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The tipping point is upon us!

A “tipping point” in sociological theory is defined as “the level at which the momentum for change becomes unstoppable.” An idea or a movement has reached “critical mass.”

I believe the global economy has reached that point.

After publishing my book Rich Dad’s Guide to investing in Gold and Silver in 2008, I have spent the last few years touring the world and educating people on investing in cycles, and why, this time, the cycle benefits gold and silver. Understanding these cycles and investing on the right side of them can make you very wealthy.

             
Italian

Portuguese
             

During my travels, one of the most remarkable phenomena I have observed is the extent to which the people of the world have been transformed, in the course of a generation or two, into investors.

This tipping point corresponds to the beginning of the second phase of the current bull market in gold and silver. In almost any bull market throughout history, the second phase of the cycle, when the public really becomes aware a bull market is occurring, is the longest phase in duration and also the phase when the greatest gains are made.

             
Mandarin

Russian
               

Over the past year I have had the privilege to take part in various speaking tours in numerous countries throughout Latin America and Asia-Pacific. During my recent partaking in the first Silver Summit in Singapore I had a strong sense that the second phase of the greatest gold and silver bull market in history is beginning. Here’s why:

Never before in history have all the world’s currencies been fiat currencies at the same time. Remember fiat currencies are established by government decree and have no intrinsic value.

Because every currency in the world is a fiat currency, there is no place to run to protect your wealth against government confiscation by continuing to print more and more currency—nowhere to run, except to gold and silver.

The same phenomenon exists, everywhere in the world. The number of Australian dollars in existence has multiplied 180 times since 1960. There are 389 times more Taiwanese dollars in existence today than there were in 1962. Every government in the world is pursuing the same policy of currency debasement—and as a result—there is more than 10 times the currency circulating world-wide than there was in the 1970’s.

Fiat currency

Here’s another big change between then and now: In the 1970s, during the last great gold and silver boom, 90 percent of the global population had no way of participating in the bull market. That’s because in the Communist Soviet Union and in Mao’s China, no markets existed, and there was not a single individual investor among those enormous populations. It was only America and Western Europe that drove gold and silver prices to their stunning heights.

This time around, the world is very different: there are billionaires in Russia, China, India, South America—every continent (except Antarctica) has its billionaires. The richest man in the world, Carlos Slim, lives in Mexico City.

Today, there are 10 times more people on the planet who have the freedom and the means to chase the next big thing, driving up market prices in the process.

Not only are there 10 times more people with the ability to participate in the market, there are somewhere between 10 and 100 times more people today who have an investment mentality than in the 1970s. Back in those days, before Nixon took us off the gold standard, people were savers. You could go to work in your teens or early 20s, save 10 percent of your income each month, and by the time you were in your 60s, you could retire and live the rest of your life off the interest on your savings.

That saver mindset evaporated the second Nixon ended the gold standard. From that day on, if you planned to enjoy your retirement, you were forced to become an investor or a speculator. The NASDAQ tech bubble of 1999 turned everyone into a day trader. The real estate bubble turned everyone into a flipper. Today, I hardly know anyone who doesn’t have an investment mentality.

This philosophical shift didn’t just occur in the United States; it happened everywhere. In modern China, investing is a sport, and Shanghai has its own riotous stock exchange.

Stock investors in Wuhan City, China.               (AFP/Getty Images)

And with the explosion of deficit spending and fiat currency creation, all over the planet, the next great bubble is destined to be precious metals.

As people rush back to gold and silver to protect their wealth, they are going to drive precious metals into a bull market the likes of which the world has never seen. Those on the right side of the bubble will profit immensely.

The 2010s will be an exciting decade. For years I have been saying we have been presented with the greatest opportunity in the history of humankind, because global economic conditions are setting up the greatest transfer of wealth in history.

So, in a nutshell, in the gold and silver bull market of the 2000s compared to the metals bull market of the 70s, you have 10 times more people able to invest, of whom 10 to 100 times more possess an investment mentality and ready to pile onto the next big thing, and there’s 10 times the money (currency) in existence.

A critical mass of world investor’s are recognizing the unsustainable nature of the fiat system. And the second phase of this bull market is beginning right now.

The tipping point has been reached!

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Social Security Funds, State Pension Funds, and Money Market Funds account for more than $7 trillion in people’s savings. These three gigantic pools of citizen’s capital and retirement savings are all currently under attack.

Either due to a growing lack of funding, recent commitments to help prop up the failed banking system, or new introduced regulations to freeze accounts in case of future bank runs… these three funds have had major news stories with far reaching repercussions:

Social Security Card

SOCIAL SECURITY

- $2.5 trillion

New York Times – 3/24/2010

Social Security to See Payout Exceed Pay-In This Year

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until 2016, according to the Congressional Budget Office.

Pension Funds

PENSION FUNDS

- $2.4 trillion

Bloomberg – 3/8/2010

Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash

The Federal Deposit Insurance Corp. is trying to encourage public retirement funds that control more than $2 trillion to buy all or part of failed lenders, taking a more direct role in propping up the banking system, said people briefed on the matter.

