to be a deflation
first
and then all of the world's central banks
will start printing like crazy to get us out of that deflation and Ben Bernanke
will be leading the charge.
You can´t have a debt that is 10 times the size of your economy.
It's not posible. Everything comes to its screeching halt first.
I've got to show you
the world's stock markets
and real estate bubbles
have to continue crashing because
all it is
is the market trying to seek
fair value.
It's trying to seek equilibrium,
this is what the markets do.
It is their job.
Basically,
you know, our entire currency system
is imaginary,
it doesn't really exist. It's just that we're all dreaming the same dream.
If anybody chooses to wake up...
it's over with.
Thank you very much!
I'm Mike Maloney
author of the bestselling book on precious metals investing,
Guide to Investing in Gold and Silver, is part of
the Rich Dad series that Robert Kiyosaki started,
the original book. Robert Kiyosaki says: write a book
no other instructions: write a book,
and so I start writing this book
two and a half years of research and writing
probably 30 hours a week,
every week
for two and a half years. It's a very well researched book.
The one thing I really worry about
is perpetuating misinformation, I want it to be accurate
and then I tried to boil it down and make it real simple. I read all these books by
economists like Milton Friedman
Murray Rothbard,
Ben Bernanke, if you get a chance to read some Ben Bernanke, don't!
He is a horrible author,
just horrible.
They're all trying to write over each other's head and impress each other
And by doing so, they make economy sound so complex
that everybody thinks well, I can't understand economics.
It's really simple.
Economics is very simple if you boil it down to its essence
and it's not that difficult to understand and that's what I tried to do
in my book.
For the people that have not read my book,
about 75% of it
is not about investing in gold and silver, it's some history of money
and then how the world economy works and what could potentially happen
you know, where we came from, where we are today and what could potentially happen.
By the way,
I really couldn't care less about gold and silver,
I don't want gold and silver, it's just in its cycle right now, it's a stupid lump
of metal that doesn't
have cashflow or spinoff dividend yields.
And so I don't want gold and silver,
it's just that right now I don't want anything else.
They're just in their cycle right now and they're going to be outperforming
everything else, in my opinion from all of my research,
and they're going to be able to buy a whole lot more other stuff.
A whole lot more real estate,
whole lot more stocks,
whole lot more oil wells, farmland,
all the true wealth.
It's in
the buildings, the businesses, the farmland that is out there,
and people get this picture in their head
that if there is an economic disaster, if there were some sort of collapse
that it's going to be like this nuclear wasteland afterwards, it's not.
All the buildings still are going to be there, the apartment buildings.
It's just that they're all going to be on sale.
The problem is
when investments are on sale nobody buys,
the public comes charging in, and they chase investments after they're going up.
Gold and silver get hot
whenever they're going up and as soon we see them take a dip,
it's like sales turn off like a light switch, most of the time.
And I don't want anybody
to get slaughtered.
I really don't want these bad things to happen, I just think that
all the evidence is there.
What our leaders have done to the economic system
is going to cause these things to happen and it's inevitable,
and I'm trying to warn as many people as possible
as quickly as possible. My company has a mission,
to get as much gold and silver in the hands of the middle class
as quickly as possible, because
when there's great economic upheaval, there is great political change,
and usually goes along with it
In the hyperinflation in Weimar Germany in 1923,
this hyperinflation ended
on November 15th, 1923. On November 8th, one week before
the end of the hyperinflation,
Hitler's storm troopers
pointing machine guns at the front door of the Burgerbraukeller where
there was a political meeting, this big beer hall
where there about 3000 people listening to politican speeches
and on that night he took the stage
at gun point
and to this literally captive audience gave a speech that changed the world.
Nobody knew the name Hitler, nobody knew who he was
until he gave this speech
to a newly empoverished middle class
people that were scared and looking for somebody to lead them,
and here this charismatic guy takes the stage, gives them a scapegoat
and says "I know the way out of this".
The next day, those people in that beer hall
followed him to try to do a military... a coup to take over
the government
and it failed.
He was imprisoned,
he was tried for high treason,
his trial went on for an entire month,
and during that month he had the ear of the nation.
He was covered in every newspaper
all across Germany,
and the judges were sympathetic to his beliefs
so they let him go on for hours on end with the speeches
and that's when he gained power was when the middle class was scared.
The middle class defines a country with their vote.
The country, as the middle class goes so goes the country,
and so
what I'm worried about
is not the loss of my financial well being,
it's the loss of capitalism, it's the loss of
our quality of life, it's the loss of our freedom of choice.
That's what I'm worried about,
and I know that there are certain people that I'm not going to be able to reach.
Joe-six-pack, I refer to the guy that comes out
of his beer and football induced coma
at the very end of the bull market and comes charging in and buys at the peak.
I can't do anything for him.
I'm hoping that I can do something for all of you.
These are wealth cycles. If you have two asset classes that are rising,
you have for instance, let's say that this is real estate on the bottom
and on the top here we've got precious metals.
Precious metals in this last decade here,
precious metals outperformed real estate and stocks
but everything went up.
Stocks went up, bonds went up, real estate went up and so did commodities and precious metals.
Is that possible?
Can everything go up? Think about it for a minute.
If we've only got so much stuff in society and if you've got these
3 or 4 asset classes
and everybody rushes toward one, pushing it to a bubble shouldn't it be drawing
currency away from the others? Shouldn't the others be going down?
Well, they didn't in the last decade.
And what's happening here if you've got two things that are going up,
if you're invested in this one down here,
when you've got to sell, you can't buy as much as this one.
If you're invested in this one, when you sell you can buy more of this one.
They're both rising in price,
this one is falling in value
when you sell it you can't buy as much gold, or food or oil.
Your house is worth half as much in oil, as oil was 10 dollars
a barrel in 1999.
So your house measured in oil has crushed, the stock market measured
in oil has crushed.
If you start looking at your home or all of your investments
and you divide them by something else, you measured them in
the price of a bushel of wheat,
a pound of copper, a ton of iron
shares of the Dow or ounces of gold,
you're going to discover something.
These two things that they're going up, eventually
the people that are invested in this one realize that
the smart investors realize that it's going into a bubble,they sell
and they buy undervalued asset,
and then this trend reverses. It can't go on for ever, and if it did,
if gold outperformed real estate for ever, there would come a day
where one ounce of gold would buy the entire planet and we all know that
that can't happen. Right?
So,
eventually one becomes overvalued and the other one becomes undervalued
and the cycle reverses,
and then it reverses again,
and what is happening is that they're printing currency about this rate
and that's the reason you can't see it. People would say:
"well, at least my house is worth a 100.000 dollars more than it was
in the year 2000", or "it's worth
20 per cent more"
Well, in fact if the inflation was 40 per cent it actually went down in value.
They'd say that,
you know, they looked at the stock market
and the Dow right know is just barely above its 2000 high.
In the last decade stocks have gone sideways for a decade.
We've had inflation during that time, they inflated the currency supply.
So,
if you start measuring one thing with another thing, so you're measuring stuff
against stuff instead of using currency, what you discover
is that everything is trapped in this valuation channel,
where it goes from overvalued to undervalued to overvalued and undervalued again,
and the thing that you're measuring it with is doing
the exact opposite mirror wave.
The trick is
sell the overvalued asset
near the peak if you can,
find the undervalued asset and I call this wealth cycles.
And if you can do that,
it's a road to true wealth, you're escaping that valuation channel.
Here is a real example, this is the Dow
measured in points. And what are points?
Points are derived by
the dollar value of the underlying stocks, so basically
its points are dollars,
and one of the reasons that they measure it in points is just
like when you go to Las Vegas, they take your currency and they give you chips.
