Why Gold & Silver? – Mike Maloney – Silver & Gold Investing


when the gold price starts to go bonkers and everyone’s going to want to know what the story is well it’s pretty simple we’re creating too many dollars why is it wasn’t cost so much I’ll tell your wife so much just bring us some more more more time all in the one characteristic about a country that the basis its currency and goes to a paper currency currency always self-destruction Thompson’s gold and silver do an accounting periodically throughout history it’s really exciting to see this they automatically revalue themselves when the public wakes up and they catch up all the currency that’s been produced to me I’ve been saying this for a number of years now silver is the biggest opportunity I have ever seen in 1980 took a thousand ounces of silver by a single family median price home that day will come again but probably going to be less than five hundred ounces you want to buy a single-family median price of home outright no payments no downpayment 100% cash flow foot $8,000 aside today you’re going to be able to do it it’s sort of just history repeating its soul filled all right so hold cash right here that’s just to didn’t want performance what is track sagging that for me cash is trash does he understand that one your whole paradigm will shift so what’s the good news we’re in New Zealand now this is the final stop on a rich dead tour I’ve been on a tour with Robert Kiyosaki doing these rich dad events in Kuala Lumpur Singapore Australia and Museum New Zealand is this opportunity isn’t going to last for long there are these brief moments throughout history that go by you know as far as historic time they go by in the blink of an eye where the safest place to be the place where people run to to protect their financial well-being during economic crisis gold and silver they have been the safe haven for your finances for 5000 years and there’s these brief moments in history where they simultaneously become the asset class that has the single greatest potential gains in absolute purchasing power and we’re in one of those right now with there every time they create new currency and they’re doing massive currency creation now it creates a bubble somewhere I believe the next great bubble is destined to be commodities in the precious metals and what’s amazing is I left with a bunch of these sort of ugly pieces of paper with pictures of dead guys on them that are from the US and then you arrive in Kuala Lumpur and in Malaysia and you trade them for some prettier pictures pieces of paper with pictures of people on them I don’t know if they’re living or dead or what but then you leave there and go to Singapore and you trade them for pretty pieces of paper that have now they’ve got like little windows you can look through in them a little clear spot watermarks all this kind of stuff and then you get to Australia and you trade them for even they’ve got more vibrant colors on their currency which I sort of like I think the American currency is pretty drab and way outdated it’s we’re just catching up to the rest of the world when it comes to the security that’s in the notes to make them less counterfeit able but and then come to New Zealand and trade them again for different pieces of paper and what cracks me up is government’s are sitting there cranking out this stuff out of paying for that’s just laughs it all the way to bank and we actually work for this stuff I mean we we quickly work our asses off our whole lives for this stuff that they’re just cranking out but you know it at a tremendous rate here and it transfers are our true wealth is measured in our time and you know it’s our labor and and the time that we have in our lives to create things and they’re able to get some of that time and labor at no expense by just cranking out this stuff it’s amazing this will sound a little bit weird to some of the viewers but I try to differentiate between currency and money currency has to be a medium of exchange we’ve got to be able to buy and sell things with it a unit of account it’s got to be portable divisible which means you can make change durable and then something called fungible fungible means that each unit is interchangeable the dollar in my pocket buys the same amount as a dollar in your pocket no difference to them money has to have all of those attributes plus it has to be a store of value over long periods of time if this is sunk on a boat on a ship now or I was a hot 500 years ago you dig it up that’s tremendous value there will be numismatic value plus the real value of gold this sinks you put it to the bottom and who cares you know this losses probably five to ten percent a year in value it’s amazing it was a long road and series of very small transitions to get here but basically you know we used to use gold and silver and then they come out with representations for gold and silver all the currency in the United States and in most countries was redeemable for gold or silver at one time in the United States our currency used to say there have been deposited with the Treasury of the United States $100 in gold coin payable to the bearer upon demand you go into any bank slap down your currency on the counter and ask for your money your gold and silver and they would give it to you then you know we were on something called the classical gold standard the that started in about 1873 in Germany and by 1900 almost every country on the planet was on this gold standard where you had a certain amount of gold in the Treasury and you created a certain amount of notes that equaled the amount of gold in the Treasury so it was a one-to-one ratio is fully backed Fiat means a order by an authority that has the power to enforce that order or a decree and so the government governments can enforce the value of their currency or make sure that their currency is the currency that’s used by making taxes only payable in that currency so fiat currencies are given value by government decree there’s no intrinsic value to them in fact you know costs about six cents to create a dollar bill or a hundred dollar bill but basically there’s maybe three cents worth of paper and ink and then some labor and transport and all that stuff except they’ve ruined the piece of paper you can’t write a list on it now because they printed it with ink so basically you know one thing you find out is all fiat currencies eventually fall to their intrinsic value which because they’ve ruined it by putting ink on it is the amount of energy you can extract from it the amount of BTUs from combustion when you burn it and you saw that during the Weimar hyperinflation people used the currency as fuel to heat their house currencies have been backed by oil by gold and silver by land what as soon as you remove something that you can’t something that puts financial constraint on where you can’t just print as much of it as you want the currency is pretty much doomed it’s beyond astonishing and if it was if it wasn’t for the horrific effects it would be more ludicrous it would be actually comical that we could stab and it had some fun with it but the it is actually horrific when you look back in history for the last 3,000 years every episode of this kind of silly crap ended very very badly you can see them repeating the same stupid mistakes today those mistakes you go through history and you see something that’s happened a hundred times in the past and then you see them doing the same thing to our currency supply today the same you know in the US the deficit spending is out of control and the currency creation if you well we’ll put up a chart of base money in the United States so it’s chart of the cash in circulation currency in circulation plus the deposits that the commercial banks have at the Federal Reserve and it took 200 years to go from zero dollars in existence paper dollars to eight hundred and twenty five billion paper dollars that exists and then it took just a few months to go from that to to about 1.75 trillion and that was with the bear stearns Fannie Mae Freddie Mac bailouts and then we had in March of 2008 and I’m sorry March of 2009 they announced another 1.2 trillion dollars worth of and part of that is actually purchasing bonds directly from the Treasury now when they do that that’s just printing currency that’s like just running the printing press but so the total comes