So, welcome to the program, Mr. Gartman.

Transcription

1 Speaker 1: This The Rich Dad Radio Show, the good news and bad news about money. Here's Robert Kiyosaki. Hello, hello, hello. It's Robert Kiyosaki of The Rich Dad Radio Show, the good news and bad news about money, and we have a great show for you. Our guest is possibly... I mean, when this guy speaks, the world listens, and I was just with him at the New Orleans Investment Conference, which is a conference everybody should go to if you want to see the future clearly, but every time this gentleman speaks, I listen, and I hate to say it, but he's been accurate so many times, and I've lost because I went against what he said. So, anyway, I want you to pay attention because if you want to see clearly now what's coming up on certain subjects, especially gold and bitcoin and the economy, and all the things you need to be careful of, especially the stock market, this is your program. Any comments, Kim? I'm looking forward to this show today with Dennis Gartman. He's the editor and publisher of The Gartman Letter, very, very well-known, and I'm sure you've seen him on many of the financial talk shows. He's a wealth of information, and I am here to learn from him today. So, welcome to the program, Mr. Gartman. Well, thank you very much for having me on. It's nice when people listen. Sometimes people laugh, so let's hope that [inaudible 00:01:23] Well, the last call you made was I think when gold was at 19, and I said, "I gotta cover my position," so I bought a little bit, and you said, "It's gonna tank," and it tanked. Now I will tell you that gold is not tanking, and I'm not a gold bug, and I want to make sure that everybody understands that because I'm not a believer that the world's coming to an end, that you need to have distilled water and dried food and ammunition. I'm not a gold bug under any circumstance. I look at gold as being nothing more than another currency whose price rising at times and falls at times. It's hard to believe, but we've actually been in a bull market in gold since late December of 2015, and here we are in early 2018, two-and-a-half years later. Gold is quietly beginning to turn higher, slowly making a bottom, looking stronger on the charts on a daily basis. Inflation pressures, I think, are starting to become evidence in extent, but very few people believe in gold at this point. The old lying gold bugs are always there, but at the market, we have not seen the public be a buyer yet, and probably won't for a while. The public doesn't get excited till things start to go parabolic, and that may be quite some period of time into the future. 1

2 Correct. So, before we go any further, would you mind giving us a little of your background and how you came to write The Gartman Letter and how you got into this, the crystal ball of the markets? My first job out of graduate school, back in the early 1970s, was as the economist for Cotton Incorporated, and my job was to understand the cotton business and how the cotton futures market function and how farmers use it or could use it and to explain it to people as a price discovering mechanism. I was lucky enough to do that. It was interesting because the cotton market taught me a lot about how all futures markets function, the carrying charges, backwardation contango, how they open interest changes, who's involved, who's not involved. I moved from there to NCMB in Charlotte, North Carolina, traded foreign exchange for them for a number of years, and then finally said, "You know what? I think I really want to move to Chicago and get a seat on the Board of Trade," so I had a seat in the bond pit in Chicago for about seven or eight years, had a great good deal of fun as the financial instrument futures markets were really in their infancy and began to become much, much more mature over a very short period of time. Then in 1984, quite honestly, I was too old to be on the floor of the Board of Trade any longer. There were younger kids, there were bigger people, there were football players and ex-basketball players, and I thought at 34 or 35 years old, it was time to move back south, and started writing... I worked for a bank for a couple of years, and trying to take an ex-floor trader and turn him into a banker was a bad decision. A little different momentum there. Yeah, it was a different attitude completely. And then in 1984, I actually started writing The Gartman Letter on a full-time basis, and I have been doing it since then, and proud to say that I haven't missed a business day except for once when my parents had their 50th anniversary. We took the day off, but every business day of the year I write. I get up at 1:00 every morning and try to write seven, eight, or nine pages of interesting views as to what the capital markets are doing, and as I tell people, my job is to be the liberal arts major of the capital market. I know a reasonable amount about commodities. I know a reasonable amount of energy, a reasonable amount about the Federal Reserve policy and central bank policies. I know a reasonable amount about political developments around the world, and my job is to explain to the energy trader what's happening over in the grain market, or to explain to the grain trader what's happening over in the bond market. I take a broader perspective, and I'm fortunate to live in 2

3 Southern Virginia, far away from the madding crowd, where I can hopefully distinguish between what is important new and what is absolute abject noise. So, Dennis, for somebody like me, would you mind explaining why the futures market exists, what is it used for, and why is it important? The futures market exist primarily for one purpose, to discover, and this is the important term, to discover the price of things. When you force people who put their own money at risk to discover the price of soybeans or to discover the price of wheat or to discover the price of crude oil or to discover the price of natural gas or copper or gold or boats or cotton, when you put your own money at risk, you will do a decent job of taking into consideration all the information that you can assimilate, the information that somebody else can assimilate, and the price will be discovered. It also serves as a way for those involved in the business to hedge the risk incumbent in that business. It gives the ability of the American farmer, for example, to know what the price of corn is going to be next year before he plants it and make the decision does he wish to plant for that price. Is that a price that he's willing to produce for? If he can't sell it to the local grain elevator, he can sell it to the future market. It gives the bread manufacturer the ability to see what is the price of hard red winter wheat, 12 months, 16 months, 24 months, 36 months into the future, and is that a price that I can produce bread for and go about my business. It also gives a place, let's be blunt, a place for speculation, and it is speculators who are terribly important to the futures market because they create liquidity. So, the futures markets function for three things, to discover the price of underlying commodities, to grant hedgers or people incumbent in the business to either produce or to use that commodity at some point in the future, and a way to hedge their risks, and finally, it gives an avenue for speculation and the creation of liquidity. Those are the three reasons why the futures markets exist and why they function so importantly. Dennis, so let's talk about the farmers and food and corn and wheat. Yeah. So, how does weather... We've had hurricanes, we've had floods, we've had freezing cold, we've had all these things. How does that play into the futures market? Well, we can talk about a very specific circumstance prevailing right now. It's very cold in early January, and the winter, most people don't realize that the wheat crop is put into the ground in September, October, and November of the previous year. It sits nascently over the wintertime. It's called soft red or hard 3