Now they're pieces of plastic, so you don't care, you're just having fun.
So change it to points,
and it's not as bad as if "Wow, you lost so many dollars"
"it went down so many points".
Anyway, that's the Dow measured in points, but
if you go every month during this entire graph from the year 1900
to today,
and each day you take the points on the Dow and divide it by the price of gold
you get
how many ounces of gold one share of the Dow is worth,
and this is what it looks like measured in gold.
It's not going anywhere,
it's got a mean of about 4 ounces of gold, which means that the price of gold
should be one quarter of the points of the Dow and then things
will sort of be in equilibrium.
It's fair value when
the Dow is only four times the price of gold,
but what you see here
is that it goes into, it goes from fair value into a bubble 18 ounces of gold,
it crashes down to 2 ounces, another bubble of 28 ounces of gold
because the bubble was bigger,
because they print more currency in the meantime, when it crashed it went down to
one ounce of gold. There was a day in 1980 when gold was 850 and
the Dow was at 850 points,
one ounce of gold bought the Dow. Conversely, if you cash out
you could only buy one ounce of gold with the proceeds of your stocks,
and then we're going on to the biggest bubble in history.
There's no time in history, this point in 1999 - 2000
there's no time that gold was as unloved and ignored
as in that time period. It was no nation's money and it had gone down
for 20 years, it was "the worst investment you can possibly make", nobody wanted it.
Take this,
This is the price of the Dow measured in gold. Flip it upside down and
you've got the price of gold measured in the Dow.
Put these two things together,
and what you find is that there's a cycle here
and if you've written stocks up to 1929
and then sold your stocks and bought gold,
and then in 1932 gone to gold
... and then, gone back to stocks I mean,
and then in 1980 go back into gold,
and so on,
uh...
this is the road to true wealth, I mean, you're making
massive gains here.
I show two hypothetical families in my book
and one goes from 35 bucks to 11.000 bucks over that time period
and the other one goes from 35 bucks to 11 million
and that is the difference, one family creates a dynasty
the other one
didn't even break even.
This is
the Gold-Dow ratio instead of the Dow-Gold ratio, so you're measuring
gold's value per ounce measured in what percentage of a share of the Dow
that it would buy,
and what is showing is that
gold is nowhere near a bubble,is very undervalued here and still has to go up,
the mean should be 25 per cent or more.
and
in every bubble in history and in nature, I used to be
an electronics engineer in
physics,
when something is out of whack, when it reverse back to the mean it overshoots.
if it's more out of whack, when it reverses to the mean, it overshoots further,
so I'm expecting the day
where the price of gold would be double or more the points on the Dow.
This is the Silver-Dow ratio.
Silver has
just
I mean, the gains here should be immense.
This is just gold for the past decade.
I just challenge anybody to go and find an index or stock or anything,
that looks that good over the last 10 years.
This is a perfect chart, it's very bullish,
there's nothing here saying gold,
in this information that you're looking at, this is what technical analysts look at
when they're
trying to figure out whether to buy an asset or sell an asset,
and this is saying
that gold is probably going to continue rising, there's nothing bearish
in that signal.
This is the SP 500 over the last decade, so representing
stocks of the 500 largest companies in America and there is gold.
uh...
Here we have
silver and
I recently spoke at the 8th annual banking conference in Socci
Russia, this is
the big banking conference for all of Europe and Russia.
And I was showing them this at the very end, they cut me off
it was really interesting.
I was running out of time,
and you hear this voice come over the loudspeaker
and it is their Finance Minister in their parlament,
telling me: "mister Maloney, mister Maloney, you've got to stop now mister Maloney"
they were trying to cut me off, I was presenting this information
they did not want presented at this conference,
and then
he comes up to me afterwards, he's got a copy of my book that he bought,
he wants it signed!
Oh, by the way, please visit our table afterwards, we're giving away,
these are 100 trillion dollar bills, they are real, they are from Zimbawe, we are giving away
20 quatrillion dollars at my table,
so... uh...
come and get your 100 trillion!
OK, so...
what I showed here was that there is an inverted head-and-shoulders
and this works just as well upside down, as it does rightside up,
you can see the head hanging, it's like this guy hanging from his feet.
This is the head and shoulders that I'm tracing out here in blue,
and then,
you draw
across the neckline, and you invert that head in a predicted move and you see this,
if you watch my...if you google
"10 dollar oil" you'll see a video
where he's cutting me off, and I'm sort of flashing through this,
I don't get a chance to describe it, but I was predicting that silver would make
a big move and guess what?
That's what silver did.
It doubled
from where it was.
This is the spot price of silver.
This is the price of silver IOUs, the price of gold and silver
is determined by people going: "I owe you 5.000 ounces of silver, I owe you
5.000 ounces of silver, I owe you 5.000 ounces of silver and
handing this things out,
and they're trading this IOUs on the Commodities Exchange
and that's what determines the worldwide spot price.
Now you can do this naked...it's called the naked shorts. If you don't have the silver
to cover it, if you're not sitting on a pile of silver and you are writing IOUs,
you can still sell them.
And some big banks do this, like J.P.Morgan and they crash the market
and then
come in and cover their shorts, they buy those IOUs back
at a lower price than they sold them for and they get to make the spread.
They fleece the public and some funds that invested in silver
for hundreds of millions of dollars by doing this,
and they do it, they've done it on a regular basis.
But Silver fell too low this time and so did gold,
and investors that were looking for physical realized that it was just too cheap,
and they all had to get some and shortages developed,
and all across India, Europe and North America the cupboards
were bare.
There were 3 months where we can only
get one silver product at a time, and we had no gold.
We didn't have gold and my dealer shipped for 3 months
and I deal with 4 of the world's largest wholesalers and they could not find gold
for us.
People don't realize how much gold and silver there is on the planet.
There are 6.6 billion people on the planet,
there are only 2.2 billion ounces of gold. That's a third
of an ounce per person. Silver is even more rare. There's only about 14th
of an ounce per person.
That means that 14 people have to share that same one ounce of silver.
And right now,
you can get a whole lot
for your currency.
uh...
I'm going to take a little
detour here.
I did not define the difference between currency and money,
and you will hear me say: currency, currency, currency, over and over and over again.
Back...before World War One,
uh...
each note the Treasury issued, each dollar in existence
in the United States
would say that there have been deposited within the United States Treasury
20 dollars in gold coin, and payable to the bearer upon demand.
The money was in the vault,
the currency was a note they gave you, it was a claimcheck,
only a claimcheck on the money. The same as if
you go to the dry cleaners and give them your shirt, and
they gave you a claimcheck for your shirt.
The value is that shirt at the dry cleaner's, not the piece of paper
that says that you own that shirt.
So our currency that circulated,
was the paper US dollars, and they were claimchecks on money,
and people do not understand that money has to be a store of value.
Only gold and silver qualify as money.
They have all the attributes that you need. They are portable, durable,
divisible, fungible... and then money is a store of value over
long periods of time.
One of the things that I always start with
is how currency is created, because if you know how the world financial system works
you know the game that you're playing.
And if you don't know the game and the rules that we're playing by
you're going to get slaughtered,
you're going to get slaughtered.
So this,
just by knowing this, increases your odds
just a hundred fold of winning.
So...uh...
"When you or I write a check there must be sufficient funds
in our account to cover the check,
but when the Federal Reserve writes a check
there is no bank deposit on which that check is drawn.
When the Federal Reserve
writes a check
it is creating money".
And that is
"Putting it Simply" from the Boston Federal Reserve's website.