The FDIC shuttered 140 lenders last year and expects the tally may be higher in 2010. Regulators have avoided signing up private-equity firms as rescuers on concern that they might take too much risk. Pension funds, whose 100 largest members manage $2.4 trillion, could provide capital to acquire deposits and outstanding loans from collapsed banks, according to the people.

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work with all investors.”

Money Market Funds

MONEY MARKET FUNDS

- $3 trillion

ZeroHedge – 1/27/2010

Suspending Money Redemptions is Now Legal; SEC Approves New Money Market Regulation in 4-1 Vote

Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC’s just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: “We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares.” Too bad investors’ hardships considerations ended up being completely irrelevant.

Frozen bank account

THE BOTTOM LINE?

Social Security - According to the government’s own data, though it’s not broke yet – it’s gonna be soon.

Physical Gold and Silver savings can’t go in the red as they have no counterparty or funding risks.

State Pensions Funds - it’s a high priority for the FDIC to tap into public state pension funds to further prop up our worsening banking system.

Whether in your hand or in a 3rd party segregated vault, saving physical precious metals for you and those you love is the antithesis to further propping up this bankrupt banking system.

Money Market Funds - newly passed SEC reforms help to ensure that in the next leg of the economic crisis you may not have the ability to withdraw funds from your account regardless of their purported safety.

The safety and liquidity of precious metals is unparalleled. Don’t allow yourself to be on the end of frozen funds.

Physical Gold and Silver is our answer to the frozen red siphon that threatens further devaluation of these savings funds that in many cases are proving to be insolvent.

Isn’t it time to ensure that your savings answer to you and to you alone?

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Negative Amortization

In terms of value, we believe the real estate market still has further to fall.

Although we are through the first wave of “sub-prime” mortgage onslaughts one glance at the chart below demonstrates the oncoming second wave of mortgage resets around the corner:

Sub-Prime Real Estate

Another huge amount of resets are on the way, but this time the majority of the mortgage resets are “option arms”:

Option Arms

What are Option Arms? Here is the definition from The Mortgage Professor:

It is an ARM [Adjustable rate Mortgage} on which the interest rate adjusts monthly and the payment adjusts annually, with borrowers offered options on how large a payment they will make. The options include interest-only, and a “minimum” payment that is usually less than the interest-only payment. The minimum payment option results in a growing loan balance, termed “negative amortization”.

Map of Misery

Not only do we believe real estate will fall further in value here in the United States but in other real estate markets around the world, as many markets have been propped up by government stimulus projects and have yet to crash:

House Price Indices

For those interested in real estate investing, as we certainly are, we believe the current name of the game is to buy and hold precious metals. We patiently await the ongoing over to undervalued swing in real estate market values and visa versa for precious metal values. It’s a steady game of stockpiling physical Gold and Silver and keeping a finger on the economic pulse of our communities, country, and the world.

The following excerpts are from Rich Dad’s Guide to Investing in Gold and Silver:

Today we find ourselves in a similar situation, only better. Real estate has become much more overvalued and silver has become extremely undervalued. Measured against silver, the median price, single-family home in the U.S. hit it’s peak in 2002, at a price of 38,123 ounces of silver, some two and half times higher than at the beginning of the last precious market in 1971.

When silver hit its peak of $52.80 in 1980, it was not rare. Today as we’ve already discussed in detail, identifiable above-ground silver stockpiles have been drawn down to a tiny fraction of their size in 1980.

Remember, in 1980 it only took 814 ounces of silver to purchase one home, and silver wasn’t rare then.

Silver Inventory at Low Levels

*If you believe Silver ETF’s actually hold the purported Silver inventories they claim.

Box of Silver Coins
Packgage of Silver Coins

When the gold and silver bull market explodes, the financial news will react just as it did in 1980, and the only thing you will hear about is gold and silver. At that time there will be market analysts all over the Internet, radio, and TV, proclaiming to everyone the greatest investment of all time – gold and silver! The rarity of silver will go from something that a small fraction of the world’s population knows about to something everyone is now an expert on.

After studying things like the tulip mania of 1637, the NASDAQ bubble of the 1990s, the history and the current fundamentals of gold and silver, and the history of financial cycles, it would not surprise me in the least to see less than 500 ounces of silver buy a median-priced, single family home sometime in the future.

The biggest mean reversion in history is knocking on our door. I can’t stress this enough. The good news is that everything always reverts to the mean. Whether the news is good or bad will depend on if you are invested in the correct asset class for the cycle you are currently in. Investors who are aware of this will have wealth knocking on their doors, whereas investors who are caught unaware may end up with collection agents knocking on theirs.

The point of all this is that with real estate so overvalued, and silver so undervalued, chances are that they will both overshoot to the opposite extreme, before reverting to the mean. What that means for you is that you now have a very rare chance to become very wealthy very quickly by simply taking advantage of economic cycles and the wealth transfer they create.

Silver’s Case for Real Estate is simple – buy and hold physical bullion.

