When the Chinese Government Stole Billions From Me
The first lesson in Rich Dad Poor Dad is, “The rich do not work for money.”
Today, I’ve modified that to, the rich do not work for fake money — fiat money.
To understand why I made the modification, you must take a brief history lesson.
As a young man on my second tour of duty in the Vietnam War in 1972, I got a letter from my rich dad that read, “President Nixon took the dollar off the gold standard. Watch out, the world is about to change.”
I didn’t quite know what rich dad meant at the time, but I was intrigued. I read The Wall Street Journal to search for answers. One article that caught my attention was on gold. The price was fluctuating from $35 an ounce to $60 an ounce.
Thinking we were smart, a fellow pilot named Ted and I flew from our carrier across 25 miles of the sea into enemy territory. We hoped to find a gold dealer and get a good deal.
We tried to negotiate with an old woman in a small village, our opening bid was $40 an ounce. Little did we know, the spot price was $55. The tiny woman we were bargaining with just smirked and was probably thinking, The two of you are idiots. Don’t you know that the spot price of gold is the same all over the world?
Thankfully we got out of there without any detection by the enemy, but we certainly didn’t get a deal on gold. Most importantly, we did get a lesson on real money.
What Is Fake Money?
When President Nixon took the US dollar off the gold standard, the US dollar became fake money. This is because rather than being tied to real money — gold — it was tied to the “full faith and credit” of the United States. Translation: it became a giant IOU.
Why would Nixon do this? Because the trade deficits between the US and other countries were growing too much. Because we were importing more than we were exporting goods, we were losing our gold.
How does this happen? When a currency is not tied to real money, governments can print more and more money out of thin air. This leads to inflation — the devaluing of the purchasing power of that currency.
This is nothing new. Countries from ancient Rome to Weimar Republic Germany to modern-day Zimbabwe have printed or debased money to the point of no return. This results in hyperinflation where money becomes worthless and people use it to create fires rather than to buy things.
Gold and Silver Are God’s Money
The reason why fake money is so dangerous is that most people don’t know that their money is fake. So, they do what they’re taught. They save it. The problem is that savers become losers because money devalues over time and becomes more and more worthless.
The rich know the difference between fake and real money. That is why rich people use fake money to buy real money, i.e., gold and silver, as well as assets with real value like real estate and commodities.
When I purchase a gold or silver coin, I don’t expect an ROI because I’m not taking a risk. Gold and silver are God’s money. Always remember, the price of gold or silver will go up or down because the value of our fake money is going up or down. Gold and silver are just gold and silver. Gold and silver will be here long after you, I, the elites, and the cockroaches are gone.
When I purchase real gold or silver, I purchase them forever. I never plan on selling. Just as Warren Buﬀett holds stocks forever, I will purchase gold and silver forever.
My Education in Gold
For more than 15 years I learned from my business partner Frank Crerie. Frank was about the same age as my rich dad and my poor dad. Frank had taken several gold and silver mines public through IPOs on the Canadian and US stock exchanges.
Too old to travel, Frank sent me throughout the world looking for gold and silver mines. It was an incredible education. I remember looking at the side of a hill in the Peruvian Andes and seeing a line of holes, small gold mines, and following a gold vein all along that hill. My mining geologist told me those tiny holes produced gold for the Incas, long before Francisco Pizarro arrived from Spain, killing their leaders and then stealing their gold.
I also remember traveling to Mongolia to visit another old gold mine we called “The CheckerBoard.” It was called that because the mine was on ﬂat ground and looked like a checkerboard because of the holes.
One of our best mines was an old silver mine in a remote part of southern Argentina. Our group took that mine public on the Toronto Stock Exchange when silver was less than $3 an ounce. We did very well once silver broke $7 per ounce. Today, silver bounces at around $24 an ounce. Unfortunately, we sold it for $7.
Our biggest acquisition was an old mine in China. We got the Chinese mine for “nothing down.” The agreement was that the Chinese government would give us the mine if we would raise money by taking the company public on the Toronto Stock Exchange, which we did. The good news is that we found gold.
It was a massive deposit.
Millions of ounces, “proven.” For about a year, we knew we were billionaires. Our Chinese goldmine had a Spanish portmanteau: Mundoro Mining, or a world of gold.
Then one day, a government oﬃcial notiﬁed us that the Chinese government was not going to renew our business license. Today, that mine is in the hands of friends of the Chinese elites.
Gold Attracts Wealth
Years ago, I remember Apple ran a magazine ad that featured a group of Hindu holy men. The headline on the ad was “Holy Icons.” The head “guru” was a white guy, not someone of Asian ethnicity. The ad featured Apple’s new Macintosh computer and the guru’s honey business on the Hawaiian island of Kauai.
The ad was clever, meaningful, and memorable.
A few years later, I was invited to a seminar, featuring the same head guru, Gurudeva. When it came time for questions, most questions were on enlightenment, spirituality, peace, or happiness. The guru was wearing a lot of gold — gold glasses, a large gold earing, gold bracelets, and a gold necklace. Since I was raised a Methodist, and Methodist ministers did not wear much gold, I raised my hand and asked, “Why do you wear so much gold?”
The kind guru smiled and said, “Because the tears of God are made of gold.”
“What?” I gasped. In the Methodist church, those would have been words of heresy, words of the devil. I sat there, in silence, my mind struggling with the guru’s words. Sensing I was struggling with the thought of God’s tears being made of gold, he said, “The tears of God — gold — attract wealth.”
When I asked what he meant by “gold attracts wealth,” the guru replied, “Let’s say you want to attract $1,000 a month into your life. Then you should own $1,000 of real gold.”
“And if I want $1 million a month, then I own $1 million in gold?”
The guru, sensing my greed overtaking my spirituality, just smiled and said, “Why don’t you start with $1,000, and see if what I say works for you. Gold does not work for everyone. There are conditions on God’s generosity.”
Since that experience, that is the formula I follow.
Play it smart,
Editor, Rich Dad Poor Dad Daily