Basically,
the way this works is: the trader of the United States is the US Treasury.
uh... but every country has the equivalent to our Treasury
so the Treasuries around the world
uh... create a bond and, what is a bond? A bond is just an IOU:
Loan me a trillion bucks and I promise that over a 30-year period,
I'm going to pay you back 2 trillion
That's basically a bond, an IOU.
And there's something in the middle here called open market operations,
that I'm gonna just show you real quickly,
but the open market operations is just a shell game
that obscures what is truly going on.
So banks show up at the Treasury Auctions, primary dealers
they're called,
and then the Federal Reserve comes along and through open market operations,
they write a check to the bank and they buy that bond from the bank,
so the Federal Reserve ends up with
the bond
but then
the next month those banks show at the Treasury Auctions again. Now the Treasury
has the dollars
and the Federal Reserve has the bond, and this process repeats itself over and over
and over again.
And there is a build up of dollars at the Treasury
and bonds at the Federal Reserve,
So,
we borrow currency into existence with an IOU, that bond,
and the Federal Reserve opens up the bigger checkbook that
doesn't have a single penny in it,
and writes a bad counterfeit check
and hands that to the Treasury,
dollars spring into existence,
then the Treasury deposits that in the various branches of the government
and the government does some deficit spending,
on social programs, public works and war,
and then they pay
those
government workers, the contractors and the soldiers.
And all of those people deposit in their private banks,
"Banks create money by 'monetizing' the private debts of businesses
and individuals".
Federal Reserve Bank of New York.
So, now the miracle of fractional reserve lending comes in to play.
Fractional reserve lending is just what it says.
They reserve a fraction of what they've got,
if you go to the bank and you deposit 100 dollars,
the bank is allowed to keep 10 dollars in your checking acount in case
you want some of that 100 dollars,
and they get to steal 90 dollars of it without telling you.
Your checking account never has the balance that it says it's got in there.
They have borrowed most of that currency out of there,
and they're going to loan it to other people.
When those people sign their loan, currency actually gets created because
you had a 100 dollars on deposit,
and they have 90 so now there's 190.
Then,
they go and buy something, that's the reason they're taking out a loan.
And they buy a house or a car,
or someyhing like that,
and when they buy that thing,
the seller then deposits it in his bank account so that 90 dollars
get deposited and then they get to go and steal 90 per cent of that
meaning 81 dollars,
so now there's 271 dollars on deposit. Can everybody see
how the currency supplies is getting magnified by the banks here?
And that process happens over and over and over again,
and under a 10 per cent reserve ratio,
every dollar deposited can create another 10.
So if you deposit a trillion in base money, you can create 10 trillion,
uh... And
that is basically it, there is nothing else. Our entire currency supply
is either IOUs
or receipts for IOUs.
That's all that it is.
It's all an imaginary agreement and it is all giving value
because you experienced yesterday that the dollar purchased you something,
so you expect that is going to tomorrow.
So you have this agreement that is,
basically,
you know, our entire currency system
is imaginary.
It doesn't really exist, it's just that we're all dreaming the same dream.
If anybody chooses to wake up,
it's over with.
So it's really just a couple of bucks that is whipped up
in this little voodoo hocus pocus scheme here, where the Treasury
and the Federal Reserve write IOUs for each other,
a check is an IOU, a bond is an IOU,
and they swap IOUs: dollars spring into existence.
A dollar is a receipt or a claimcheck:
an IOU!
Then the rest of the currency supply
is a bunch of numbers that the bank type in their computers.
They don't exist.
In my book,
I call things
money until I get to the point where I define what money is.
And the difference between money and currency and from that point forward,
I only call gold and silver money,
and I call everything else currency,
but in the original manuscript,
when I start talking about the massive currency creation that is going on,
and how
banks are just debasing their currency supply all over the world
and how this Mandrake mechanism works,
I start referring to it as the numbers supply.
the M3 number supply,
uh... the base number supply because
they're just numbers that somebody made up. I can write numbers on a post-it
and hand them out like this.
They make them up, they type them in a computer, it is nothing but a supply
of numbers, How many numbers are there?
It's infinite!
So it's nothing but a number supply.
But it becomes real
when you work for some of that
currency supply, that number supply,
and at that point,
it now represents your blood, sweat, labor, ideas and talent.
You are what gives the currency supply value.
It would have no value without you.
And the way that that value is enforced this is the really cruel joke here.
Let's say you save a part of that currency supply, so you can pay
tax to the tax collector in the United States, that is called the IRS,
so that they can turn that over to the Treasury so the Treasury can pay
the principal plus the interest
on that bond
which was paid for with a check from nothing.
So, you can see that, right?
Everybody sees how this works?
Now, there's another joke.
There was interest due on that bond.
Let me ask you, if you borrow a dollar into existence and it's the only
dollar that exists on the entire planet but you promise to pay back
2 dollars,
Where do you get the second dollar?
Has anybody got the answer on that one?
You borrow it into existence.
When people say they're just printing money,
they're wrong.
First of all, they're printing currency, but they're borrowing currency
into existence.
The Fed doesn't just print money,
what they do is they indebt us in the future.
Everyone of these loans that we took out of the bank that created
the vast majority of our currency supply, 95 per cent of our currency supply,
roughly,
has been created by the banks
uh... i think actually is 93 percent now
and the Federal Reserve created about 7 percent
but uh...
before the financial crisis
the actual physical paper dollars are what the Federal Reserve and the Treasury
creates it's known as base, they call it base money, I call it base currency
uh... and then we
create the rest of the currency supply
by going to the bank
and borrowing for home or something like that or buying dinner
and sign our credit card.
When you sign a credit card receipt you've expanded the currency supply of
the planet.
The problem with this system is
that every single month there is a payment due
on that bond
for the principle plus the interest
and there's payments due on your home mortgages and on your cars and on your
credit cards every single month
you've got to make a payment
on that currency that you borrowed into existence and on the balance sheet
that payment extinguishes the currency that you borrowed into existence, so
the currency supply starts to collapse.
This system
requires
that we go deeper into debt every month than were the previous month, we have to
always borrow more currency into existence
than we are extinguishing every single month
or the whole thing starts to collapse,
and
I'll show you what that collapse looks like in a minute
but first I'm going to show you the base money, this is the
these are the physical paper dollars uh... it's basically cash in circulation
plus the deposits that the big commercial banks have at the Federal Reserve
uh... all of the banks have a checking account at the Federal Reserve
and their deposits are redeemable in paper dollars so it's a measurement
of how many paper dollars exist.
It took 200 years to go from zero dollars in existence to
825 billion
dollars,
then came along, came the financial crisis of 2008
and it has only taken two and a half years to triple that.
We are now at about uh...
2.4 trillion dollars of base money
from 825
just two-and-a-half years ago,
so this looks like the currency supply of the planet is just exploding
when you look at this and
most economists and newsletter writers are talking about inflation, inflation
inflation is right around the corner, this is going to happen.
I believe that we're going to have, I wrote in my book
we would have the threats of deflation
followed by big inflation
which we have already had, that's what this is,
followed by a real monetary deflation which is the collapse of the currency
supply: inflation, deflation
are properly referred to as an expansion or contraction of the currency supply
prices follow but there's a delay,
uh... and so uh... consumer price inflation
keeps your eye off the ball.
If you can look at what's happening in the currency supply
you're seeing into the future.
And I believe that there's going to be deflation first
and then all of the world central banks
will start printing like crazy to get us out of that deflation
and Ben Bernanke will be leading the charge,
and so
back in
March of 2006
uh... the Federal Reserve hid
the broadest measure of the currency supply,
the currency supply that is M1, M2 and M3
uh... M1 is uh...
cash in circulation
uh...
plus checking,
checking accounts
uh... M3
was the broadest measure that incorporated the most different types of
of bank deposits and so on,
not at all the entire currency supply, the entire currency supply is actually
total credit
so about 53 trillion today and it's uh...
stalled and started to shrink.