4 red winter wheat for a reason, and it matures in the spring and it's harvested in May, June, and July of the following year. That winter wheat crop needs to have some protection, a blanket of sorts, and snow usually does it unless the temperatures stay above freezing for the entire winter, which is unusual in Kansas and Oklahoma and the high plains of Texas, and right now, we have frigid temperatures and no snow covering the winter wheat crops, so suddenly wheat, which might look to be an abundant crop, may not be nearly so abundant, and wheat prices may start to rally for the simple reason that weather has changed, or in the case of natural gas or crude oil, frigid temperatures increase the demand for heating oil and natural gas and send those prices higher. So, part of the markets are specular, and then there's a producer, and then there's the consumer. Yes. So, specular will look at this coal and go, okay, I'm gonna punt on wheat. Is that what happens? That's exactly correct, and you might actually have the bread producer, the cake producer say, "You know what? I have not covered as much of my wheat that I really would need on a normal annual basis. I can't buy it right now in the cash market. I can't find enough in the gain elevators," so he may buy futures to lock in price for the next year or two, if he fears that he won't get a reasonable price going forward. At the same time, the producer of wheat may say, "You know what? I can produce this wheat at a reasonable price. I can't sell what I own to the grain elevator yet because I haven't produced it yet. I may sell it to the futures market to lock in a price," so it just depends on what position one has. So, once again, this is Robert Kiyosaki of The Rich Dad Radio Show. We're talking to Dennis Gartman. Like I said, when he speaks, people listen. He's the editor and author of The Gartman Letter, and what we're talking about is a very important part of any investor, because every investor is looking into the future because if I buy real estate today, like Kim and I are working on a project down the street from us, we've gotta look into the future, and that's where the risk comes in and all that. So, Dennis Gartman, please subscribe to his letter. I mean, it's important. I don't care if you're not into wheat. It's that what Dennis has from all these years of being in this business is the ability to see the future. Any comments, Kim? Well, and it's not just, of course, the commodities market. It's stocks, it's bonds, it's everything. It's, of course, our cryptocurrency, Dennis, that we'll talk about later, your love of bitcoin. 4

5 Speaker 1: Speaker 5: So, we're gonna be talking to Dennis more about one of my favorite subjects, gold, because Dennis, I am one of those pessimistic gold bugs. I've been since Vietnam, and I've made a lot of money in gold. I've started goldmines and silver mines. I mean, that's how fanatical and delusional I am. And then one- I take full credit for that. And before we go to a break, I just gotta get your take, Dennis, on commodities. What would you be gearing people towards today? Is it- I would actually tell people that first of all, the talk has been of disinflation or deflation for such a protracted period of time that I actually think we should look forward to a period of time when commodity prices are going to stop deflating and actually may quietly start inflating. I think you'll start to see grain prices stronger a year from now than they are now. I think you'll see copper prices stronger a year from now than they are now. I think you'll most agricultural commodities stronger a year from now than they are now. The only place that I am not manifestly bullish is crude oil because I think that $62 to $65 per barrel WTI brings an awful lot of new production and an awful lot of fracking capabilities online, but on balance, I think commodity prices want to go higher, not lower, and I think the era of deflation and disinflation is behind us. So, that's not good new for Mr. and Mrs. Consumer because when they go to Whole Foods they go into sticker shock, and that's where it affects everybody. Yeah, that is exactly correct, Robert. I think that you're gonna be looking at higher food prices, not dramatically so. This is not gonna be a return to the inflationary pressures of the late '60s and '70s and '80s, but I do think that you're going to start to see quietly higher commodity prices on balance, and yes, food prices will be higher a year from now than they are now. So, once again, it's Robert Kiyosaki of The Rich Dad Radio Show, good news and bad news about, right now, commodities, but we're looking into the future with Dennis Gartman, editor of The Gartman Letter. When we come back, we'll be going into some of our more favorite subjects like gold, Mr. Trump, bitcoin, and all the things that people are yacking and talking about. You're listen to The Rich Dad Radio Show with Robert Kiyosaki. Every business owner and real estate investor needs asset protection, entities like LLCs, S or C corps, are vital to protect yourself and your business. Let Corporate Direct guide you through the process of forming a corporation or LLC. Corporate Direct is owned by Rich Dad advisor, Garrett Sutton, and is Robert Kiyosaki's choice for corporate formation. Mention Rich Dad and receive $100 5