to about three trillion paper dollars that will exist very shortly here that’s an expanding from from 825 billion to 3 trillion as an expansion of almost four times and it’s just ridiculous so there will be more this printed than ever before which means a dollar keeps coming down and other things keep going up and that’s really what’s going to happen it’s predictable and eventually this will go to its true worth zero so all of you savers out there and people trying to save this trash you’re going to lose big time they just type them into a computer the dollars they don’t have to print them anymore it used to be that you had to mint coin edge to expand the currency supply then you had to print paper to expand the currency supply but now all you do is you add zeros to it it’s just and boom you know it’s ten times they don’t even have to print this trash in it right it’s electronic that is how fast it’s going to hit people I can as a commemorative Congress I cannot find out more information about what the CIA is doing than what the FOMC is doing the central bank what they’re doing on monetary policy that’s very very secretive them the Federal Reserve has been given been given the power and the authority to create money out of thin air the way it works on the Federal Reserve which is neither federal nor has reserves it’s a private corporation and you can see this by going to their website and go to the frequently asked questions the first question is is the Federal Reserve private and they make their answer very obscure if you read between the lines it basically says well no but maybe yes but sort of no but really yes but definitely not that’s what it says then second question does the Federal Reserve have stockholders answer yes and by law they are paid a 6% dividend and it couldn’t be more clear so in the answer in the answer the second question why is the answer to the first there is no federal agency that has stockholders if it’s got stockholders is private it’s that simple and but the way they create currency the Treasury creates a pretty piece of paper with some ink on it called a bond and that’s basically an IOU they’re going to borrow something from somebody and it says IOU whatever your whatever I’m borrowing plus interest over 30 years at such-and-such percentage the Federal Reserve then opens up their big old checkbook that has a zero balance in it they’re broke there’s nothing there it’s zero point zero zero is the balance and they write a check for that hundred dollars or in the case of today trillions you know but they write that check and hand that to the Treasury and when they give that to the Treasury that currency springs into existence the Treasury then deposits that into the various branches of the government and the government does throws a few Wars does some deficit spending put what we call pork barrel spending in the United States on things like a bridge to nowhere and stuff like that and then it eventually ends up in government employees hands in the contractors hands and so on and gets deposited into private banks and then comes the miracle of fractional reserve banking say for every ten dollars that you deposit in your checking account each country will have its own reserve ratios but in the United States for years we had a ten percent reserve ratio on checking accounts the deposited into a checking account the bank is allowed to loan out if you deposit ten they’re allowed to loan out nine and that gets loaned usually to somebody that’s buying something they’re buying a house they’re going to sign a mortgage that’s how they’re borrowing the money they’re signing this mortgage they take that nine dollars they buy the house and that’s going to get deposited into the checking account of the seller of the house and then since that’s in a checking account under a ten percent reserve ratio they get to loan out ninety percent of that which gets redeposited ninety percent of that which gets redeposited and so on and for every ten dollars it creates a hundred dollars of brand-new currency through fractional reserve banking and that’s actually where most of the currency supply comes from the fractional reserve think in the old days anybody wanted to borrow any money you had to go to the bank and borrow it from the people who were saving money yeah nobody does that anymore people aren’t saving much to start with and the money you borrow from a bank does not come from the savers it comes from the bank as you say creating it on the spot when you sign your name to the loan document it’s created on the spot one of the things I’ve been dragging about is the reserves in the bank’s reserves in the banks have not increased a dime in ten years it’s the same 41 billion dollars there’s 41 billion dollars of reserves in the banks against how many trillions just 7% of our money supply has a 10% reserve so that means 0.7% of cash in existence to cover the other what is that ninety seven ninety nine point three percent it’s a sign of the money supplies so you have a fractional reserve there’s no fractional reserve fraction nothing there’s nothing one set on a million dollars is not much of a fractional reserve right golly so getting back to this expansion of the how the money supply is created most of the currency about ten percent or so is base money and then which is that hocus pocus voodoo scam where the Treasury creates an IOU and the Federal Reserve or the central bank of whichever country so depending on the country will be the Ministry of Finance and then their central bank which may be labeled Reserve Bank or something like that and really when that central bank writes a check a check is really an IOU – right it’s an IOU cash and you can take it to the bank and redeem that check for cash so they swap IOUs and currency springs into existence the thing is though after that currency springs into existence and then it gets magnified by fractional reserve banking we work our asses off for this stuff and save up some of it so that we pay tax to the Treasury so they can pay back the Federal Reserve or the central bank of whichever country it is the principal plus interest to a private corporation that has it’s not federal and it has no reserves and yeah it has stockholders it’s like it’s like the biggest scam that has ever been perpetrated it it’s amazing in the United States that we’ve gone along with this for close to a hundred years the facts are there yeah every fact that there is supports the argument there is a conspiracy to steal all the money from all of us and give it to the banks the Federal Reserve makes credit available but in a way it’s it’s fraudulent and it’s theft because it does have value you know if you go to the bank and they give you a million dollars if we all take it but it becomes valuable only by diluting the value of somebody else who’s holding money if there are those who are saving money they’re being robbed the majority is highly leveraged out on debt ours if they win by us going right into a hyperinflation the mass stupidity is winning at the expense of the banking system I’ve never seen the big boys lose in all of monetary history that’s right so a short-term deflation would transfer all the prior everybody’s property to the banks through the bank and then you go into a big inflation and the again the little guys lose out and the bank’s win well you know there are people think that that is actually the conspiracy that’s operating making the whole system know that that is the point of the whole thing and it’s hard to argue against it I have never seen a projected deficit come out on target they always go past whatever their projections are so if they’re projecting a 1.75 trillion dollar deficit it’s going to be 2 or 2.25 something like that when that when all is said and done and then after this 2009 I mean the deficit projections if you look at a deficit chart with a zero line you know balanced budget this deficit is just like dropping off the bottom of the chart and then it’s supposed to get smaller in the in 2010-11 12 we’re supposed to have smaller and smaller deficits but there is this enormous wave of mortgage resets where we are in uncharted waters we are and I think it’s Jim Provost and the perfect storm I think what’s interesting about and from my perspective is that we’re just starting to see you know the sea starting to get rough the ostlers nowhere