But M3, they used to publish it every month
it was the uh... measurement of the currency supply that most newsletter
writers and uh... on the news that they would report
and the Fed hid it from us in March of 2006 claiming
that it was too expensive to compile all this information
and that it was useless anyway that you couldn't glean anything from M3
that you couldn't get from M2.
Now, here's the real kicker.
There is a...
uh... M3 is... you take a whole bunch of different monetary aggregates
that the Fed publishes
and you add them together and you get M3.
The only one that they don't publish I believe it's uh...
uh... euro-dollars
I can't remember, I believe it's euro-dollars,
it was 0.6 percent of M3
so you can still reconstruct M3 off of all the other monetary
aggregates plus minus 0.6 percent accuracy
and there are several companies that do this, shadow stats, shadow government
statistics or shadowstats.com,
is one of them, it's by John Williams. He's one of the people that does and all the
people that do their data agrees,
so I'm like 99.4
because is there a 0.6 percent plus minus,
I'm 99.4 percent
sure
that this information is correct,
and what you see here is that there's a little collapse going on
of the
currency supply up here,
and it's not huge we've gone from you know this would be 15 so about
14.7 trillion dollars down to just under 14 trillion
dollars
in M3,
but base currency
is a component of the M3 that red part on the bottom is part of it,
and they've been pushing that up like crazy
Why? Because there's a credit collapse going on right now.
When you deduct the base money
from the credit based portion
of this part of M3,
so the portion of what we borrow into existence
what happens is that it shows this enormous collapse going on. This is M3 minus
base money
and there's a 1.7
trillion-dollar collapse of the currency supply, it's about 13 percent,
Now, there's no time in history that this has happened, this goes back to nineteen
sixty
except the beginning of the Great Depression,
that was the last time the currency supply contracted was,
the beginning of the Great Depression.
Usually there's a time lag between stuff like this happening
and the public feeling it
so the Federal Reserve
is borrowing currency into existence like crazy
and they're now doing direct purchases of bonds from... They don't even go through
that open market operations shell game,
that keeps you from seeing what's going on,
they're buying bonds directly from the Treasury, this is Quantitative Easing
they're calling it
and that means there's an emergency going on.
They're telling us that everything's fine,
that, you know
all of their emergency efforts cured everything, and the economy is OK
what the hell is this right here?
why in just the past couple of months this is part of the quantitative easing
why is the currency expanding?
from uh...
2 trillion
to 2.4?
If everything was fine,
the Federal Reserve would not be doing that!
They're scared shitless, so it's happening
they're doing anything they can to prevent this deflationary collapse
that I predicted in my book
uh... you know
I first started buying gold when it was 325 bucks
an ounce, actually
it was 315
uh...
326 for golden eagles
uh... that was October 2002,
by April 2003 I had discovered silver
and I was all in.
I can see, I was reading in 2001 and 2002
I was researching what was going on in the global economy every single day,
I was addicted to it.
And by October of 2002 I started making my commitment
and by April of 2003 I was all in. In 2004
I started speaking on it.
In 2005 I incorporated goldsilver.com and became a precious
metals dealer and start writing my book and that was published in 2008,
so I didn't just bet my portfolio on it, I bet my entire life on it.
I can see that there wasn't anything
in history as far as finances go that was as much of this sure bet, a sure
thing
as gold and silver accounting for the expansion of the fiat currency supply.
Gold and silver are denominated
in this fiat currency, these digital numbers that they type into the computers
and paper notes so they just run off the printing press and it's all borrowed
into existence.
Periodically throughout history for the past 2400 years they have
done this.
This is...
the lower line is the value of the gold held at the Treasury so
the uh...
the number of ounces of gold times the price.
The upper line
is the currency in circulation, base money.
And that this is from the year 1918 and here we have
the stock market crash in 29 and these are the bank runs of the
30 where people were asking for gold.
But they printed too many receipts for gold. If you can go back to before World
War One these two lines would converge.
They diverge there and we've created this lie where we were
creating all these receipts for gold, these claimchecks on gold that didn't
exist.
When people wanted it,
Roosevelt had to make private ownership of gold illegal because there was a run
on gold,
and in the United States americans could not own gold.
And then a year later they unpegged the dollar from gold
and the dollar's value
plummeted,
so that it took, it went from taking 20 dollars to purchase one
ounce of gold
uh...it then required 35 dollars to purchase, so they called it a change in the price
of gold, they can't change the price of gold when you're on a worldwide gold standard,
and gold has, you know, it's got a certain intrinsic value.
The dollar fell.
And so...
what's amazing
is accounted for the currency supply.
This is the free markets in the will of the public forcing the government hands
forcing them to change the rules. Here's the same chart again
uh... but now I've taken the dates out further, so you can see
uh... World War Two, the expansion of the currency supply then in 59
uh... Charles de Gaulle, the president of France
uh... says we want our gold, other countries started jumping on board and gold
started leaving the vaults.
Then I'm taking it out further because that one goes out to 1971
In 1971 we go off of gold but there's another line here,
a blue line.
how many here would say the credit cards are replacing cash in circulation?
Credit cards are replacing cash in circulation.
I believe they are and when you sign a credit card receipt and you paid
that merchant, the merchant's checking account does not know the difference between
credit card currency that you created
and cash that the Federal Reserve created.
It can't tell the difference and that currency that you created circulates
until somebody saves it up and pays down credit card debt.
And so uh...
I add that
to the currency supply.
Once Nixon took us off of gold, and gold became a separately traded
commodity/currency
uh... the will of the public and the free markets drove the price of gold up until
once again
the value of gold held at the Treasury
exceeded the currency supply and there was a year where we could have gone back
on the gold standard
and
it also covered outstanding revolving credit for an entire month.
So all it was doing is the same thing as it did in 1934
and in Weimar Germany and hundreds and hundreds of times
since the year 407 BC with the first grade inflation in Athens.
This is the same chart again
but it shows Ben Bernanke panicking over here and this is the increase of
base money.
that's that first chart that I showed you, not first chart,
but one where there was a red
area on the bottom,
so that's the increase in base money.
Well, there's the outstanding revolving credit piled on top of it,
uh... here's gold
and what this means
is that gold has to rise from here
to way up there to do the same accounting that it has already done
twice in the United States and hundreds and hundreds of times in
history.
This is a natural thing. It does this automatically. The will of the public and
the free market force this to happen. I'd believe
that is there's absolutely no chance in hell that this won't happen,
right now it takes about 15000 to 20000 dollar a ounce of gold
So, here is another way of looking at the same thing, and it's a great way of looking
whether gold is undervalued or overvalued.
If you take just the paper dollars, that base money
and you say there's a certain amount of paper dollars, how much gold do we have
as a percentage of those paper dollars to cover them?
And so gold is expensive
when we've got too much gold, more than uh... paper dollars,
and it's cheap
when we don't have enough, and it's very cheap
uh... when uh...
when it's way down here. Well,
this is where we are as far as just the paper dollars. Here's when you add outstanding
revolving credit.
This is what
a debt collapse or currency collapse looks like.
We borrow
uh... two units of currency into existence here
uh... and
uh... to do that
we promise to pay back, we're borrowing this currency into existence with the bond
the bond is over here, say you've got
uh... these two units of debt plus interest,
so you owe back
more than you're borrowing into existence but then each month
you're going to pay off
a small portion of that debt,
and so the next month we go on borrow more into existence
and we pay off, we keep on hang off that debt every month
and we always have to borrow more into existence than we're paying off, but notice
something.