6 off a formation. Call That's , or visit online at corporatedirect.com. That's corporatedirect.com. Speaker 1: Your financial education continues. Now, back to Robert Kiyosaki and The Rich Dad Radio Show. Welcome back. Robert Kiyosaki of The Rich Dad Radio Show, the good news and bad news about money. Our guest today, Dennis Gartman, publisher and editor of The Gartman Letter, which he's been publishing since 1987, and you can go to his website, thegartmanletter.com, and you can listen to The Rich Dad Radio program anytime, anywhere, on itunes or Android, and all of our programs are archived, because we're talking about the future, what's coming up for 2018 and on. So, you can go to listen to our programs, our archives, at richdadradio.com, and once again, let's get back to Dennis Gartman, and the question everybody's asking about Dennis is bitcoin, and you're quite bearish on it. Well, let's not say I'm bearish. I just find the whole thing amusing, and it is so- You're talking about Trump, aren't you? Yeah. Well, yeah. No, that's sad. We'll talk, and I will say first off that I voted for him, but we'll talk about that later. Let's talk about bitcoin, and it's not that I'm bearish of bitcoin, it's that I find the whole thing foolish. I'm a great proponent of the blockchain. I think that that's gonna change the manner in which we trade. It's gonna change the manner in which you make plane reservations. It's gonna change the manner in which you do almost anything that is incumbent in the use of a computer. The blockchain is brilliant, but we have to separate blockchain technology from a bitcoin. Wasn't bitcoin supposed to have been a libertarian's dream with a finite supply of... I forget what [Natoshi 00:15:34] said he was wanting to create, but there was supposed to be some absolute finite supply of bitcoin once it was properly and completely mined, and I love the term mining when it comes to the creation of bitcoin, but now we find that there are, what, 1,300, 1,400 various cryptocurrencies out there, so it's not that bitcoin has been made infinite. It's that the universe of potential coins has been made infinite, and this reminds me so much of what happened four or five hundred years ago in Holland with the tulip bulb mania that happened in England with the South Sea island bubble. It happened here in the United States in the late '90s to the turn of the century with the dot-com bubble. It happened in 1929 with the stock market bubble. It happened in 2005, six, and seven with the real estate bubble. These things, when the public gets involved as the public has become involved, and the only question one gets anymore is what do you think about bitcoin, when the public is this involved, these things almost always end badly. So, I own any bitcoin? No. 6

7 Will I be short of bitcoin? No. Will I be long of bitcoin? No. I will simply avoid it because it has all the hallmarks of a bubble from history, and as I said, these things usually end in tears. I bought five bitcoin, and I call them my pets. I keep them in a cage. Yeah. Well, that seems pretty good. I just kind of watch them and see what they're doing, because if I'm not watching them, I'm not interested, so at least I'm watching them. Dennis, I heard a rumor that US government was putting a lot of money into creating their own cryptocurrency so that we could become a cashless society. Any validity to that? Do I doubt that some governments somewhere are doing that? No, I do not doubt that at all. There's no question that eventually we shall become a cashless society or a cashless world. Are we gonna become cashless in my lifetime? I doubt it. Are we gonna become cashless in my daughter's lifetimes? So, they're 34 and 36, I guess, right now. Will we become a cashless society in their lifetimes? It's possible. Given the computer technologies that abound, almost certainly we shall go that way. What is the need for cash? I mean, we see it here in our own business that the... We used to take in checks for payment for the newsletter. Now more of it comes across the ACH system, or it gets wired to us. Shall we become eventually a cashless society? Almost certainly, we shall. Is the US government involved in it? I would hope that somewhere within the confines of the Fed they are investigating it. Do I think that they shall move to push us in that direction? No. Society will make its own decisions. Yeah. As a futures trader, when you're looking into the future, what are some of the rules you have to not become a legend in your own mind out there like I am? I think the most important rule that anyone can ever use in the business of trading is simply this. Never, ever, ever, ever, not ever, never, ever average down. What do you mean by average down? If you buy a stock at 15 because you liked the stock, you liked the company, you liked the chart pattern, you liked the economy, you liked everything about it and it went to 10, the market's telling you that you're wrong, period. You're wrong. If it goes to 20, you're right. Why would you do more of something that has told you that you're wrong, and why don't you do more of the things that are telling you that you're right? If you buy a stock at 15 and it goes to 10, don't buy more. Do more of the things that are working, and do less of the things that are not. If you do that in life, you're gonna be far more successful. Do the things that you 7