As the upcoming swings in valuation should prove to be very precious indeed for those who act now.

If Mike continues to be proven correct, wealth awaits its transference to you.

Don’t miss this rare opportunity!

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Investor Jim Rogers

The following transcript is from a recent interview with legendary investor, Jim Rogers:

King World News – 3/13/2010

Eric King: Is a day of more of a social breakdown rapidly approaching would you say?

Jim Rogers: Well, I certainly don’t want it. Nobody does anywhere, but what I can see is they keep making mistakes, and as you keep making mistakes ultimately the situation is going to be worse.

The economic and geopolitical situation will be worse, and so we as Americans are going to be more and more unhappy and that again is not a radical statement. It has always led to social unrest. We are seeing some now in the US. Other countries in the world have seen governments topple in the last two, three, four years by what’s going on. And I am afraid that the people in Washington are making it worse, and if it does get worse as I anticipate, that has always led to social unrest, throughout history, everywhere in the world.

Eric King: If you had to guess on the social breakdowns in the United States, what kind of a time frame would you give me as a guess?

Jim Rogers: Well, certainly within the next decade, I mean that would be easy to say, perhaps sooner. You know Eric I know people who insist that the US will have to default on it’s government debt in the next couple of years. That’s not my statement, I don’t know because I haven’t done the homework, but I do know people I admire who swear to me it’s going to happen. If that sort of thing starts happening, we have problems at the state level, the city level, and if the US government is in that kind of trouble, whenever it is, whether it’s the next two years or in the next ten years, it’s going to lead to problems.

Again, I don’t like saying it first of all, second, it’s just the way the world has always worked, not a radical statement. But if suddenly people cannot get food or cannot get jobs, especially you know, the America of this decade is not the America of the 1930’s, in the America of the 1930’s people were still disciplined, hard working, much more so than they are now. Now in the US, there is more of a, "you owe it to us mentality" than there was in America a hundred years ago, or eighty years ago. Again that’s not a strange thing, it’s just a historic fact and people with that current attitude are more inclined to be unhappy and do something about it than others.

Our study of past crises show that those who took action beforehand, were the ones that were able to be prepared.

Mike Maloney with Silver Coins       Silver coin in hand

"If you needed emergency coinage for any reason, if there was a true currency crisis, this (US Silver Eagle) has all the elements that you need in a currency crisis. It says that it’s one-ounce fine silver. One ounce is what they are hearing on the radio, what’s going to be repeated on MSNBC, CNN, Bloomberg, it’s gonna be every hour if there was a currency crisis, you’d be hearing the price of gold and the price of silver and they’re quoting one troy ounce is the price. So this is exactly what the guy down at the gas station is hearing." - Mike Maloney

Gold coin in hand       Gold bar in hand

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Mike Maloney – Rich Dad’s Guide to Investing in Gold and Silver:

In the end, I think we are in for a wild roller coaster of a ride, with a few whipsaws thrown in. First the threat of deflation, followed by a helicopter drop, followed by big inflation, followed by real deflation, then followed by a hyperinflation.

This scenario is the one that fulfills predictions made by Robert Kiyosaki, and several other people I have great respect for. I think that our current subprime fiasco will turn into a larger problem than it is now, and as the real estate sector begins to plummet, and the credit currency that was borrowed into existence begins to evaporate, the threat of deflation will loom. Then Ben Bernanke will come to the rescue and bail us out by orchestrating another helicopter drop of currency.

Whatever turn we take next on this financial "roller coaster" ride, GoldSilver.com strives to have contingency plans for all economic scenarios: deflationary depression, stagflation, high price inflation, or even a possible hyperinflation.

There is a looming threat of hyperinflation coming to pass in the United States and we strive to be prepared.

How do we do this?

We study history compared with present circumstances and pay close attention to items that have 100% track records.

Then for our own strategy we examine how others have handled high inflationary climates in the past. Let’s take for example South America in the 1980’s:

  • In 1988, after 3 years of consecutively increasing their money supply over 300 percent, Brazil had nearly a 1,000 percent inflation for that year alone.
  • In 1985, Argentina suffered an annualized inflation rate of 1,000 percent.
  • Bolivia, also in 1985, suffered a record inflation level of 50,000 percent annualized.

Remember that these countries have incredible resources at their disposal such as agriculture, mining, and a large work force. It’s not like they are much different than other economies at their core.

In 1989, Dr. Gerald Swanson, author of The Hyperinflation Survival Guide, visited South America over a two year period to study the development of inflation and it’s impact on businesses, individuals, and governments. He and his research team interviewed 80 leading bankers and industrialists, as well as ordinary citizens from Brazil, Bolivia, and Argentina.

"Inflation is when you go to the same restaurant each morning, order the same breakfast, and each time have to ask how much it costs." – Brazilian businessman

Inflation in South America

The following excerpts are from The Hyperinflation Survival Guide:

Imagine that a customer has just placed the largest order you have ever received, and he is preparing to pay cash for immediate delivery.