You notice how the debt is now growing faster? It was only fifty percent higher
but now it's a double, it's a hundred percent.
It grows faster
than the currency supply.
There comes a day where this is unsustainable.
If the public gets scared and they stopped borrowing currency into
existence and they save up and pay down debt,
the whole thing goes into a deflationary collapse.
This is what I was predicting and this is what is happening right now.
Thank you.
uh... This is how much debt we owe compared to the size of our economy.
If you owe fifty cents and your economy is a dollar
you owe fifty percent of the size of the economy.
If you owe five hundred billion and your economy is one trillion you owe fifty
percent
the size of your economy.
It's the same either way so uh... this what this chart shows,
is how much debt the United States has,
the National Debt,
compared to the size of its economy,
and it goes back to 1792, which was when the original coinage act of
the United States was created,
and there was debt leftover
from the revolutionary war and, so that's this debt here at the very
beginning of the chart,
right there
and what you see is that it never exceeded the fifty percent level,
until World War Two,
this includes the Civil War,
World War One and the establishment of the Federal Reserve,
uh... the Great Depression.
You see that during the twenties we were growing the economy faster than the debt,
and so the debt compared to the size of the economy is a smaller and smaller
uh... portion
because we were having the roaring twenties, the economy was growing
and the debt wasn't growing as fast,
so on this chart the debt is shrinking through the twenties but then suddenly
in 1930 it goes up. Why?
It wasn't because we were borrowing a whole bunch of currency and going into
debt,
it's because the economy shrank
and our debt stayed the same,
so that was the last great deflation that got us into uh... a deeper debt
because we couldn't afford to pay the debt that we owed,
uh... the economy shrank
faster
then we do the deficit spending for World War Two and we can exceed this
level of fifty percent because now we have this fiat currency system,
where we could just borrow currency into existence
but when you do that
a bond, bonds range from like a month to thirty years out into the future that
you're going to pay them back,
that means we're borrowing prosperity out of the future. You remember how I said
you save up some of the currency supply and you can pay tax to pay the
principle plus interest.
So the prosperity that we're enjoying right now, this moment
is owed back
in the future.
We have to pay a principle plus interest for the privilege now of having currency
that we can use. Somebody is skimming off the top basically, this is the way the
banking system sort of skims off the top, is through inflation
there's people that get rich off of this without having
to do any work and
putting their value into the system, they get to skim
purchasing power out of the system through inflation.
But every dollar that we borrow into existence puts us in debt in the future,
so we are every year borrowing prosperity out of the future and we
spend it today.
The average roll over for all the bonds is about four-and-a-half years,
so the prosperity that we're enjoying right now
we owe back
uh... we've got to pay for four-and-a-half years from now.
And right now the taxes that you're paying
are paying for prosperity during the Bush administration,
We have already spent it, it's gone.
So then we started growing the economy faster than we were doing deficits
spending,
so our debt compared to the size of the economy goes down during the Korean War,
in Vietnam,
and then we have the end of the gold standard and then Reagan says:
"deficits don't matter"
we can just go ahead and spend as much as we want.
uh... The debt increases. Just before this era of the financial crisis,
there's a little
slope where it starts to go down, that's the Clinton era.
They said that we had surpluses, it was
uh... bullshit.
If you look.. I don't look at the government's accounting
of whether or not they say we have a surplus or deficit, what I look at
is the National Debt.
Did it go up? If it went up it meant we spent more than we had. If it went down
it means we had a surplus, we had excess income above what we're spending
and during the Clinton years there was never a year
where the actual national debt went down.
I don't know of the people in the United States, from the United States here,
remember when uh... Gore and Bush were running against each other
they're both telling us how they were going to spend all this currency that
was flowing in.
You know, they were each
trying to compete
on all the free crap they're going to give us in the future,
and uh...
you know, that's how
uh... actually that isn't how Bush won...
but that's another story. Anyway,
These statistics are from the congressional budget office. This is what
our government is going to tell us, is going to happen in the future,
and it's not pretty.
It's completely unsustainable, it is impossible,
it cannot happen, you can't have
debts that is ten times the size of your economy.
It's not possible. Everything comes to a screeching halt first,
and so something has to change.
Right now,
uh... I don't know if it got passed or not, but the government
I dont't keep up with the news, I consider it all short term noise,
it distracts you from what is really going on, so I'm not sure
did uh... they settle on some sort of budget and is the government gonna keep
on running?
Does anybody know this?
Yes, they did?
Did the republicans, who were trying to get this thing passed whose gonna pay down the
debt that they win?
There's some sort of compromise.
You see, it's deflationary.
It would cost a financial collapse to try and pay down this debt, you have to go into..
In order
for us to maintain the levels we've got and to maintain the prosperity
Obama has to be a...
we have to be twice as far in debt when he leaves office than when he came in.
Or the whole thing is starting to collapse.
uh... so,
more proof that we are going into a deflation first.
This is what a dead cat bounce looks like.
This is the stock market. The stock rises
uh... it peaks, takes a little dip,
a bunch of investors come in, thinking that they're scooping up deals and they
start buying and it rises again and then the crash continues because
when they started buying it hadn't reached fair value yet. It had just rollover
taken a little bounce in the market that's still uh...
looking for a fair value so there's the dead cat and it bounces.
There's the Nasdaq,
so that's uh...
uh... what
a dead cat bounce looks like.
The initial crash on the Nasdaq was 38 percent. The total crash was
78 percent.
This is the Dow
in the 1929 crash and the dead cat bounce,
uh... the initial portion of the crash was 48 percent,
and the total crash was 90 percent,
so in the first examples was 38 percent, 78 percent.
48 percent, 90 percent, so if the initial crash is larger
the rest of the crash is going to be larger.
We are going through a giant version of the 1929 crash or the
Nasdaq crash. We just had the biggest crash in history: the Dow
which is supposed to be the biggest, safest, securest. The 30 largest
companies in the United States
uh... just crashed
by 56 percent and we are in a dead cat bounce, meaning
that ultimately
the total crash should be greater than 90 percent from its high.
This is the best way of measuring
the value of a stock, and I'm sorry if I'm going fast and this isn't sinking in, I've got
lot of stuff here and I've got to cover it,
only got twenty minutes left,
I gotta show you that the world's stock markets and real estate bubbles
have to continue crashing because
all it is
is that market trying to seek fair value,
it's trying to seek equilibrium,
this is what the markets do,
it is their job.
The SP 500, these are PE ratios, how many here knows
know what a PE ratio is?
OK, how many do not?
It's OK, raise your hand and say that you don't. OK,
it's the price of a share of stock
divided by the earnings of the company.
So it's basically how much is this stock costing me, compared to how
much is the company making.
And one of the best ways, the
entire industry stock market, the industry, the financial industry
agrees that this is probably the best way
of measuring the true value of the stock, whether it's overpriced or underpriced
when you're buying it.
The S&P only goes back to the year 1950 but professor
Robert Shiller
of Yale University
uh... reconstructed the S&P and took the 500 largest companies in America
and took it
all the way back to the year 1880.
So you have
a hundred and
twenty years or two hundred and twenty one years
of data here.
Fair value
is when PE ratios are about 12, meaning you're paying
twelve times the earnings of the stock,
so if you buy a stock its going to... if nothing else changes and the
company continues making the same amount every year, it's gonna take you 12 years
to make your
uh... money back and be in profit.
Undervalued is anything under 10, overvalued is 15 to 18,
anything over 18 is a bubble,
and so here's the data going back to the year 1880
and what you see here
is that there is no time in history that we go from fair value to overvalued, once it
hits overvalued,
it does not stop, it bounces on the way down,
and visits undervalued, overvalued, undervalued, overvalued, undervalued,
overvalued, undervalued.