near what I believe is coming a few years out which is like the huge tsunami that’s going to really really Rock the markets these are some huge waves in 2010 and 2011 of mortgage resets for the adjustable rate more the arms the option arms and so on yeah this second wave and it’s as much as as caused the financial crisis in the first place this time though they’re probably not going to allow these people to go into foreclosure what they’re going to do is bail them out which means the deficit spending is just going to get worse in 2010 and 11 they can’t do a thing about this it’s too late it doesn’t matter what matters is how smart you are now if you think these guys are going to save you our family I think you’re in for a sad rude awakening I mean it’s one thing this is a matter of the federal budget is in deficit but every year there’s supplemental appropriations go far beyond that so basically we’re running six hundred billion dollars a year in excess in debt every year just a funny excess a claim that the budget deficit is two hundred and something or three hundred and eighteen billion according to the but all you have to do though to see what the real deficit is is what did we oh last year and how much do we owe this year that’s right it’s about six hundred mil I think it’s seven hundred and fifty billion Oh someone’s wrong I’m gonna laugh at you makes your head spin it’s beyond you know just make your head explode that this can’t be right why are we the only guys I seem to understand this and they’re borrowing money they’re going into the end game now because the money they’re borrowing is starting to go exponential it’s doubling at a quicker and quicker and quicker rate and there comes an end game where entry you’re borrowing so much money each year to pay the interest on the borrowed money that’s right there you have to go into hyperinflation yes it when it that the exponential curve thing is one things always bothered me that’s a problem exponential curves they lose sooner or later go straight up to infinity they start off nice and easy yeah I’ll probably get to do it basically only Oh a penny more this year after a while as this time goes on that’s curve gets steeper and steeper you’ve got the bar more and more money until suddenly you’re into hyperinflation because there’s no way out if you don’t it’s a hyper inflate the money supply thing falls apart right what are you gonna do well throughout history whenever societies create a whole bunch of units of currency you know they can they start off with a certain amount of money in their society gold and silver and they come out with representative representations of gold and silver like paper notes or debased coinage we’ve you’re mixing it with copper and they increase the currency supply and gold and silver sort of lays dormant it lays in wait until the public realizes they start to sense the inflation of prices that are caused by the inflation of the currency supply true inflation is the inflation of the currency supply rising prices of the symptom of the monetary inflation and then they rush back toward gold and silver to protect their purchasing power and in doing so they bid the price up until it accounts for the currency supply it’s an amazing process and I show this in my book rich dad’s advisers guide to investing in gold and silver there’s a couple of charts in there with the Federal Reserve we have hard data and I’ve got some data from the Weimar hyperinflation where gold went from 100 marks an ounce to 87 trillion marks an ounce but what you see with the Federal Reserve data is that the price of gold the will of the public and the free markets do this over and over and over again throughout history they bid the price of gold and silver silver up so with the price of gold the gold at the US Treasury rose in 1934 till its value equalled the value of all the paper dollars in existence that promise to pay gold in 1980 it did the same thing never in the history of the world has this ever happened in 1971 the US and Nixon convinced the entire world to replace gold and silver with paper money this stuff cash is trash we had to abandon Bretton Woods because the u.s. vaults were basically getting cleaned out I had directed secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the United States because the Bretton Woods system had put the whole world on a dollar standard all countries on the planet were backing their currency with dollars the dollar was then backed by gold at $35 an ounce make making meaning that all currencies were pegged to gold through the dollar and they didn’t fluctuate they didn’t they weren’t floating on the foreign currency exchange all currencies remained pegged to one another through the dollar to gold when we unpaired from gold in 1971 when Nixon closed the gold window all currencies became free-floating or I call them free-falling against gold they don’t actually float the dollar used to be worth one twentieth of an ounce of gold today it’s one one thousandth of an ounce and it’s on its way toward less than 110 thousand pretty soon once he unpacked gold rose and it went from 35 to 200 in 74 back down to 100 by late 76 and then up to 850 by 1980 in doing so in one of the other graphs in my book I show that it covered the entire currency supply of the United the base money it’s called the paper dollars that exists at about 400 or 500 dollars an ounce the value of all the gold at the Treasury was equivalent all the gold all the paper dollars that existed so we could have there was a year where we could have gone back on the gold standard then at about six or six hundred and fifty dollars an ounce it also covered all outstanding revolving credit or unpaid credit card balances people don’t most people don’t know that when you make a charge and you go to a restaurant and eat or you go to the grocery store you buy something on your credit card when you sign that credit card you’re expanding the currency supply of the planet the bank doesn’t loan you anything they create a book entry and you have just created the currency that you allowed you you created the currency and you spin it but you allow the bank to charge you interest on it as though it was theirs all they did was make a book entry for you it’s a that’s a pretty good scam too the important thing here is that when you’re eating at a restaurant or shopping at a grocery store or buying clothes or whatever when you pay with a credit card those dollars that you created go into a checking account exactly the same as if you had paid with paper dollars and they circulate until somebody saves them up and pays down credit card debt so in my book I argue that that you have to include outstanding revolving credit as part of base money for this particular measurement that I’m doing which is how gold and continue to how it revalued itself the will of the public and the free markets revalue gold to account for the currency supply and again in 1980 there was about three months where it covered all outstanding revolving credit and base money both and there was a year where we could have gone back on the gold standard well at the end of my book I have the same graph and I showed the expansion of the currency supply that has happened since now this process or something very close to it has been going on since the year 407 BC with the first grade inflation in Athens it happened several times in Rome there were a couple of hyperinflations during the French Revolution but it happens over and over and over again on this planet and it’s it’s it’s not like clockwork but it’s highly reliable it’s when a government abuses its currency system gold will do this and at the end of the book I show it would take seventy three hundred dollars now it’s for history repeat and for it to do the same thing that it is done hundreds and hundreds of times throughout history however the currency supply base money is just exploding outstanding revolving credit top two trillion dollars for the first time this year and so for history to repeat today and the for gold to cover that portion of the currency supply that it covered in nineteen eighty 1934 1923 in the Weimar Germany and and like I said hundreds of times throughout history it now requires about a fifteen thousand dollar per ounce price if the u.s. stops all the ridiculous deficit spending and currency creation that they’re doing if