Your response? You thank him and explain that you can’t afford to fill the order, in spite of the fact that you have enough inventory.

You explain further that you gave your employees a 10 percent pay hike last week, and they will be demanding another within the month.

The price of your most important raw material went up 12 percent yesterday, and to purchase more you will need a loan, with interest rates currently running at 6 percent monthly.

In spite of your increased wage and supply costs, you can’t raise your own prices because the government refused your latest price increase request.

If you fill you customer’s order, you will actually lose money.

This scenario, in one form or another, is not uncommon in economies with soaring inflation rates, and has become practically routine in countries like Brazil, Argentina, and Bolivia.

But I am not asking you to imagine what it would be like to run a business in South America, where the situation is often worse than I have described.

I am asking you to imagine what it might one day be like in the United States.

Is your Nest Egg made of Monopoly money?

"Any government, like any family, can for a year spend a little more than it earns. But you and I know that a continuance of that habit means the poorhouse." – Franklin D. Roosevelt, 1932

As business and financial leaders throughout Bolivia, Brazil, and Argentina pointed out, though, it will not take triple digit inflation to wreak havoc on the United States economy. A sudden acceleration into the teens and twenties would be sufficient to alter personal and corporate lifestyles, and would necessitate changes in the way Americans run their businesses and their lives.

An inflationary surge of this scope is easily possible given current U.S. economic conditions. Indeed, many South American leaders are convinced that rising inflation rates are the logical byproduct of what they see as our ruinous fiscal policies. Again and again, these business and financial leaders expressed dismay that America’s headlong sprint down the classic inflationary path was receiving so little attention in the United States, while it seemed so obvious from their vantage point at the end of that road.

If there is one overriding lesson from South America, it is that governments cannot indefinitely continue to spend beyond their means without suffering terrible economic consequences. There is simply no logical reason to think that the United States can become the first country in world history to successfully manage it’s economy by continuing to rely on the resources of other nations to finance its excesses.

Below is the latest chart from the Federal Reserve showing base money creation:

Money Creation by the Federal Reserve Board

This money creation is unprecedented in the United States and shows no sign of slowing down. It may be new to us, but people from other countries can tell you from first-hand experience how it will turn out.

How many times do governments have to reprove that the formula of:

Slowing economy + increased currency creation does not equal long term prosperity for the country?

When this has happened in other countries there have been many losers, but the positive part of this equation is that there are also some individuals and families that win big with life changing wealth. Those who understand what is happening and take action, not only protect themselves but massively prosper in the final equation.

Mike Maloney – Rich Dad’s Guide to Investing in Gold and Silver:

Gold and silver have revalued themselves throughout the centuries and called on fiat paper to account for itself. In doing so, gold and silver bring fraudulent money to justice. They’ve always done this, and they always will.

Once again, the accounting has begun, and it will not stop until the full accounting is completed.

The resounding answer we have come up with for ourselves and our families is holding physical precious metals either directly or in storage.

Examples in these other countries show that when this debasement of the currency happens there is a massive wealth transfer from those that hold the depreciating paper assets to those holding items of intrinsic value.

Are you ready?

It is possible to have your IRA in actual physical Gold and Silver but remember the cutoff date for 2009 IRA’s is fast approaching. If you are considering making this move or further contributing to your existing precious metal IRA we suggest you start the process as soon as possible.

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The following excerpts are from Mike Maloney’s #1 book Rich Dad’s Guide to Investing in Gold and Silver:

Robert KiyosakiMike MaloneyRobert Duncan

Prophecy by Robert Kiyosaki

Rich Dad's Prophecy by Robert Kiyosaki

In his book Rich Dad’s Prophecy, Robert Kiyosaki predicted that one of the greatest stock market booms in history was yet to come, and would last at least until 2007. This was amazing considering that the book was written back in 2002. The country was still reeling from 9/11 and financial scandals like Enron, while the DOW was finishing a three-year brutal bear market, and many analysts were predicting a bear market for years to come. But Robert made his ultra-bullish prediction in the midst of all that bearish sentiment based on the fundamentals of the baby boom demographics and their retirement needs. The so-called experts called Robert a lunatic. Current events reveal he’s a genius.

I met Robert Kiyosaki in 2005. He was holding one of his favorite live events: a book study where 100 to 200 people who have all done their homework by reading the assigned book get together to discuss, analyze, and interpret the book, the world, and their lives. It is always a weekend of revelation and inspiration.

The Dollar Crisis by Richard Duncan

The Dollar Crisis by Richard Duncan

The book we were studying was The Dollar Crisis by Richard Duncan. The book outlines how we came to this cliff’s edge of financial ruin and how years of fiscal malfeasance had built up an energy that would soon visit it’s rage upon us as a monetary monsoon of a magnitude yet unknown.

As we studied the crisis, storm clouds darkened the room, the wind whipped the pages of our books, and the rain began pelting our bodies. But in the middle of the storm, Robert was standing there, alone in the sunlight, unruffled by the wind, untouched by the rain.