The greatest bubble in history,
the year 2000
PE is at almost 45,
absolutely insane investing in a stock
and having to wait 45 years to be in profit.
This was nuts and people were chasing stocks like crazy. This is the tech
boom and so on.
Well, it crashed down the fair value during the market crash of 2008
and it bounced back into a bubble,
where PE is about 23 or 24 right now.
The stock markets seek equilibrium. They seek fair value over the years. This is
their job, that is what they do.
There's a famous trader named Bernard Baruch
who said in the short term the stock market is a voting machine,
is like a stock machine, I mean, it's a slot machine or voting machine
it does
what the public thinks it should do.
The public chases after something, it goes into a bubble,
but in the long term it's a weighing machine,
it balances,
its scales balancing each other.
That's what the stock market is always trying to do: seek fair value.
It's only there for brief moments in history,
but the point is that every time we are in a bubble,
it visits severely undervalued and the greater the bubble, usually the greater
you overshoot
fair value.
uh... This is the second best way of measuring a stock's value:
the dividend yield. If you buy a stock for a buck
and that company pays you six cents every year into your brokerage account
you're getting a six-percent yield.
I have inverted this chart because
uh... the higher the yield the more undervalued the stock is, the lower the yield
more overvalued it is.
So I inverted it, so the bubbles are up
and undervalued is down,
uh... so fair value is
uh... four and a half to almost six
uh...
so there you see the same pattern as before,
but here's what's alarming.
It's that there is no time in the first 118 years of data
that we have been in a bubble this large.
This is absolute insanity and it can not last.
There are two ways that the market can seek equilibrium. One:
the market goes sideways for a decade while we have raging inflation
that will balance this out and then bring dividend yields and PEs back into line.
Two: it crashes,
the markets go down,
the currency supply is collapsing,
therefore this has to be a deflationary collapse, this can't be an
inflation in what they call an invisible crash.
uh... these are the world stock markets,
so there you have the US stock market, the England stock market, Germany
stock market,
this is Singapore and Japan.
Notice that
before the year 2000
Singapore and Japan used to trade in different direction than the United States.
The United States could be going up while their stock market was going down.
But before the year 2000
all of the markets of all the major
economies
trade in the same direction at the same time.
Here is Brazil
and here is Russia
and in about the year 2003
they started trading in the same direction and since the market crash of
2008 all markets, all world markets
go the same direction at the same time.
The S&P, the Dow they're way, way overvalued in a bubble,
we're having a deflationary collapse of the currency supply,
the markets have to go down,
when they do, the rest of the world's, where the United States goes so
goes the rest of the world.
These markets all
have to collapse.
Now, we have some real estate bubbles going on. The real estate bubble in the United States
uh... took
it basically burst in the year 2007-2008
and it's been falling
but I measure something called the mortgage rent ratio,
uh... fair value on a home is if you're paying about a uh...
uh... a dollar to a dollar five
for the mortgage, the monthly mortgage on a thirty-year mortgage
plus your carry cost like insurance and stuff,
for each dollar that you can rent the house for, if you were going to rent it.
We went into a bubble of a buck twenty five in 1989-1990,
fair value is about a buck five,
and then we had the recession and it went to ninety cents, on national average
in the year 1995
uh... real estate cash flow by ten percent, a single-family medium price home
in the United States
except you couldn't get a loan back then, credit was tight,
the economy was lousy,
then we went into this real estate bubble that was the greatest bubble in
world history,
where people are paying a buck eighty-five, a buck ninety, almost two bucks
for each dollar they could rent the house for.
uh... And
then that bubble popped,
and it came back down not to fair value but to a buck twenty five and bounced,
so it came back down to the height
of the previous bubble,
it bounced,
and we are right now at a buck twenty five, so valuations on real estate are
still
as high as they were in the bubble in 1989.
they have to come down
or rents have to go up.
This is all deflationary, which means that rents are not going to go up,
real estate is gonna come down.
All of this travels together, like I said.
Now, when the world stock markets crash,
does anybody know about the bubbles that are going on, the real estate bubbles
that are going on in the rest of the world?
How many here are watching the videos that we produce each week on Youtube
and so on?
OK, do you enjoy those videos?
Yes, good. Are they informative? Yes.
Do we try to sell you anything? No.
All we do is we educate.
So here is a video that we made in Las Vegas uh... this is our driver
very well-informed man, very educated.
uh... he was very informed on world finance, the stock markets, real estate,
he really knew what was going on
in Las Vegas and behind him there is a uh... big casino project I can't
remember the name of this one
uh... there's the...
Venetian in the background and there's a building going up in front of that.
this is the
the casino project that they were developing
uh... and that's another shot of it.
See that tall building behind it?
That's a hotel called the Fountainbleu.
If you go to the other side of the Fountainbleu
what you notice is that there's a bunch of windows that are boarded over, this
thing is skinned on the outside, it's not finished on the inside,
they've got a billion and a half into it, now looking for another three billion
dollars to finish this thing,
and this stuff is all over Las Vegas, it's not just in Las Vegas, it's all over the world.
This is in Moscow,
this is a development called Moscow's City Center,
there's the
project, you can't read it unless you read Russian,
uh... but all of these beautiful buildings here, there's nine buildings
one of them was completely in the framing stage, another one was uh... half
way completed
of the others there are two that are occupied and one that is one-third
occupied,
the rest are just skinned over,
and they're not completed on the inside.
The project is at a standstill,
uh... and
then in front of this project there's this giant hole in the ground and this
is where the centerpiece was supposed to be.
This was Russia's bragging rights,
this was going to be the tallest building in Europe,
Federation Tower, and it's a hole in the ground,
and it'll remain a hole in the ground,
that will never be finished.
Does anybody know what the Singapore flyer is? I've only got ten minutes and I'm
not gonna be able to finish this thing,
It's a big ferris wheel in Singapore, it's one of the tallest in the world if not
the tallest, I think it is the tallest,
and here I am looking at their real estate bubble
and if you noticed
there's cranes on top of all these buildings here,
uh... there's cranes everywhere. Look at all those buildings being built uh...
All bubbles burst, we are in a worldwide credit bubble,
when these markets rollover
the giant real estate bubbles
that were going up and then took a little breath when our
markets crashed
their bubbles kept on going after pausing, when our real estate bubble
uh... popped and started reverting back to fair value.
The markets are just trying to seek fair value, that's all they're doing.
But people and the world central banks go: "Oh, my God!"
every time there's a little
crash
"we gotta do something about it!"
It doesn't feel good to be in a recession so they try and pump everything up
but they don't realize that they're just making everything worse later.
Everything they do is gonna come back to haunt them as more
uh... inflation eventually
uh... or
this deflation I'm talking about is the expansion of credit
contracting.
Here's another thing that is going on
that is going to mean that this decade is different than anything else that you
have known.
uh... People don't realize that every 30 to 40 years
the world has an entirely new monetary system.
It changes every 30 to 40 years.
In 1873 Germany started the Classical Gold Standard
uh... and by 1900
pretty much every developed country on the planet was on the standard
where every note in circulation that was put out by their treasury was backed by
an equivalent amount of gold,
so it was 100 percent backing,
uh... then World War One happened,
all the combatants in Europe went off of the Classical Gold Standard
and started printing,
and between the wars
we had something called the gold exchange standard where it was a mixture
of debt
and uh... gold backing the currency
uh... then that was a very poorly constructed man-made system,
and anything man-made cannot last, so
basically they were uh...
the Federal Reserve, under the Federal Reserve Act there was a 40 percent
reserve ratio
and they were allowed to put
uh... a fifty dollar bill into circulation for each twenty dollars
worth of gold that they had backing the fifty dollars,
so they're putting claimchecks on gold in excess of the amount of gold that
they actually had.