they stop that today and they’re not going to is there ever any example in history of a government being able to print or borrow its way to prosperity only temporarily and I would say that we’re in that stage right now we’re temporarily very wealthy because they’re still just trust in the dollar and I would say thirty years since it’s just pure fiat money since 71 30-some years now that we have on short-run benefited by this but long-term no I don’t think there’s an example the longer goes and the more pervasive it is the more likely it is you’re going to end up with runaway inflation you know one of the things I say is you know all frauds typically end rather suddenly and rather swiftly and this is why I think in the past we’ve seen such parabolic curves upwards in the gold price at times or even just quick very quick revaluations at times because you know in all currencies because their currencies when they when they start to die people lose confidence in the odd they’re people aren’t going to gold and silver in masses stereo or you know or uh you know it’s it’s a sudden it’s a sudden when it happens it is a sudden realization of rationality that is hitting the marketplace and it’s harder to stop rational thought then it then than anything else it’s not people going crazy for gold and silver it’s them waking up out of their delusions of paper money and just like Enron was a fraud and collapse suddenly so too will our dollar gold and silver do an accounting periodically throughout history it’s really exciting to see this they automatically revalue themselves when the public wakes up and they catch up to all the currency that’s been produced and it is there’s this same tiny little pile of two billion ounces of gold that there was back in 1980 and the pile of silver has gone from 2.2 billion ounces to 300 million today there’s eight point three times more gold available for investors to buy than there it is silver what you guys you hear it I don’t think we heard what he just said okay that’s it to me I’ve been saying this for a number of years now silver is the biggest opportunity I have ever seen bigger than real estate bigger than anything else the wealth transfer that is going on right now is enormous this is the greatest opportunity in the history of mankind because this is going to be the greatest wealth transfer in the history of mankind never before have all the world’s currencies been fiat currencies at the same time this is the very first time that that has happened and gold being a freely traded separate commodity slash money right now gold has begun this accounting again this time it’s going to be worldwide and this time there’s a blizzard of paper right now and all that paper throughout history tries to come and land on this same tiny little pile of metal periodically and the pile of silver is one-tenth the size roughly that it was in 1980 the last time that silver hit 50 bucks today it’s 15 bucks roughly silver is just one of the most undervalued things that there is there’s so little of it today the past three four years or so have seen this the above ground supplies of silver measured if you’re measuring it at it as a percentage of usage rates however how much we’re using there’s a good graph that the CPM group which is one of the two agencies that are used by the industry the precious metals industry they’re hired to do worldwide audits of supply and demand and where that golden the precious metals are being used they have a graph where they show it as how many months of supply are above ground in other words if you shut off mining at any given moment how about how long would the silver or gold that we have above ground blast and normally before the 60s we always had like 10 20 years or more of supply throughout the 80s 70s and 80s it sort of bounced around between two and a half and five years and then in the 90s it started falling and by 2006 we were down to three months three months of above-ground supplies compared to like 10 years normally so silver is extremely rare for the first time in human history there is more gold for investors to buy than silver that has never happened before in fact if you took all the gold and put it into a cube you can fit it our attendance it would be a little bit less than 20 meters on each side but Silver’s far more rare if you put it into a cube they would measure a little bit less than 12 meters on each side so I believe silver is the better investment of the two the dynamics of this bull market this new bull market are completely different than the last bull market in the last bull market I mean who were the people that drove gold up to eight hundred and fifty dollars and silver to fifty bucks it was basically North America and Western Europe the entire USSR which you know all of Eastern Europe and Russia that was a state-run economy you couldn’t buy gold or silver there there was no exchanges that no place to buy it China India Mexico South America these were basically all farming based economies these farmers didn’t have any excess currency to buy gold and silver with and even if they did there were no exchanges in these countries either so it couldn’t have affected the worldwide spot price today the entire world can buy gold and silver and there are billionaires in all of those countries and you got these things like the Shanghai Stock Exchange you know this didn’t exist back then we’re the first to offer silver bullion as an investment opportunity the price for the first batch of the Ghoulies set very low close to the cost of the raw material the investment threshold is not high and is more suitable for the general public silver is much cheaper than gold so there will come a day where all of the things like the information that silver is more rare than gold that’s going to become common knowledge right now it’s not one in 10,000 people that know this but there’s going to come a day where the majority of the people that are interested in investing or markets or have a retirement account if they’ve got anything you know if they’re not starving people in Africa they are going to know something about gold and silver and they’re going to find out that silver is more rare than gold where do you think the price is going to go then if we do have a currency collapse like there been other currency collapses around the world you know people will go to the precious metals and the precious metals will have a price that we can’t imagine they might even get to the situation where people will not want to accept dollars in exchange for their for their gold and silver they’re going to win no matter how many zeros the difference between gold and silver is gold is boarded silver is consumed silver is an industrial precious metal it is using cellphones telephones computers electric lights everywhere more information age would become the more we use silver and what what Michael is saying is that stockpile is at all-time lows and they’re not discovering much more silver is the most reflective most electrically conductive and most thermally conductive element that there is and in most cases there is no replacement it’s an element not a compound or a molecule so you can’t like rearrange a bunch of atoms in a molecule and come up with an alternative for silver it’s a single atom you know every time you use up a cell you know you get a new cell phone and you throw away your old one or whatever whenever you type you’re typing on silver you look at a DVD or a CD you’re looking at silver when you look in the mirror you’re looking at silver and eventually all that stuff ends up in landfills and in most cases it’s not economically feasible to recover the silver out of these products my business partner Brent harms just wrote an article called Christmastime in a silver mine and he was down in Mexico during Christmas and was able to go down inside a working silver mine and they were telling him how a lot of the silver mines are currently being mothballed right now because they can’t dig it up and sell it at a profit at these prices it’s below mining costs on the average there’s a few companies out there that can make a profit at this price but not many you can’t have a commodity that the world is running out of like silver that’s below mining costs that’s a situation that can’t last it is not crystal ball you know and it’s not about you know the stuff on television