8 do well. Avoid the things you don't do well. Buy things that are going up. Avoid things that are going down. Do more of that which is working, and less of that which is not. That is the first and most important rule of trading that I can pass on to anybody else. The pros in the business of trading lose money more often than they make money, but out of the 10 trades that they do, the three that work overcome any of their losses. Amateurs, the public, probably on balance make more profitable trades and lose money, because on the three trades out of 10 that they lose, they average down and lose a lot more, and I think that that's important to understand. That's what separates pros from amateurs. Is that called dollar-cost averaging? Dollar-cost averaging is averaging down. It's buying something that's gone down against you. Correct. I am not a proponent of dollar-cost averaging unless you want to say, "I want to average up." If you buy something at 15 and it goes to 20, buy more. If it goes to 25, buy more. If it goes to 30, buy more. Why? Because the market's telling you that your thinking is correct. Okay, and- And you said, too, at Thanksgiving, you have a fun thing that you do with your readers, and look at the favorite rule of trading. Yes. I put usually 20 rules of trading. They haven't changed very much over the years, but I always of the subscribers to send me in their new rule of trading, and we usually have a contest to see who comes up with the most interesting rule of trading. My favorite from several years ago was a subscriber who wrote in and said... And this is a rule that we now adopt. There is never just one cockroach, i.e., when a company shows that its earnings have fallen, rest assured that next time its earnings are gonna fall. If you find out that a president a company or the treasurer of a company has resigned his position to spend more time with his family, I guarantee you there's a problem there and that there are more problems coming. There is never just one cockroach. It just seems to always be that way. This year, the rule that won this year was if your brother-in-law is buying, you sell. That's great. 8

9 That's fantastic. Going back to your dollar-cost averaging or averaging down, I don't what they call it, that's what they say in the industry. Never grab a falling knife. Yes. Don't grab falling knives. Those hurt. Try to hang onto rising balloons as best you can, and try to avoid falling knives. So, with that said, we have today, probably it is the highest stock market prices in world history. Yeah. It is, isn't it? What is your opinion on that? You can write this down. Promise you won't laugh. Promise. It's a bull market. It'll continue until it stops. That's the second- That's hard to not laugh at. It's hard not to laugh at, but you know what? That's what's important about this. Every time you've tried to fade the market, and fade is a pro's term to take the other side of a trade, every time I've tried to fade the market, it has gone consistently right in my face and goes to new highs. The economy is doing reasonably well. As my old friend Brian Wesbury, who I think is one of the best economists on the street, has this wonderful explanation for what the economy is doing. This is not a racehorse economy. This is a plow-horse economy. It just continues to quietly plow laboriously forward, and it's probably gonna continue to do exactly that, and as long as it does, earnings will be better and the stock market will probably make new highs. So, continue to buy new highs. That's what pros do, and every time somebody has tried to sell it, it's proven to be utterly and completely wrong. My wife has been brilliant. She just bought a bunch of stocks five and six years ago and has sat quietly along all that while and has enjoyed the ride higher. Brilliant move on her part. So, right now, your advice to the average person out there like me... So, stock market's at all-time high, but isn't that when people, they get sucked into it? If you think that price-to-earnings multiples are high, and they are, the price-toearnings multiples are high when you take earnings of the past five or six or seven years and say, "Well, yes. If that's the average," and pass them and take the price today of the stock market against the earnings on average of the past decade, the P/E multiples are high and stocks might look expensive, but aren't 9

10 stock prices supposed to look forward, and given the tax cuts that went into effect and given the circumstance prevailing around the world, that we now have a synchronous global economic advance that is not rushing anywhere forward, it's plodding, plow horsing quietly forward, that's probably gonna continue. So, anytime you see weakness in the equities market, you probably have to be a buyer of equities. We'll have the inevitable four-to-five percent correction. That's going to happen. We need one. The moment you step in and buy, you're probably gonna step right into the face of being a buyer into that correction, but when you get a correction, you want to be a buyer. The only time that I'll be nervous about equities is if we have some geopolitical risk that happens, and who knows what that shall be, but you walk in one morning and the Dow's down 400, and it doesn't rally. That's the day you probably have to become unconfident. That's the day you probably have to say, "You know what? Maybe I want to take some of the money off the table." You walk in one day because there's some geopolitical circumstance that has happened, the stock market opens 400 lower, and it doesn't bounce back, but thus far, every time we open a hundred or 200 points lower on the Dow, almost by the afternoon or usually by the next day, we're at new highs again. Speaker 1: Speaker 6: Once again, it's Robert Kiyosaki of The Rich Dad Radio Show. Our guest today is Dennis Gartman, editor and publisher of The Gartman Letter, and you can go to his website at thegartmanletter.com. He's been writing his letter since 1987, and he is the man I look to when I want to see the future, and the future today is very bright for some people, and not so bright for people who aren't listening to Dennis and listening to their brother-in-law. So, when we come back, we'll be talking to more about Dennis, this time about gold, and what else he sees coming in the future. Oh, we might have to talk a little bit about the president and some taxes and things like that as well. Sure. So, when we come back, we'll be speaking more with Dennis Gartman about what he sees coming in the future. You're listening to The Rich Dad Radio Show with Robert Kiyosaki. Robert Kiyosaki's Rich Dad advisors have a great gift for you. Visit richdadadvisors.com and receive five free reports on business and investing success, five free reports that can help you right now, and while there, check out the Author's Choice audio series. Audio is a great way to learn, and for as little as 99 cents, you can download key chapters from all the Rich Dad advisor books. You can listen to The Myths and Magic of Real Estate Investing, Seven 10