Ever since the Federal Reserve was born we have been living under a lie.
And if people say that we've got free markets in the United States, they're
wrong. You cannot have free markets without free market money.
Your currency is fifty percent of every transaction,
all of the transactions are the free market.
If there's a small group of men deciding what currency is
and how much the cost of currency is going to be, the interest rates, that
isn't a free market.
We do not have free markets, we haven't had since the year 1913,
then we have uh... something called the Bretton Woods system, the Classical Gold
Standard broke down,
the Bretton Woods system was from 1944
where uh... all of the world's
uh... currencies would be backed by the US dollar at 35 dollars an
ounce and foreign central banks only
could exchange those dollars for gold at the New York Fed,
for 35 dollars per ounce,
so all the world's currencies were pegged to gold but through
the US dollar.
uh... All of these countries started asking for dollars and gold flowed
out of the vaults and Nixon had to take us off the gold standard in 1971,
so you've got 30 to 40 years, 30 years, 28 years, 39 years
plus what's next?
In this decade there's going to be an emergency meeting of the G7, of the
G20 countries,
and there going to be trying to hash out a new world monetary system and they're
already working on it,
they're trying to figure out
what they're going to do when the dollar collapses.
uh...
Here's the differences between
the seventies bull market and today and this is the reason I say that you really
can't compare them, their isn't any comparison,
and remember
in eight years
gold went up 24 times its price silver went up 36, these are enormous
winnings in such a short period of time.
uh... In the seventies it was basically North America and Western Europe,
that drove the price of the precious metals,
the exchanges were the London Metals Exchange,
and the Commodities Exchanges in the United States,
that's where the price of gold and silver was set.
All of the USSR
they could not participate, there were no exchanges there, there's no market
for gold and silver
and even if you could buy some, it was on the black market, so your investment did
not affect the worldwide price. Those people were excluded in participating
in this bull market and driving the price of gold forward.
China under Mao,
same thing,
first of all everybody was making a subsistence living, very few people even
had electricity
let alone being able to go and invest in gold.
India, Mexico, South America, these countries were all very poor at that time,
the world's richest man is Carlos Slim,
and uh... he lives in Mexico City,
uh... you have massive investors in all of these countries now and in Shanghai
investing is a sport,
people will sit around in a room like this and watch tickers go by and make their bets,
uh... the rest of the world, Africa, I mean, pretty much
the whole rest of the world was excluded in that bull market and gold went up 24 times
and silver 36.
So what...and back then too,
news traveled very slowly,
you turned on that old vaccum tube TV set waiting 60 seconds for it
warm up and then Walter Cronkite would come on give you the price of gold
and or
you open the newspaper the next day
and uh... get your news 24 hours after it happened,
and then you pick up the telephone and call your broker and if you were lucky he can
get an order onto the floor of the exchange for you the same day, but
possibly the next day.
So, news and reaction time was very slow.
uh... Also the development of the investor mindset.
before the Arisa Act and before Nixon took us off of gold, before
1971 when Nixon took us off of gold
if you went to work between your late teens or mid twenties,
depending on whether you went to college or not, you could expect
that if you saved ten percent of your income every month
then when we got into your sixties you can retire and live off the interest in your
savings account.
Can you do that today? Nobody can live off the interest of
its savings account, unless he got twenty million bucks sitting there,
fifty million bucks, that's the only way you're going to get by.
and you wouldn't leave in the savings account because you're losing to
inflation,
your principle is getting whittled away
because of inflation.
uh...
So,
my parents' generation
were savers
not speculators and investors.
uh... What's different today?
Today, the entire world can participate.
It's roughly ten times the populations that can participate in
this bull market.
News travels at the speed of light over a tremendous variety of media outlets.
You can get the news
on your cell phone,
on your laptop,
uh...
And
an investor crossing the Sahara,
we're out filming in front of the pyramids and there's this Bedouin guy
sitting on the ground and he's got some sticks and he's starting a fire to make
some tea,
and he's on his cell phone.
this guy crossing the desert can take his Apple Iphone, check the price of gold and
place a trade right there.
Is this a different world or not?
Yes?
OK?
uh...
Then you have the development of the investor mindset. Along comes the
tech bubble,
and Nasdaq and everybody got themselves a trading platform and became a day trader,
uh... and then they got punished, the market crashed.
Then you've got a real estate bubble that happens and everybody starts chasing
real estate,
and then they get foreclosed on, on real estate,
the bubble popped at least here in the US and England,
the bubbles are still going on all down the coast of China and Australia and
New Zealand, those bubbles are massive and they're about to burst.
uh... And so they got punished,
nobody has been punished on precious metals for 30 years.
Our memories just aren't that long so the next
great bubble is absolutely destined to be precious metals.
Nobody has been burned out on it, you know, nobody that's chasing
after an investment
to either secure their retirement or to buy them that new Lamborghini.
uh...
And so
the development of the investor mindset, this is really critical to try and
figure out.
How many units of currency around the planet are gonna come chasing
the same tiny little pile of gold and a pile of silver that's about one fifth
the size that was in 1980?
uh... It's at least ten times the eligible populations,
each one of them has at least ten times the currency,
and, you know, as I think about this it's probably greater than these figures
I was saying that there was somewhere between
ten and one hundred times more investors but think about this:
In all of the USSR and China, more that half the world's population, there was
not one
investor,
not one
and today it's the sport in Shanghai.
So i think this is probably over a hundred, it might be a thousand I don't
know.
So you can take these figures and possibly add a zero to them and
that's the potential amount of units of currency that can come chasing the same...
I mean we had 2 billion ounces of gold back then,
uh... on the markets, and today there's 2.2, so it's 10 percent more gold,
but silver there's only about 600 million ounces of silver
on the exhanges, 500 million ounces, 600 million ounces.
uh... Here's the 747,
and here's a little man with very strong legs that just dropped out of the sky,
this is for scale,
and if you took all of the silver ever mined in history
it would fit into a cube about that size on the scale and all the gold ever mined
in history
would be a cube about that size, however, gold has two basic functions:
money and jewelry,
and that's a pretty much it. Only 5 percent of gold production gets used in
industry.
Silver is the second most useful commodity known to man, oil is the first
with about 30.000 uses,
silver is second with about 10.000 uses but we use it in microscopic
amounts.
When you type on the keyboard you're typing on silver, when you look at a DVD
or a CD you're looking at silver, when you look in the mirror, you're looking at silver.
When you look through a thermal pane window, you're looking through silver.
It's everywhere, it's a biocide, it's going into superconductors,
it's going into RFID chips,
but you know what? None of that matters.
What's going to drive the price of silver is investment demand,
it's the public rushing into this and when gold gets too expensive for the
public, they switch their preference to silver, this is what happened back in
in late 1979 and early 1980,
silver lagged gold and then uh... silver just exploded because gold
got too expensive.
But silver has already been outperforming gold,
and there will come a day when there's commentators on MSNBC, Fox News, CNN
they're going to be showing with...
Whenever you're in a bubble, whatever is in a bubble and the public is
chasing, they want to hear about, and the news accommodates,
they give you whatever you want to hear about, they don't tell you what they
should be telling you,
they tell you what you want to hear.
And there's going to be people on air like me
showing charts and saying: "Of course, silver has been outperforming gold,
there's less of it".
"There's five times more gold for investors to buy than there is silver"
that's the reason is been outperforming gold so, is it possible that silver could
actually
exceed the price of gold?
Sure, it is. All you have to do is look at these insane bubbles that have
happened in the past like the tulip mania of 1637.