it is pure supply demand economics fundamentals as I said there’s two billion people wanting the western lifestyle two billion people wanting cellphones computers electricity lights all of this stuff I mean right now Silver’s price is 165th of Gold’s price for the first two thousand years the gold and silver were money Silver’s exchange rate to gold its value was one twelfth of Gold’s price on the average you know it bounced up and down but there’s a pretty good reason for that I don’t have hard proof on this I can’t tell you exactly what quantities of gold versus silver were in circulation but 1/12 is a real interesting exchange rate because it’s also roughly the amount of my noble supplies of gold and silver in the Earth’s crust there’s about 12 times more my noble silver than there is gold so when you dig it up the average quantities circulating were probably 12 times more silver circulating than gold and it was simply the free markets and something called the price discovery mechanism discovering how much gold and silver were in circulation I use farmers in Florida as an example because that’s where a lot of the oranges are grown in the United States so farmer in Florida they grow too many oranges one year and there’s this the supply goes way up and demand is still down here price has to fall until orange juice goes below apple juice and enough people switch over to drinking orange juice so that supply rises to meet demand the next year they have a freeze and supply goes way down here and then prices have to go up high enough to bid those scarce oranges out of the farmers hands to make demand fall to meet the supply and it’s a marvelously efficient mekin that is completely brainless mindless it’s the total sum of all the transactions that go on in a society to people trying to strike a price on something and so I believe that the reason for the exchange rate for the first two thousand years was simply the price discovery mechanism finding out what quantities of gold and silver were available well right now there’s Silver’s value is 165th of Gold’s value yet there’s about eight times more gold for investors to buy than there is silver this doesn’t add up the free markets will adjust this like I said in my book right now if they stop creating creating currency today that means that gold should go to fifteen thousand dollars an ounce but silver I believe it’s got to go it should go down to at least the 10:1 ratio you know it should overshoot whenever anything gets way out of whack to one side when it overshoots the mean it usually when it reverts to the mean it overshoots the further out of whack it is the further further it overshoots if silver goes to the logical ten to one ratio that’s $1,500 silver that means you would have a gain of 100 times on silver versus only 15 times on gold and if silver silver should remain more rare than gold even in the peak so there is a possibility that you could see silver I mean it’s within the realm of possibility I’m not saying it’s going there but Silver’s price could be higher than Gold’s price and that could be by multiples it’s possible that you could see silver at five or eight times Gold’s price the theory here is that because of the scarcity of silver and scarcity getting real things value this could be worth as much as or more than gold during a super mega spike that could and should happen to induce more silver mining this opportunity isn’t going to last for long it’s going to be a there are these brief moments throughout history that go by you know as far as historic time they go by in the blink I wear the safest place to be the place where people run to to protect their financial well-being during economic crisis gold and silver they have been the safe haven for your finances for 5000 years and there’s these brief moments in history where they simultaneously become the asset class that has the single greatest potential gains in absolute purchasing power and we’re in one of those right now and I don’t know why anybody would want to have any investment that wasn’t the safest thing that there it possibly is the only thing that has never gone to zero for 5000 years and it currently has the greatest potential of making gains in absolute purchasing power and it’s all due to the recklessness of world governments having to you know the u.s. is doing this massive deficit spending and printing when we print and dilute our purchasing power that dilute the value of the dollar what happens to the exchange rate like here in New Zealand the Kiwi dollar goes up the US dollar Falls and then exports from New Zealand to the United States fall so to get those exports going again you have to print also and every government on earth is doing that right now they haven’t caught up with the massive printing that we just started with the Fannie Mae and Freddie Mac bailouts inside and stuff but if you look at currency creation I I was showing a chart in Sydney to the audience there were six point seven billion Aussie dollars in existence in 1960 there are 1.2 trillion Aussie dollars in existence today that’s 180 times more Aussie dollars in existence and it’s like that with the m2 currency supply of China it’s been exploding it rates that are double-digit every year there’s this blizzard of paper all countries on earth are going into these if you chart it the printing of currency is exponential and that means that gold and silver are eventually going to catch up with all of this paper as they revalue themselves but they lie in wait for a little while and then the move sort of happens suddenly and that’s your opportunity that’s this enormous wealth transfer it really took this economic crisis for people to start waking up people can feel there’s something wrong you know even I was doing these wealth real estate wealth Expos in 2006 with Robert Kiyosaki and I would get up there and I would say there’s something really wrong with the world economy you should be able to feel it right now how many people can feel there’s something wrong in every hand in the audience would go up and I’d start talking about gold and silver and I’d be absolutely swamped at my booth afterwards so in just the past few years people have an innate sense that something has shifted and so they’re willing to accept it now they’re willing to hear it and that causes demand for the information to rise the Internet is is the whole reason that instead of 1 in 10 or 20 people knowing the Federal Reserve is private now it’s 1 in 3 this is one of the things that is going to make gold and silver just explode you know markets always do this like I said first phase second phase and the final blow off top that blow off top is going to be huge you have basically about 10 times the population that can actually go after gold and silver each with ten times more currency and then if you look at the number of investors in each population back in 1980 we were just coming off of where you had company run pension plans in the United States to the individual retirement accounts people you had a few bewildered investors that really didn’t know what they were doing and had their broker do things for them but then we had the Nasdaq bubble in 99 and everybody got a trading platform and became a day trader then you had the real estate bubble and everybody started flipping real estate there’s probably in each population at least ten times more investors so you’ve got a factor of ten times more people each with with ten times more investors in each population each with at least ten times more currency so you’ve got a you know that’s that’s a thousand a factor of a thousand this is going to be huge and then you couple that with the speed of light I mean today instead of waiting for Walter Cronkite to turn on that vacuum tube tube TV set and wait for it to warm up and then Walter Cronkite tells the price of gold today and investor in Mongolia picks up his Apple iPhone gets the price of gold and places a trade right there it’s a different world the internet changed everything what you’re going to see happen this time around is something different than what happened in the 1970s and look at it from this point of view back in the 1970s the US was still the largest creditor nation in the world now were the largest debtor nation in the world we didn’t have this mountain of derivatives hanging over the banks back in the 1970s like we