11 Steps to Limited Liability, The Four Pillars of Investing, Team Code of Honor, or The Psychology of Debt, among other great audios. For pennies, you can power up your skills for getting out of the rat race, so please visit richdadadvisors.com for your five free reports and your powerful and affordable audio chapters. That's richdadadvisors.com for great information that can help you right now. Speaker 1: This is The Rich Dad Radio Show, the good news and bad news about money. Here's Robert Kiyosaki. Welcome back. Robert Kiyosaki of The Rich Dad Radio Show, the good news and bad news about money. You can listen to The Rich Dad Radio program anytime, anywhere on itunes or Android, and you can listen to these programs on your time and your schedule. All of our programs are archived. We do that because repetition is how you learn best. Listen to this program one more time. You'll retain 70% more, and also, you can get your friends, family, and business associates to listen to it, because we are in very exciting and also volatile times. Our special guest today is Dennis Gartman, editor and publisher of The Gartman Letter, and he's been publishing that letter since His website is thegartmanletter.com, and I'm very excited about... I've been looking forward to interviewing Dennis for a long time, because if you want to get ahead, you've got to talk to people much smarter than you. So, once again, we're talking to Dennis Gartman. We warned about bitcoin, not that he's pro or against it. He just thinks it's a bubble, which I agree with. Anything you want to say about it, Kim? At the break, Dennis, we were talking about the trade deficit. Everybody's screaming about the trade deficit, and everybody's concerned about the national debt. You have a very different take on it. Yeah, I do. I have a completely different take on it. First of all, I do not worry even slightly about the fact that the United States runs a 50-billion-dollar trade deficit almost every single month. The president seems to wail and gnash his teeth. Mr. Bannon, thank goodness is no longer of political importance, wailed and gnashes his teeth over the trade numbers, but let's be honest. Since the 1960s, the United States has run imbalances of trade almost every single year. I think there were only two in the past 60 years that we didn't. What's interesting is, is the economy in better shape now than it was then. Are we a better country now than we were then? The answer is abundantly clear, yes. Every year, we run budget deficit or trade deficits. My only concern, as I tell people, I can have us run a trade surplus within three months. Easy enough to do. How would you do that? How do you do that? 11

12 Yeah. Easy. Drive the marginal income tax bracket to a hundred percent and put the United States into a depression. We will stop importing goods and services, we will continue to export some goods and services until the rest of the world goes into a depression, but we will run a trade surplus in a very short span of time. If you look at the last time the United States' monthly trade numbers fell under 40 billion dollars, it was 2007, 2008, and 2009, and I don't have the data in front of me to be exactly precise, but we fell from, let's call it, 50-billion-dollar trade numbers to 25-billion-dollar trade deficits during the worst recession we'd had since the early 1980s. I.e., in order to get a balance of trade, we need to have weak economic circumstances in the United States so that we import less. What nonsense is that? Rather, I want to see that we export... If I had my druthers, I'd love to see exports from the United States up one percent every month and imports into the United States up two percent every month. That tells me one and one thing only, that the economy is doing better. The trade deficit may get worse. I couldn't care less. Plus, we have problems trying to discern what it is that we actually do import and export anyway. I.e., I don't lie awake a night worrying about the trade numbers, and if we wanted to run a trade surplus, easily accomplished. Just drive the marginal tax bracket to a hundred percent and put us into a depression. Do we really want to do that? I think not. Good point. I tell you, that is a very radical point of view. But you also don't lose sleep over the national debt. Every- I really don't. Yes, I understand- Why is that? Because we account for it in a rather interesting manner, and in speeches that I give, I tell people I'm lucky enough to live in Southeast Virginia, and across the Chesapeake Bay from where I live, it's almost 20 miles to Norfolk Naval Shipyard. That's three times the horizon, but I can see the Navy's aircraft carriers. We have 11 of them. Usually three or four are in the harbor here in Norfolk, and you know what's interesting? We're the only country in the world that has that many aircraft carriers, and we carry them on the balance sheet of the United States at zero. When we build an aircraft carrier, when we build a new B-1 bomber, when we build new tanks, when we build new roads, when we build new federally-funded hospitals, when we build schools, we're the only country that carries them at nothing. Other countries carry all of their military expenditures or their military assets at a value. We don't. 12

13 How much is Yosemite worth now? I think we carry that on our balance sheet at a dollar. As I say in speech, I'm willing to pay three for it right now and triple the valuation. It is silly, the manner in which we worry about our budget deficits. Yes, it would be much better if we got something closer to a balance budget. Yes, it would be better if we had a simpler tax regime. Yes, it would be better if we got a handle on entitlements, which are probably out of control. Yes, it would be better if we cut our spending, I think, rather materially, but first of all, if we looked at the government as we would look at a business, actually, we probably are in pretty good fiscal circumstances, and some might even say we are underleveraged, not over. That's a totally different point of view. Yeah. A very important question, because you're probably- Fascinating. A strike zone is commodities. What do you think the relationship between gold, currency like the dollar and the euro, and bitcoin? Is there a correlation in there? Well, one would think, but the correlation between bitcoin and gold, if there is to be a correlation, it has certainly ceased to be evident to me. I have to admit, Robert, when bitcoin went above the price of gold, I was stunned. I mean, I should make no bones about it. I was stunned. A dollar a day, that- Well, Dennis, I don't know about you, but I was laughing at the guy trying to sell me bitcoin at 20 bucks. Yeah, and I was laughing at him when he was trying to sell it to me at 500, at a thousand, at 1,500, at 2,000, at 3,000, at 5,000, at 10,000, at I laughed the whole way up, so I've been an idiot when it came to bitcoin. As somebody once said, them's not eating sardines, them's trading the sardines, and bitcoin isn't an asset. It's a trading circumstance, and I've had friends who were really good traders who see no sense at all in bitcoin but have traded it because it is something that is fun to trade and they've had fun with it. Is there a correlation between gold and bitcoin? I'm not sure there is at all. Is there a relationship between stocks and gold? I'm not sure there is at all. Is there a relationship between wheat and crude oil and natural gas and commodities, generally, and gold? I think there actually is in that instance, yes. Okay. So, what's your forecast on gold? 13