"Bring it on!" he yelled. "Real Investors don’t run from crisis. They run toward it! Bring it on!"

It was then that I realized that the sense of panic we felt was wholly unfounded. The reason there was light where Robert was standing, and darkness everywhere else in the room, was because his vision was clearer than ours. His clarity of vision was on a whole other level, a level the rest of the room had not yet attained. He had a clarity of vision that could not be achieved through study and knowledge, but only through a change in context. His context gave him a whole different perspective of things to come. it allowed him to not just see through the darkness but to sweep away the darkness, flooding his world with light. There was no darkness where he stood, because there was no darkness in his world.

That was the moment he gave me a truly great gift: a change of context. The clouds broke, the rain stopped, and the wind died. It was as if I had awakened from a bad dream. The gift Robert bestowed upon me was the revelation that the greatest opportunity in the history of mankind had just been laid at my feet. All I had to do was reach down and pick it up.

Tuesday March 16th, please join Robert Kiyosaki, Michael Maloney, and Robert Duncan for an Exclusive Free Podcast:

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Dear Friend -

You have been hearing me say that it is time to be prepared for the Greatest Wealth Transfer in the History of the World. The bad news is, as the economic turbulence continues on a global scale, those playing by the old rules of money will lose everything they have worked for. Savers will be losers.

“The year 2013 will mark the hundredth anniversary of the Federal Reserve System. For nearly one hundred years the Fed has pulled off the biggest cash heist in the world. This cash heist is a bank robbery where the robbers do not wear masks, but rather business suits with American flag pins in the jacket lapels. It is a robbery where the rich take from the poor via our our banks and our government.”

Robert Kiyosaki – from Conspiracy of the Rich: The 8 New Rules of Money

Join us for a free podcast on March 16, 5pm MST.

You are invited to experience this one-time-only live discussion with two leading experts who will give you a better understanding of the money system and global economics. Join me on this exclusive podcast, along with Mike Maloney, Rich Dad Advisor on Precious Metals and the Global Economy, and Richard Duncan, Former Financial Sector Specialist for the World Bank and Consultant to the IMF (International Monetary Fund).

Don’t feel intimidated! I promise to make this complex subject simple so that everyone has the opportunity to increase their financial intelligence. And IT WON’T COST YOU ONE THIN DIME. Register Now.

Register now to join us on the March 16th, 5pm MST podcast.

I am collaborating with two of the brightest minds on the subject of Gold vs. The U.S. Dollar in the world today to offer you this podcast session that will help you make better decisions about your financial future – at no cost to you. Mike Maloney and Richard Duncan are the financial wise men of this era in history.  The future is here.  The wealth transfer is on.  Join us.
Read more about my special podcast guests:

mallony.jpg
 

Since 2002, Michael Maloney has specialized in education on monetary history, economics, and financial literacy. He is widely regarded as an expert on economic cycles. Michael is the owner and founder of GoldSilver.com, an online precious metals dealership. GoldSilver.com provides invaluable research and commentary for its clients, assisting them in their wealth-building endeavors. Since 2005 Michael has been the precious metals investment advisor to Robert Kiyosaki. He is the author of Guide to Investing in Gold and Silver.

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Richard Duncan is the author of The Dollar Crisis: Causes , Consequences, Cures – the bestseller that accurately predicted the global economic crisis that began in 2008. His latest book is The Corruption of Capitalism – A strategy to rebalance the global economy and restore sustainable growth. Duncan has worked as a financial sector specialist for the World Bank in Washington, D.C. He also worked as a consultant for the IMF in Thailand during the Asian Crisis and is now chief economist at Blackhorse Asset Management.

Join us on March 16th 5pm MST for this exclusive podcast.

This all-important discussion about money will open your eyes to the Greatest Wealth Transfer in the History of the World. Even if you know very little about this complex subject, listening to this podcast will help you make better decisions about your financial future.

Register Now.

Remember, it’s free as my commitment to your financial education continues.

Robert Kiyosaki

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Physical Delivery Stored in a 3rd Party Vault Precious Metal IRA

FedEx International Delivery

Silver Eagle U.S. Silver Eagles
Canadian Maple Leafs
Austrian Philharmonics
1 ounce Rounds
10 ounce Bars
100 ounce Bars
Gold Eagle U.S. Gold Eagles
Gold Maple Leaf
S. African Krugerrands
Gold Buffalo
1 ounce Gold Bars
10 ounce Gold Bars
1 Kilo Gold Bars

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Same Problem, Different Country?

For those that study history the following recent article might have them sit up and take serious notice.

Citigroup Warns Customers It May Refuse To Allow Withdrawals

Business Insider – 2/19/2010

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” Citigroup said on statements received by customers all over the country.

We suggest an astute person compare what is happening right now with what happened just a few years ago in Argentina:

Argentine Currency Crisis 2001 – Review & Reflection

“Those who cannot remember the past are condemned to repeat it.”
- George Santayana

If you are curious about what a monetary crisis could look like in your country we encourage you to simply look for clues from other countries economic pasts, those that have already been through such a phenomenon.