do today there are other uncertainties we didn’t have the huge trade deficits that we in the 1970s that we have today we didn’t have the huge level levels of federal government spending in the 1970s like we did today I mean in the late 1970s it was the Soviet Union that was bogged down in Afghanistan you know today we’re bogged down in in in Iraq I mean the world of differences and as a consequence of these differences we may actually go and this is what my expectation is we may go into a currency crisis where gold and silver are going to be accepted as the only form of currency in the not-too-distant future and the dollars going to go the same way that the Continental went I think Ron Paul has had a huge effect especially on the awareness of the Federal Reserve and as a byproduct he’s created an awful lot of gold and silver fans because by you know people in the United States are discovering that you know it’s in our Constitution that only gold and silver can be money in the United States and that the Federal Reserve notes are illegal unconstitutional and money that were not supposed to be using the reason why is the currency that founded the this the United States the Continental dollar the first dollar of the United States went to zero in a hyperinflation because the Revolutionary War was basically funded solely on deficit spending they were just printing the currency and spending it it started out at a trading at a 1:1 ratio with the Spanish mil dollar this is before the silver US silver dollar existed the Spanish Miller had the same weight of silver in it as a US silver dollar and it fell to where by 1779 it was a it took 1,000 Continentals to buy a spanish mil dollar by 1783 they were toilet paper so having just been through a hyperinflation the founders of the United States of America put in the they saw the damage it does how it wipes out what we would consider the middle class but it wipes out anybody any holders of paper currency lose all their purchasing power to the holders of real money and so Ron Paul has brought about a big recognition of that I really like Ron Paul and it’s a shame that I wanted him to be president at the same time I didn’t want him to because he would get blamed for all the stuff that’s happening that’s really the fault of all of the previous presidents but basically George Bush jr. and alan greenspan they’re the ones that are really to blame for the mess that we’re in and the american public themselves for being allowed to allowing themselves to be taken for this ride and just going along with it what do you think the founders of this country would say I mean if Thomas Jefferson or Andrew Jackson came back today and took a look at what has happened to their country to this system that they laid out in the Constitution what would their view of what our society is what would it be do you think they would describe us as socialists as communists yeah I might want to arrest us and put us in prison especially Congress because you know what was interesting on the monetary issue the monetary act of night 1792 the first one half the Constitution said that if you if you participated in counterfeiting that you could get the death penalty into them counterfeiting was printing notes that were worthless Bills of credit because they do I was like when the Federal Reserve notes when when the Continental dollar went to zero and they knew what runaway inflation was I’m sure Jefferson others would say look don’t you remember a you know what happened so if they instituted the death penalty for counterfeiting he was a you know in the moral sense this is what we’ve done we have legalized counterfeiting you and I can’t kind of it fortunately that’s still against the law because it’s fraud but why is it that the government’s allowed to do what we’re not allowed to do the price is definitely being suppressed the evidence is in the commodities and Futures Trading Commission reports there’s a guy named Theodore Butler who has been following this for years and exposing the manipulation so my hat is off to Ted Butler metals leasing is something that’s existed for a long time and it was done for some very legitimate purposes if a mine is having a labor dispute or there’s a mine collapse or for some reason they’re out of production and they have already sold forward they’ve got contracts to deliver metals in the future they can fulfill those contracts and not lose those customers by leasing gold or silver from somebody that has a stockpile of gold and silver and fulfilling those contracts and then replacing the gold or silver paying back out of their production later on refineries can do the same thing but there’s been a some gold and silver leasing that is for less than legitimate purposes that has been done over the past several years where a bullion Bank will lease gold from the basically the government it’s probably coming from the Federal Reserve we don’t have hard evidence on any of this but if you look at GA ta o RG that’s the gold antitrust action committee so ga ta org this is a group of commodities analysts and attorneys that have done a spectacular job of compiling a body of evidence that is just so overwhelming that any sane person that looks at it comes to the conclusion that the world’s central banks have been doing this process of leasing gold and selling it into the markets to suppress the price and that there’s probably only between 40 and 60% of the gold left in these central banks that somewhere between 40 and 60% is already in private hands it’s been sold into the markets to suppress the price the government or the Federal Reserve or somebody with access to gold will lease it to a bullion bank who then sells it on the open market to push the price down and then they take the proceeds and they’ll buy options or futures and then they take the balance and invest they used to invest in US Treasuries that we’re paying like five percent the lease rate was like at one-quarter of 1% and they get to pocket the spread so it’s basically free money with no risk well all these contracts have a clause in them where they can pay back in cash so it I believe that it will cause the price of silver and gold to explode one day simply because they they don’t if they had to go out and buy the gold and silver on the open market and replace it the price would go to the moon but even if they don’t if it’s exposed that that gold and silver isn’t there that there’s a whole lot less of gold and silver in the world then people thought there was that’s also going to make it explode so it doesn’t matter they’re you know they’re getting caught in in one of the world’s most gigantic short squeezes and one day we will see these prices just absolutely explode and I want to be on the correct side of this and I want to I want to own as much physical gold and silver coins and bars as possible when this happens if you can’t touch it you don’t on it how do you see this thing ending well of most importance there’s going to be a price explosion gold and silver and the people are now are going to make a lot of money from it the people that are in it there’s almost no understanding of what this is all about and that’s why knowing what God ‘knows is so critical because the markets here it’s going here and we know why one of the things that I’ve done that I don’t know anybody else that’s noticed this but I download the financial statement of the United States every single year and I keep it on my desk and I highlight certain areas and go through it and one of the things I noticed was there’s a section of for gold where they account for the gold and they list so many ounces and the US government keeps those ounces on the book on the books at forty four dollars and twenty two point two to two cents that’s the official price of old forty-four dollars and 22 cents it’s ridiculous but that’s the price and then later on in a footnote it’ll say that the that eleven billion dollars worth of the gold has been pledged for gold notes held by the Federal Reserve and then later on it says the Treasury can redeem those gold notes at any time well if the notes are held by the treasurer the Federal Reserve how can the Treasury redeem them for gold if the Treasury has them it means that the Federal Reserve has the gold and the Treasury has the notes now when you take 11 billion dollars divided by forty four point two two to