14 Well, as I said earlier, I think that... And I don't think there's any think about it. It's actually quite abundantly clear that the lows in this bear market that existed several years ago ended in late 2015, and every... I like to tell people if you can get a chart of something, put it on a wall, walk 20 feet away from it, try to forget what you're looking at, and ascertain what that thing is doing, if somebody put a chart of gold on a wall that was large enough and walked 20 feet away, you'd say, "You know what? Whatever that is, it's not going down anymore, and it looks like it's trying to go up. Each low has been higher since the end of Each high has not been higher," that would be the real signal, and if you could trade gold, let's call it in dollar terms, above per ounce, that will mean we've taken out the previous interim highs where every low has been progressively higher, and a bull market has begun. I really do think that a bull market has begun in gold now, and I think that it shall be several years, maybe many years, in duration, but we are years away from when you get those parabolic movements higher. It's in these first two or three or four or five years of any 10-year bull market that are the most difficult because that's when the lows get tested and one's patience gets put to the greatest test, but I do think on balance one will do best owning gold, not just in dollar terms, however. I think you want to own gold in terms of euros. I think you want to own gold in terms of yen. I think you want to own gold in terms of dollars, because gold is still a finite commodity. There is only X amount of it that has thus far been mined, and on the other hand, the monetary authorities, the Fed, the ECB, the Bank of Japan, the Bank of Canada, the Reserve Banks of Australia and New Zealand are all expanding the supply of reserves into the system, and they're creating more currency, and the amount of gold on balance is really not being created or being increased at all, so I think you want to own gold in terms of dollars, euros, and yen. You want to own gold in terms of other currencies. So, that's what we do. I just buy gold. I mean, we never sell, Kim and I. We just keep buying, and buying, and buying, and buying, and buying, and it's just because I just see the printing of the dollar and the yen, especially. Well, quantitative easing has occurred in Japan. Quantitative easing has occurred in Europe. It's occurred in the antipodean countries, New Zealand and Australia. It's occurring in Canada. It's just a phenomenon that has been occurring, and on balance that's something that probably is not going to ever stop. We hear the urgency on the part of the Fed to curtail its experiment with quantitative easing, but are the reserves that it has injected into the system over the course of the past several years, and let's be honest, the Fed, I think, did exactly the right thing in the debts of the recession in 2007, 2008, and 2009, and adopted quantitative easing, because otherwise we might well have headed into a depression that we might still be in. They did the right thing. Now it's the problem of trying to withdraw those sums, and they're not doing a very 14

15 aggressive job of withdrawing them, nor, in my opinion, should they. I think the Fed is doing exactly the right thing, but they've been expansionary, and that probably is the driving force behind commodity prices, generally, and gold specifically. So, before we come to an end, is there anything especially that you want to talk about that's hot on your mind? You know, I find energy and crude oil fascinating, and the aspect of fracking as it has developed here in the United States, I find fascinating. One, fracking is old. Fracking began a hundred years ago. It's just become more common and better used, and the technologies behind fracking and what's known as seismic technology to look into the ground and see what is in the ground as far as energy is concerned is important. When I was in undergraduate school in the 1960s, they told me that we were gonna be out of crude oil by the middle of 1980s. The world believed that. I mean, all I know is that here we are in 2018 and we have four times more proven reserves in the ground now than we did then. I don't know about you, but I've driven a car since I've flown in airplanes. I've heated my house. I've cooled my house, and yet we have more proven reserves of energy in the ground, and here in the United States, we've gone from producing four million barrels of crude a mere six years ago to almost 10 million barrels of crude now, all because of seismic technology, horizontal drilling, and fracking. Now, what's interesting to me, and I think this is important because I've talked about inflationary pressures in commodities, I'm not very bullish at all of energy prices for the simple reason that the number one producer of crude oil in the world is Russia, and they have only begun to frack wells in Russia. Saudi Arabia has not fracked a well yet. In England, they actually did frack a well last week. I thought that was fascinating, but we are the ones that have shown the world how to go find more crude, how to frack those wells, how to horizontally drill, and do you really not think that Russia, that China, that Saudi Arabia, do you really believe that they're not gonna take our technologies and advance the finding of and the producing of crude oil? I think there's a reason why the Crown Prince of Saudi Arabia has made it abundantly clear that Saudi Arabia's gonna produce crude oil as aggressively as it can, because he's convinced that new technologies will come along that will drive the price of crude oil dramatically lower over the next 15 to 20 years. Great point. Thank you. Hey, one question, Dennis. There's a lot of controversy on the tax code. Yes. 15