This article offers a quick glimpse at a modern history example. Here is a brief recount what occurred only a few years ago in Argentina:

In July of 1989 – Argentina’s currency at the time was going through a hyperinflation. The austral (image below), recorded a 200% inflation rate in July alone, topping a 5000% rate of inflation for the year. It was for this reason that during the 1989 and 1990 hyperinflation peaks many Argentines began rejecting the austral as payment, demanding U.S. dollars instead.

To reign in ruinous price inflations, the government in 1991 adapted a new Argentine peso establishing a fixed dollar-pegged exchange rate (one Argentine peso per U.S. dollar). The initial aim of the measure was to ensure the acceptance of the new Argentine peso currency:

This 1991 enactment, the Law of Convertibility (La Ley de Convertibilidad), helped establish the peso and sharply reduce price inflation, restoring stable prices throughout the remainder of the 1990’s. This fact raised the quality of life for many Argentine citizens. As a result, many citizens could more easily afford to travel abroad, buy-imported goods at lower prices, or ask for credits in dollars at very low interest rates.

Meanwhile, Argentina’s government deficit spending remained high and public debts expanded rapidly but the country showed no true signs of being able to pay for their growing debt load. However the IMF (International Monetary Fund) continued to lend funds to the Argentine government while postponing scheduled repayments. The Argentine financial markets became saturated in dollars and foreign debt.

In 1999 Argentina’s GDP dropped 4% and unemployment levels were rising, a recession had begun. The economic downturn continued onward through 2000 and 2001.

In December 2001, the call on Argentina’s debts came forth, the government couldn’t pay their loans and obligations. Argentines becoming aware of the situation began withdrawing from their bank accounts preparing for the worst. Bank Runs had began.

To quell bank runs (citizens withdrawing large sums of paper currency from their bank accounts, and or converting pesos into dollars and sending them abroad) the government enacted a set of measures that effectively froze all bank accounts for 12 months, allowing for only minor sums of cash to be withdrawn. These government banking measures became informally known as the corralito – or crudely translated – an “animal pen“.

The citizens were livid at the rationing of withdrawals and the forced devaluations of their savings. As the country’s economic collapse took hold people took to the streets in mass, violence and vandalism ensued:

The vast majority of the public’s savings were caught in the financial quagmire (the “animal pen“) – they lost roughly 50% to 75% of their purchasing power.

In January 2002, after a full decade, the Law of Convertibility was finally abandoned. The Argentine peso plummeted in value going from a fixed 1 to 1 ratio with the US dollar, to as high as a 4 to 1 ratio. Effectively, this devaluation reduced the purchasing power of the Argentine peso to 25% or 1/4th of its 1990’s purchasing power.



The wealth transfer was vast and swift. The people’s savings were crushed:

  1. http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29#Effects_on_wealth_distribution
  2. http://www.aaep.org.ar/anales/works/works2004/Amado-Cerro-Meloni-04.pdf

There were some who understood what was happening and took action before the bank freeze occurred. Many of these folks moved their capital offshore before the crisis played out, they were thus able to more than triple their purchasing power over those who strictly held Argentine pesos.

This is what tends to happen during currency crises, there are many on the inside who not only duck debasements and or devaluations, they exploit it to their advantage.

Wealth transfers from average savers to financial insiders.

Those with direct access to foreign currency exchange floors or first hand access to the fiat currency printing press tend to have an advantage over the average worker and saver.

But Here’s the Key… You Don’t Have to be An Insider

Examine what happened to an Argentinean who purchased Gold or Silver when the recession was quickening and the run on the banks was commencing:

Gold in Argentine pesos Silver in Argentine pesos Gold in US dollars Silver in US dollars
August 1, 2001 $265 Argentine Pesos* $4.22 Argentine Pesos* Gold $265 Silver $4.22
August 1, 2002 $1120 Argentine Pesos* $16.84 Argentine Pesos* Gold $302 Silver $4.57

In 2002, once the Law of Convertibility was abandoned, Argentines who held physical Gold and Silver not only protected their wealth and their purchasing power, they enhanced it 3 to 4 fold:

Here Is the Secret:

  • You don’t have to be an insider to protect your wealth during a currency crisis.
  • You don’t have to be stuck in failing banks trapped in a financial “animal pen”.
  • You only need to study history and take action so you are not condemned to repeat the mistakes of those before you.

Don’t let history’s rhyme and repetition steal your hard earned wealth.

Physical Gold and Silver are unquestionably the solution for us.

What’s yours? -> Take action while there is still time remaining.

We are pleased to announce International Shipping direct to Ireland, Italy, Sweden, and Taiwan!

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We’re excited to deliver you a new studio segment of Mike Maloney offering up his Silver market insights on the leading investing and finance website TheStreet.com

As author of the international best-selling “Rich Dad’s Guide to Investing in Gold and Silver”, Mike talks with TheStreet.com’s precious metals reporter Alix Steel, revealing why he thinks Silver prices could skyrocket to $1500 within five years.