put forty four dollars and twenty two point two to two cents it turns out that the US only had eleven billion five hundred million dollars worth of gold at that price and eleven billion dollars of it was already been given to the Federal Reserve a private agency with no oversight and they don’t have to account for anything and the Treasury who does have to account for something keeps that on their books with an IOU you know basically they’ve got these gold notes these I’ll use gold back someday then you look at but somebody can’t remember the guys name but James Turk is a gold analyst that one of the people that writes to him showed that the US Treasury in June of 2007 jr. maybe was May of 2007 they changed the way they hold gold on the books it used to say gold and storage and that was changed to gold and gold receivables including loans and swaps where applicable and it’s all accounted for is one line item it’s a single number so they’re keeping track of accounts receivable and inventory as a single number this is illegal accounting any come any public company that does something like this would end up that people would end up in jail this is the type of accounting that caused Enron to crash and the US government appears to be doing this same thing so the gold from the US Treasury has been given to the Federal Reserve we know that we see these lease rates if you look at the supply-demand fundamentals and and you look at price action the way things add up there’s more gold sold in to the market every year then comes from mine supply by a significant amount that excess gold has to come from somewhere and this group of attorneys and commodities analysts at gatah have done a spectacular job and I believe everything they have to say about the gold manipulation and this is what gold leasing is a large part of the manipulation the other half of this manipulation I believe is the exchange-traded funds if you’re going to invest in gold and silver please investigate these things totally for yourself before putting a dime into them take a look at their Securities and Exchange Commission filings and take a look at their prospectus and read them with a very suspicious eye as to how could these people cheat me these were armies of the world’s best attorneys that work for the world’s largest banks that that crafted these documents and what you’re going to find is that most of these clauses will have a word inserted into them somewhere that will either give the clause two meanings the opposite meaning from what you think it’s saying or no meaning and also the entire gold community pretty much has come to the conclusion that these are entities are simply another means of manipulating the price of gold and silver what better way to keep gold from rising than to suck up the majority of the investment capital and then by gold with the proceeds you can make it mimic the price action of gold with futures and options not real physical gold in bars the if they had all the if dif GLD for instance that’s the ticker symbol for the gold fund GLD if they had all the gold had accumulated all the gold they say they have gold should be at far higher prices than it is today and that’s one of the things that the all of the precious metals dealers see that is very very suspicious so our belief is that they don’t have the gold and silver they say they have to back them and they’ve written in clauses like in the SLV fund the silver fund which is also called the iShares there are clauses written into their prospectus in their ssl their Securities and Exchange Commission filings to cover these things things like under certain market conditions where illiquidity exists the price of the air shares might diverge from the price of silver and fall their silver is held in exchange volts so how could their pile of silver be worth less than the pile of silver next to it this is what I want to know I you know the reason for having this clause is if they were not buying the gold and silver that they say they are supposed to be and then that is exposed there would be a rush out of that fund the price would go down and would would diverge from the price of silver and fall and so they’ve just kind of it covered their bets so that nobody goes to jail also with regards to the exchange-traded funds I can’t understand why anybody would take the most private investment that somebody can possibly make when you buy gold or silver like when you buy from me it’s a private investment it’s just between you and I government isn’t informed that you’ve got precious metals and then but if you deal with these exchange-traded funds you’re taking that ultimate private investment and you’re handing it back over to the banks that have caused this financial meltdown in the first place by gambling with your deposits I you’re also making it so that it depends on the performance of a counterparty a you’ve got the bank that is going to have to when you want to redeem those shares you sell on your brokerage account and then the bank and the brokerage house have to both perform and and credit your account and then you can write a check against it finally when you’ve got gold and silver you can walk into any precious metals dealer you can sell it when we go into a blow-off top I guarantee you that people would love to take to trade you’re their home or their car or whatever for precious metals so that happened back in 1980 it’ll happen again like I said everything is waves and cycles and the great news is that the greatest wealth is created in the shortest period of time when we’re going back through these crises the first phase of any bull market is sort of a stealth phase where it’s quiet accumulation then the second phase is usually the longest duration and the greatest growth and then the final third phase is a blow-off top where the market just goes vertical you remember the Nasdaq in the last three months of 1999 it just went vertical in the the public everybody rushed into it and they all got slaughtered the herd always comes rushing in at the end and they always get slaughtered and that’s the time you want to sell you don’t want to hold on to gold and silver forever you want to hold on to it until a median price single-family home cost less than 40 ounces of gold or less than 500 ounces of silver and then you want to trade your gold and silver for real estate cash flow real estate yes it was it was like eight sixteen I think would buy a single-family medium price home except there was a lot more silver and we aren’t we weren’t in is is I don’t think that that bubble is going to be anything compared to this next bubble so in my book I said it wouldn’t surprise me to see less than 500 so of silver by a single family medium price home which is pretty amazing because you’re talking about setting – excuse me talking about setting aside somewhere between eight and nine thousand dollars today to be able to buy a trade that straight over for a single family medium price home in the United States which peaked at about two hundred and twenty eight thousand dollars and now it’s falling probably about two hundred thousand or one hundred and ninety five today I’m not I haven’t checked but it’s Realtors Association data you can go to their website and get the data but you know if gold goes where I think it’s going and silver goes to the 10:1 valuation which is entirely possible it could be that just a couple hundred ounces like two hundred ounces of silver buy as a single family medium price home so you know each hundred ounces is only fifteen sixteen hundred bucks so you’re talking about sometimes when I say these things I can’t believe I’m saying them but they’re just entirely logical things and it’s just yeah and it’s stuff like this has happened before but it would be like you’d set aside three thousand four thousand dollars today in silver and trade it for a home someday in the future and I don’t think it’s going to be that long it’s going to be probably between two and five years maybe a little bit longer six years 2015 at the latest I think it just you know that’s what it feels like if they are not financially literate if they’re not financially educated they should be you know I’m with the rich dad team and Robert is a big real estate investor but he gets cash flow real estate and he gets it in the right sectors I mean you know he moved out of Class A properties