16 Speaker 1: What's your take on the tax code? Who wins? Who loses? Is it gonna do what they say it's gonna do? I will defer on who wins, who loses. I will simply say this, two things. One, any time you cut taxes, I'm in favor of it. There's no question that cutting taxes begets stronger economic environs, and cutting taxes almost always, there are exceptions, but cutting taxes almost always gives rise to larger tax revenues. It's almost axiomatic. So, I like the fact that we've cut taxes. Are there winners and losers? Yes. Do I wish that we had gone to a flat tax? Of course. Will we find out what's in the tax law as we go forward? Yes. Nancy Pelosi stupidly said regarding the healthcare, "We need to pass this so we can find out what's in it." Yes. Same thing here. The same thing is incumbent here in the tax regime that has just been passed, but on balance, am I supportive of it? Absolutely. So, Dennis, I want to thank you. We're out of time, unfortunately. Love to invite you back, and like we were talking earlier during the break, every time I see you on television you've got a four-minute sound bite- Oh, they'll let anybody on, so don't worry. You're really a valued treasure. I mean, your points of view have really rattled my brain cells, my points of view, so I want to thank you for that. Yeah. Really, thank you for all the information. Thank you for the world that you're doing in educating people about what's happening in the world and in the US. Well, thanks for having me on. It's been my honor. You all made a great good deal of fun. Look forward to doing it again sometime in the future. We'd love to. Oh, we did, too. Thank you, Dennis. Thank you, Dennis. Cheers. When we come back, the next part of our program is Ask Robert. You're listening to The Rich Dad Radio Show with Robert Kiyosaki. 16

17 Speaker 5: Speaker 6: Speaker 1: Every business owner and real estate investor needs asset protection. Entities like LLCs, S or C corps, are vital to protect yourself and your business. Let Corporate Direct guide you through the process of forming a corporation or LLC. Corporate Direct is owned by Rich Dad advisor, Garrett Sutton, and is Robert Kiyosaki's choice for corporate formation. Mention Rich Dad and receive $100 off a formation. Call That's , or visit online at corporatedirect.com. That's corporatedirect.com. Robert Kiyosaki's Rich Dad advisors have a great gift for you. Visit richdadadvisors.com and receive five free reports on business and investing success, five free reports that can help you right now, and while there, check out the Author's Choice audio series. Audio is a great way to learn, and for as little as 99 cents, you can download key chapters from all the Rich Dad advisor books. You can listen to The Myths and Magic of Real Estate Investing, Seven Steps to Limited Liability, The Four Pillars of Investing, Team Code of Honor, or The Psychology of Debt, among other great audios. For pennies, you can power up your skills for getting out of the rat race, so please visit richdadadvisors.com for your five free reports and your powerful and affordable audio chapters. That's richdadadvisors.com for great information that can help you right now. Financial freedom begins with financial education. Now, back to Robert Kiyosaki and The Rich Dad Radio Show. Welcome back. Robert Kiyosaki of The Rich Dad Radio Show, the good news and bad news about money. Dennis Gartman, editor and publisher of The Gartman Letter, I want to thank him for being on this program, and his website is thegartmanletter.com, and you can listen to The Rich Dad Radio program anytime, anywhere on itunes or Android, and all of our programs are archived at richdadradio.com. We archive them simply because if you listen to this again you will hear twice as much, at least twice as much, and you can share with friends, family, and business associates, because the way we get ahead and see clearly is by having different points of view and all this, and boy, he was a spectacular guest, wasn't he? This was a show you need to listen to again, and again, and again, and I'm telling you, my eyes are opening on his explanation of the trade deficit, that he actually applauds the trade deficit, and he's not worried about the national debt, and he mentioned that Yosemite is listed for a dollar, and you were saying, Robert, that the gold at Fort Knox- At Fort Knox is listed at $32 an ounce, or $35 an ounce. $35 an ounce, and today whereas gold, so- It's called mark to market. It's what is the asset worth. 17

18 Yeah. So, one of the things we do at The Rich Dad Radio Show is we want to bring different points of view, and this was a very different point of view, and it's kind of enlightening to me. It's refreshing to hear what he had to say about that, so... The thing I really feel grateful to you listeners out there and the staff who puts this program on is that Dennis Gartman generally has four minutes on television, and he got 30 minutes here, so for all of us it gives us a whole different point of view, and that's why we have all these different guests, and I think that's the value of The Rich Dad Radio program is because nobody has the right answer. Where there's always a pessimist, there's always an optimist. We're gonna have a guy who's very optimistic about bitcoin. Dennis is pessimistic. So, you've gotta make your own decisions somewhere in that line there, and that's how we all learn. I was just fascinated about his thing about fracking and oil because Kim and I have a lot of oil and we've made a lot of money due to fracking, but will the price of oil keep going up? If Dennis is accurate, I mean... I see the other side of it is that a lot of the debt we're carrying right now is at $70 a barrel, so as long as it's 60, we're running a deficit inside these small oil companies, these well kit companies, so that's because we understand the business of oil a bit better. Our job is just to have you see clearer so you can make better decisions, so that's why we have The Rich Dad Radio Show, and thanks for listening to it. So, what's the first question, Melissa? You can submit your questions to askrobert@richdadradio.com. Melissa: Melissa: Our first question today comes from Scott in Greenville, North Carolina. Greenville. Hey, WBT Charlotte. Thank you. Yes. Thanks for listening. Favorite book is Rich Dad Poor Dad. He says, "I learned of your three piggy banks for tithing, savings, and investment in Rich Kid Smart Kid, and I'm using it for my personal finances while I'm learning my way through S quadrant hell. Did you and Kim use the same approach for your S quadrant business finances? Do you use it for your businesses now?" The answer is personally, yes. Do we use it for our business? No, because the business structure is different than us personally. And let me- 18