Stay tuned for more media coverage with Mike in the weeks and months ahead!

We are pleased to announce International Shipping direct to Greece, Portugal, and Spain! Click here for more details.

Physical Delivery Stored in a 3rd Party Vault Precious Metal IRA

Silver Eagle U.S. Silver Eagles
Canadian Maple Leafs
Austrian Philharmonics
1 ounce Rounds
10 ounce Bars
100 ounce Bars
Gold Eagle U.S. Gold Eagles
Gold Maple Leaf
South African Krugerrands
Gold Buffalo
1 ounce Gold Bars
10 ounce Gold Bars
1 Kilo Gold Bars

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What’s going on in Greece?

Telegraph – Feb 7, 2010

Greek Ouzo crisis escalates into global margin call as confidence ebbs.

For the third time in 18 months the global financial system risks spinning out of control unless political leaders take immediate and radical action.

The Guardian – Feb 7, 2010

Super-wealthy investors move billions out of Greece. Investors withdraw up to €10bn from Greece as government prepares tax crackdown to cut down deficit.

A staggering €8bn-€10bn (£7bn-£8.7bn) may have been taken out of Greece by private investors since it became engulfed by economic turmoil in November.

Spiegel Online – Feb 1, 2010

Fears of a debt default by Greece and other EU countries that have been hit hard by the financial crisis have caused the euro single currency to depreciate sharply in recent weeks. The euro member states now face a dilemma, according to Thomas Straubhaar, president of the Hamburg-based HWWI economic institute.

Straubhaar says one solution would be to allow inflation in the euro area to rise. That would lessen the real burden of nominal debt, and in political terms would be the simplest way to deal with excessive government debt.

“Inflation lessens the real purchasing power of the masses like an indirect tax (…). But there’s a tremendous difference: It requires no parliamentary approval,” Straubhaar wrote.

What’s this all mean to Gold and Silver?

Free Gold Money Report – James Turk – Feb. 4, 2010

Every once in a great while, the market offers a unique opportunity to buy precious metals ‘on the cheap’. I believe today is one of those moments.

Counterparty risk is growing. As it does, the precious metals become increasingly important to preserve wealth because tangible assets are not dependent upon the promise of any government or bank. Gold and silver are the ultimate safe haven, and right now they are being offered at bargain basement prices.

… the risk of sovereign debt defaults is not going to disappear. Nor is uncertainty about the durability of the euro. And the dollar continues to be debased by reckless spending that is piling more debt upon the US government’s huge mountain of debt. These risks create an environment in which one seeks safety for their hard-earned assets, which is what the precious metals offer.

Why is the price dropping?

MineWeb – John Embry – Feb. 3, 2010

Gold should continue to consolidate over the next few weeks but, the next big move is likely to be up.

This is the view of Sprott Asset Management’s chief investment strategist John Embry, who says he is looking for the price of the yellow metal to hit around $1,350 to $1,400 by late spring.

Speaking on the inaugural Mineweb Gold Weekly Podcast, Embry says the recent downward trend seen in the gold price is nothing more than a healthy correction.

“The idea that the US dollar is a safe haven today is flat out wrong,” he added, “and that is going to be one of the major factors that are going to change the perceptions in the gold market going forward.”

“I think a lot of the world’s wealth is figuring out that we have little choice given the debt problems in the world and the resultant unlimited creation of money and so I think there is a solid investment bid in the market for gold.”

He adds, that concerns that have been raised about the possible impact the jewelery market is likely to have on the long term rise of gold because, he says, “all great bull markets in precious metals come from their reestablishment as money.”

Meanwhile there are further reports of a lack of physical supply on the London Bullion Exchange:

GoldenJackass – Jim Willie CB – Feb 3, 2010

A great disconnect exists in the gold market between the exchange futures contract price (the paper price) and the gold bullion paid price for transactions (the physical price). The differential in price is growing wider, enough to place tremendous pressure on the gold market itself. Look not to the gold premium paid for purchases, but to high volume purchases in the tens of million$. In mid-December, almost every demand for gold contract delivery was matched by a cash delivery, complete with 25% bonus premium offered. The officials even produced a new ledger item called ‘Cash For Delivery’ that was necessary to balance their badgered books. It prompted little attention. Some call it a basic bribe. Others call it a technical default.

Fast approaching is the event of GAME OVER for London, a condition that has already reached critical level, according to a key reliable source of information with London connections and direct experience with its market events. How long can a major metals exchange sell contracts but have miniscule supply of gold in their vaulted possession? The paper gold market and the physical gold bullion market have finally separated in a practical manner, meaning actual gold has almost no role anymore in London paper contract settlement. The absence of gold in London requires extraordinary tactics to settle contracts and to obtain gold bullion. Red tape procedures delay delivery for individuals, and bribes accompany gold delivery demands as standard practice. The London Bullion Market Assn has almost zero gold, its supply having been drained in high volumes since early December, a process currently in acceleration. The opportunity to convert fiat money into precious metal at prices considered reasonable is also vanishing.