several years ago and started moving into B and C rental properties this is working class properties these are apartments that rent for less than five hundred dollars a month us you know that’s where he’s at well with the whole popping of the real estate bubble everybody that gets foreclosed on has to live somewhere so right now there’s this huge shortage of his type of real estate and high demand so if you know what you’re doing real estate is still an excellent investment but for the uneducated investor yes your real estate and getting the precious metals as soon as possible I am NOT a Gold Bug or a silver bug I’m a cycles guy this is the cycle right now for commodities and precious metals and all you have to do to prove that to yourself is take a single-family medium-price home and divide it by the price of gold a barrel of oil bushel of wheat ton of iron a pound of copper and what you’ll find is that real estate and stock markets have been falling since somewhere between 99 and 2001 depending on what you choose to measure it with but they have been going down against anything tangible they have and people think that they’ve been going up but people always chase yesterday’s news and that’s what they’re doing right now they’re chasing yesterday’s news you know I’ve been just very very consistent since 2002 I’ve been by preaching and buying precious metals and there’s going to come a time when it’s over with and when I won’t be able to honestly go out and look somebody in the eye and tell them that precious metals is a good investment and instead I’ve set up my business so that I’ll be able to tell them that no precious metals isn’t a good investment get out it’s time to buy real estate it’s time to buy stocks so the main thing get a financial education get financially literate and right now we’re in the portion of the cycle that’s the easiest gold and silver are just really I mean they’re good investments but at the same time they’re dumb investments they don’t take a lot of financial literacy to the I mean you buy them and you sit on them until they’re overvalued and then you sell them and buy something else so they don’t take a lot of work it takes more of a financial education to be a landlord or to be in the stock markets or the currency exchanges or something like that this takes a lot of talent knowledge and maintenance where with gold and silver you know you buy it the hard part is selling it when when the top where is the top you know I can measure those things and I have a team of researchers that that’s their job is every day is just to try and figure out how to measure this stuff and so that we can pick the top and get out of it because like I said in my company we’re a group of cycles investors we’re not precious metals bugs and if there’s one piece of advice that I would give to your viewers it’s that we’re still early on in the cycle of moving out of financial assets moving into tangible assets of all sorts and the easiest way to acquire tangible assets is to accumulate gold and silver so when money does start flooding into gold when gold gets to 1500 or 2000 a lot of people are going to start looking over at silver there will only be 50 bucks an ounce buy them and start buying silver when’s when everyone realizes what’s happening is going to be a gold rush into this thing that will be just it’ll just blow people away it’ll be the biggest one in history yeah it’s going to make the the even and the shares it’s going to make the Nasdaq boom look like nothing and the difference will be this will be for real and that was you know that really was a bubble now doesn’t mean that we won’t have a bubble in the gold market and silver markets but the move itself will be intrinsically real and I believe that this is the next big bubble as the precious metals commodities but precious metals especially because the helicopter drops they’re doing right now for all the money they’re creating that has to find a home well the shocks had their bubble in 2000 real estate had its bubble in 2006 and you know what what’s the next asset class to go into a bubble well then the real difference is the gold and silver are tiny little markets and as you say so is investing money in the hoards institutions and pension funds and even the general public when I actually realize what’s going on and they all try to get in this little market that’s when you get the ballistic kind of yeah extraordinary fireworks I think so yeah well like I said there are these brief moments in history where the safest place to be the safe haven investment for every second of the last 5,000 years the only thing that has never gone to zero and can’t go to zero every stock can go to zero that for these brief moments be also becomes the place with the single greatest potential gains in purchasing power if you looked at the 70s bull market from 71 to 80 the top performer was silver second performer was gold third performer was oil fourth performer was the precious metals mining stocks so I just I can’t understand why you know you mentioned that people don’t even do the recommended 10% well why do they recommend 10% they recommend 10% because they want to make money off of the other 90% and those brokers that are saying this can’t they don’t make any money off of the gold and silver so they tell you that it’s dangerous you got to be careful with gold don’t put any more than 10% in your portfolio as a hedge what a bunch of crap gold was $35 an ounce in 1971 it’s it’s now about a thousand and for the Dow to have had the same performance over that period of time it would have to be over 26,000 points it would have to be like 3.8 times higher than it is today everything throughout time goes from overvalued to undervalued to over bud undervalued and whatever you’re measuring it with is doing the exact opposite wave so you’ve got everything if you look at your house priced in gold or oil or you look at gold priced in shares of the Dow or real estate you’ll see that everything is trapped in this valuation channel gold is done with its down wave and stocks and real estate are done with their up wave and they’ve just started to revert back and they’re going to continue this until gold is way overvalued and and real estate our way undervalued and then it’s time to get out of your gold and silver but you know we’re in this period where governments are abusing their currencies worldwide and gold and silver are going to account for all of this and so they’re there’s like I say brief moments throughout history where the single the investment with the single greatest potential gains in purchasing power is also the safest place that you can put your wealth for the past 5,000 years and I’m not going to let that let that pass me up let me tell you I went 100 percent into this and I believe it absolutely and I will follow what I believe thank you by Oh stop Oh show yeahyou you’ve often said get yourself a safe as much silver as you can in a large-caliber web breaking through the clouds that’s my way bottoms up the road I chose to take we got Oh all our conscious energy the trolley got the foot down the magazine do the Oh yes it’s going to get it’s going to get very bad because there’s not a single instance in the last 3,000 years of history of mankind where this thing has ever worked out and I have a hard time believing but now after all this time for no particular reason at all we’re gonna pull it off with no one helping close so I have a really hard time with this night okay and change your thinking this is trash doesn’t even exist little bit take it the Senate get back to your one yeah I love my brothers yeah – is crap hi i’m mike maloney one of the things I hear most often from my customers is okay okay you’ve got me convinced already I need to buy gold and silver I need to buy it right now but what do I do next how do i buy what form do I buy well one of the most important things to remember is to buy real gold and silver not fool’s gold and silver you need to buy gold and silver coins and bars that you could hold in your hand now you don’t have to hold them in your hand we can store them for you or we can deliver them to your door but you want to get real gold and silver the US silver eagle comes in a really nice case there’s 25 tubes of 20 each in here says West Point mint on it United States

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