19 So, this is the whole point here. We keep it very simple, but there's no right answer. It's what works for you. So, do we do it personally? Yes. Does our business do it? No. And let me explain what the three piggy banks are. So, our rules is that, and we've done this for years and years, and we actually started it when we had very little money coming in and more money going out, but with every dollar that came into our household, we took 30% off the top first, before paying any bills, before paying anybody, and 10%- That was hard because it meant we were even deeper in debt. I mean, negative every month. Yep. So, with that one dollar, 30% off the top, 10% went into a savings account, 10% went into an investing account, and 10% went into a charity or tithing account, and we still practice that today. It's much more than 30% today, happy to say, and you'll be amazed at how fast those piggy banks accumulate. What she means by it's more and more is because we're making so much money from our... We save gold. We don't save cash, and we invest in real estate and all those things, and we tithe, and before it was really tough to tithe 20 bucks. Now it's in the hundreds of thousands, so that's the difference. It just keeps growing. It's really called budgeting, but what most people do is they don't pay themselves first. They pay themselves last. Another thing, too, I want to talk about is Kim and I have a high debt structure, personally, because we're real estate investors. The Rich Dad company is not into this high-debt structure, so our methods of budgeting are different. The point of saying that is that there is no set answer. Everybody's looking for the magic bullet, give me the right answer, and what they're gonna tell you is the same old garbage. Go to school, get a job, save money, invest for the longterm in the stock market, get out of debt, and buy a house because it's an asset. That's a standard line. If you do that, there's a lot of guys my age right now who are Baby Boomers, they're not gonna make it. They're not gonna make it because they haven't invested enough, so that's why everybody is different. So, if I was at my age now and I had nothing, I'd have to do something different, and that's why I'm saying we're very grateful to have different people, different points of view, because everybody goes, "Give me the answer," rather than think for yourself. Next question, Melissa. Melissa: Our next question comes from Robin in Houston, Texas, favorite book, Rich Dad Poor Dad. I own physical gold, but after listening to your show with James Rickards, I'm apprehensive about keeping it in the banking system. Where do you recommend storing physical gold outside of the system? We get that question a lot. 19

20 Melissa: Okay, but this is the point, the reason we ask you to study and all this. He's just looking for the answer. The reason that is said is that there was an accord held in [Bresman 00:49:47], Australia in 2014, and what was passed was that it is now possible that banks and governments will shut down, and they're going to do what's called an ice-nine or a... It happened in Greece and it happened in... What's the country? Oh... Cyprus. Cyprus, where they just basically locked your money up. So, what happened was Obama and his boys then made it legal for the world to do that. The reason for that, as Dennis said, there is no money in the banks right now. All that money is leveraged out. It's all- It's all electronic. It's just leveraged out. For every ounce of gold in an ETF right now, there's a hundred ounces out there in the marketplace, so it's over-leveraged. So, the reason Rickards is saying keep it out of the bank is that he is concerned. He has evidence, and I can't verify that, that they're gonna shut the banking system down. Now, is that true or not? I don't know. It's like Dennis Gartman. Is that true or not? I don't know, but I can make my own decisions. So, Kim and I keep our money in, they're called, private vaults that are designed for people with large sums. If you don't have large sums, just buy a little safe and keep it in your house, but don't make it so obvious where the safe is, but the point here is this. It's what's the logic behind Rickards saying that. The book by Rickards, who wrote about that, was called The Road to Ruin, James Rickards. Next question, please. Our next question comes from Brent in Sacramento, California, favorite book, Rich Dad Poor Dad. He says, "Robert and Kim, what is your process in determining which investments you want to invest in?" That's a great question, but that's just strategy. See, Dennis Gartman doesn't care about the price going way up on the stock market. There's a reason for that, because stocks are liquid. If he senses that it's gonna crash, he can get out in a split second. That's the beauty of stocks. It's the beauty of gold, also. You can get out quickly. In real estate, you cannot get out that quickly, so with every investment category, be it a business, be it real estate, be it paper, which is stocks, bonds, mutual funds, ETFs, and savings, and commodities like oil, you've got to understand your liquidity ratios. How quick can I get out, if necessary? In oil and gas, Kim and I cannot get out. We're trapped in there. It's hard to get out of it. In real estate, it's hard to get out of there. Stocks, bonds, and mutual funds, easy to get out of there. Gold, easy to get out of it. So, what determines our ratio is called a liquidity factor. How quick can we get out? Any comments on that, Kim? 20