I don't know if it will, I don't actually expect it to,
but it definitely could because it's more rare and the markets do
something called the price discovery mechanism where they try to find out,
uh... they set the price based upon the equilibrium that's determined by the
rarity of the two items.
uh... That's been going on for centuries,
the price discovery mechanism is not broken, it still works,
uh... and I expect it to work, so we use up the silver, so the result is, this is what
they look like today.
Now, cubes are deceiving that so the gold cube's actually about four, five
times larger than the silver cube.
If you take a cubic foot, that's a foot by a foot by a foot.
And if you make it 2 feet by 2 feet by 2 feet, it hasn't doubled, it's now
8 cubic feet.
So,
uh... as you double the measurements on a cube, it goes up in volume eight times,
so there's actually about four, five times more gold than there is silver on
the exchanges that investors can buy,
so when people come flooding into this, I do expect this... Right now silver's
value is 1/35 of gold.
I expect it to outperform gold by at least a factor of 3.5,
I'm expecting a 10/1 ratio at an absolute minimum.
uh... Silver being 1/5 of gold's price is perfectly logical,
if it's going up slow and it hits gold's price then all the industry will
just switched to gold because that's the only other metal they can use in most of
these instances. They can use platinum, rhodium, paladium and gold but they only mine
5 million ounces each per year of platinum, rhodium and paladium.
They use 900 million ounces of silver
so there's not enough of those other metals, the only alternative to silver in
most of these applications, like keyboards in electronics, is gold.
uh... So if it was going up slowly and it did hit the price of gold, gold can
stop it in its tracks, if there's a rush gold can go past, however
silver is much cheaper to mine than gold and it wouldn't stay there.
uh... We are always trying to figure this stuff out at our company, trying
to measure it and see when to buy, when to sell.
Now...
Can you roll that... This is a
clip from one of our Youtube videos, and this is the insiders video
that uh... our customers at Goldsilver.com, they got to see this two months
ago and then we just released it,
and so this is the type of information that you get,
and when we're nearing a top, our customers are going to be informed on
what we are doing,
so, can you roll that video, please?
And what you see is that when you're coming off the bubble, when it's overvalued
it has never in 130 years,
just gone back to fair value and gone back up into a bubble, it always
continues on its uh... way down in a bear market until it goes to severely
undervalued and then a new bull market starts again and it start rising.
Well, we are in a bubble, it has to seek equilibrium, it's probably gonna blow right past it
and go to severely undervalued,
just like it has
every time for the past 130 years.
So real estate and stocks are doing this at the same time,
while we're in a bull market for precious metals and there is a problem
with currencies.
So we are going to be measuring all these things very carefully, and then
using some confirming indicators that should flash
to us when to get ready to sell and we're going to be letting you know,
so thanks a lot, I hope you have some great holidays, I'll see you later.
I was standing in front of a green screen just sort of drawing this charts out of memory and our
animator Adam had to sort of flow the charts in front of me and move them around to
match them up with my finger,
but uh...
uh... that is what you get as a customer,
it's on the Youtube channel "Why Gold And Silver?" so if you do a search
for "sell silver Mike Maloney",
because it's when to sell your gold and silver so "sell silver Mike Maloney"
you'll get that video in its entirety, and there are dozens of videos on
"WhyGoldAndSilver"
"GoldMikeMaloney"
and "WealthCycles".
So those are the 3 Youtube
channels
that you can go to,
and each one of them has a few dozen videos on it.
uh...
This is the gold panic in 1948 in Shanghai,
if you wait
until the last minute,
I'm not very good at swearing, Robert Kiyosaki is great at it
swear much on stage,
but if you wait until the last minute, you are shit out of luck,
up shit creek, without a paddle in a barbed wire canoe, fucked!
Thank you! Unlike the second to the last frame here,
here's one thing people do not realize.
It does not take
Ben Bernanke to print the dollar into oblivion for gold
to go to 10.000 dollars an ounce, 50.000 dollars an ounce,
100.000 dollars an ounce.
All it takes are
a few very wealthy investors to try to get theirs
before the masses wake up and the herd comes charging in,
but this is the masses, this is the people waking up
out of their beer-and-football induced comas,
coming in at the last second, well, this is sort of a different situation,
because their currencies were going to to go to zero because of war,
but basically,
you've to get in ahead of the trend,
and then get out when everybody else is panicking like that.
Like I said, this is the greatest wealth transfer in history,
but you have no idea of the scale until you think.
If we do have a change in our monetary system
and if we have to go back to some sort of asset backed currency
that means that the people that are holding non asset backed currencies,
which is all the currencies on the planet today,
their wealth is transferred to the holders of precious metals.
This is the greatest wealth transfer in history, therefore it is the greatest
opportunity in history.
By the way, is Stephanie Wing here?
Stephanie stand up for just a second. Stephanie's grandfather's sister
was the Secretary during the roaring twenties and through
the stock market crash and then in the depths of the Great Depression,
she started buying stocks when everybody else
was selling and when stocks were like the bad, and the poisoned investment
that you did not want to get involved in.
Stephanie's grandfather's sister started buying the stocks,
she is an example of wealth cycles,
she rode this stocks up and I don't know exactly when she did it, but
she must have sort of innate sense that the stocks were overvalued, and
she sold the stocks and bought real estate. If you go to the French Embassy in Washington DC
that was her hotel,
thank you, Stephanie.
So, thank you very much, we'll see out in the lobby where you can get
Free 100 trillion bucks from us, thanks!
So, I just came off stage of the event, and
you know,
it's great, the event went
great, all the information was very well received,
it was a great audience,
but, you know?
Even though it's so rewarding
to talk to the people live and hear their reaction
still reaching a few hundred
or a few thousand people at a time.
It's not good enough any more, we're really in an emergency
and we need to start reaching millions of people at a time,
and that's why I'm trying to
go more video oriented,
than travelling around the planet like I have been, country by country,
telling
400 to 4.000 people at a time.
So, you know, hopefully
I'm hoping that I don't have to make any more
personal appearances,
that I can just
produce videos, write books and get the information out there
as fast as possible and reach
millions instead of thousands.
Well, we've been working on a documentary and we have been
around the world, Taiwan, Singapore, Australia, New Zealand
Colombia, Peru,
Ecuador,
London, Saint Petersburg (Russia), Moscow
Germany, Rome,
Paris,
Athens (Greece),
and we shot in front of the pyramids in Egypt, it's been a spectacular trip,
trying to put together
this documentary and I think
that's going to be really enjoyable for people and highly educational.
No chance in hell that it's gonna happen,
as far as a one world currency that everybody is going to use.
But what you see here is that in the XAU
since the early eighties,
on the average,
gold and silver outperformed the stocks, on the average.
...you've gotta get started, that'why... the free markets always overwhelm manipulations,
it's a doomed plan,
eventually it will fail,
but, they've got to position so accordingly, they've got to be ready, you can't wait...
because you can see 200, 300 point gap days for gold.
Basically,you know, one thing you find out is that
all fiat currencies eventually fall to their intrinsic value,
because they ruin it by puttink ink on it. It's the amount of energy you can extract from it,
the amount of the BTUs,
from combustion, when you burn it, and you saw that during the Weimar hyperinflation,
people used the currency as fuel to heat the house. Currencies have been backed by oil, by gold and silver
by land, but as soon as you remove some things that you can't,
some things that put financial constraint, where you just can't print as much currency as you want,
the currency is pretty much doomed.
It's beyond astonishing... If it wasn't for the horrific effects,
it would be more ludicrous, it would be actually comical, that we can stop and have some fun with,
and it's actually horrific, if you look back in history in the last 3000 years,
every episode of this kind of silly crap ended
very very badly...