Folks, be sure to get physical Gold and Silver!

Mike Maloney in Taiwan

Mike Maloney recently visited Taiwan for the launch of his book in Mandarin!

Knowledge is power. It is power that can be worn like a suit of armor. Truth can be a weapon. A weapon, which can be wielded like a sword, slicing through the propaganda and misinformation, laying them bare for all to see. Armed with these tools, I march headlong into the storm, not with fear, but with enthusiasm.

I have often said that this period of time is like cresting the top of the highest peak of a roller coaster and staring down at the black void below. You can be either terrified, or sit in anxious anticipation of the thrills yet to come.

One day soon, the general public will finally wake up and discover that they too are riding that roller coaster. Only they will not know where they are. They will be disoriented and confused, and sheer terror will grip them as they crest the top of the highest peak and glimpse, for the first time, the black void that will soon engulf them.

When the roller coaster reaches the bottom the public will have become desperate for precious metals, and in their panic they will rush to buy gold and silver. They will offer you their goods, services, and investments at fire-sale values. By selling your gold and silver when the public needs it most, the full weight of the wealth transfer will have been complete, and you will have done very, very well.

- Mike Maloney

Physical DeliveryStored in a 3rd Party VaultPrecious Metal IRA

Silver Eagle U.S. Silver Eagles
Canadian Maple Leafs
Austrian Philharmonics
1 ounce Rounds
10 ounce Bars
100 ounce Bars
Gold Eagle U.S. Gold Eagles
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Gold Buffalo
1 ounce Gold Bars
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Welcome to the Worldwide Fiat Currency Championship:

The Race to Debase

This is the first time in human history this race has occurred on a worldwide scale!!

For the first time in the history of the world all the currencies are fiat!

So who will be crowned champion of the world?

With a 100% win record!

GOLD

AND THE CUSTOMERS GO WILD!!!


Everyone on Earth is taking part in this race to the currency graveyard!

You have two choices:

Money (Gold & Silver)

or

Currency

Always Maintains Value – Stands to Transfer Wealth to You!

Designed to Lose Value -Transfers Wealth Away from You!

We have chosen which side we are on at Goldsilver.com.

Remember… It’s Fact:

Every currency in the world is fiat or “faith basedmeaning it’s worth only the value of the actual paper it is printed on. More people are learning this fact every day, confidence is eroding in the fiat currency system. History proves that for fiat currency… the final value of zero is inevitable!

“The credit boom is built on the sands of banknotes and deposits. It must collapse.” – Ludwig Von Mises

The solution to protecting yourself is simple. Secure a Gold and Silver foundation to your wealth. Owning physical Gold and Silver has been very lucrative over the past decade. But don’t take our word for it. The facts below prove that this is a Worldwide Event!

So Who Is Winning “The Worldwide Fiat Currency Race to Debase”?

How did paper currencies perform versus Gold and Silver last decade?

January 1, 2000 -> December 31, 2009

Fiat Currency vs. Gold Decade Gain Silver Decade Gain

US dollar
281 % 214 %
Argentine peso 1349 % 1093 %
Australian dollar 155 % 129 %
Brazilian real 257 % 194 %
British pound 280 % 213 %
Canadian dollar 176 % 127 %
Chilean peso 265 % 201 %
Chinese yuan 214 % 159 %
Colombian peso 335 % 258 %
Costa Rica colon 616 % 490 %
Euro 167 % 120 %
Hong Kong dollar 273 % 213 %
Indian rupee 307 % 235 %
Indonesian rupiah 409 % 319 %
Israeli new shekel 248 % 186 %
Japanese yen 247 % 186 %
Malaysian ringgit 244 % 183 %
Mexico peso 433 % 339 %
New Zealand dollar 174 % 126 %
Peruvian nuevos soles 214 % 158 %
Philippine peso 340 % 262 %
Russia ruble 320 % 246 %
Singapore dollar 221 % 165 %
South African rand 357 % 276 %
South Korean won 294 % 224 %
Swedish kronor 221 % 164 %
Swiss franc 147 % 104 %
Taiwanese new dollar 288 % 220 %
Thailand baht 239 % 179 %
Vietnamese dong 404 % 315 %

*** If you don’t see your nation’s currency above simply click the following link to perform your calculations -> http://www.xe.com/ict/ ***

Which Monetary Unit are You Going to Hold this Decade?

DON’T MISS THE GOLD & SILVER RUSH OF THE 21ST CENTURY!

Gold

We Believe Gold & Silver Bull Markets are Just Getting Warmed Up -
Don’t Get Passed By!!!

Physical DeliveryStored in a 3rd Party VaultPrecious Metal IRA

Silver Eagle U.S. Silver Eagles
Canadian Maple Leafs
Austrian Philharmonics
1 ounce Rounds
10 ounce Bars
100 ounce Bars
Gold Eagle U.S. Gold Eagles
Gold Maple Leaf
S. African Krugerrands
Gold Buffalo
1 ounce Gold Bars
10 ounce Gold Bars
1 Kilo Gold Bars

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