For millions of Americans, Robert Kiyosaki is the financial guru of the modern era. The author and financial advisor first gained recognition with his best-selling book, Rich Dad Poor Dad. Many other hits followed, and today a large and loyal fanbase looks to his guidance for all aspects of their financial lives.
Words Worth Listening To
This background makes any observations from Kiyosaki about financial trends actually capable of moving those markets. That is why several comments shared during a recent interview with MarketWatch are worthy of note. Of particular interest is his strongly stated belief that the world is “on the edge of a cliff right now.” Moreover, he feels this is a very unique time, stating, “We have never been here before.”
Robert Kiyosaki traces the roots of his pessimism to the abandonment of the gold standard in 1971. 1 He believes the decision “basically screwed the world.” The current unsustainable environment of growing debt and deficit spending by virtually all governments has its roots in the switch to fiat paper currency.
The Effect of Zero or Negative Interest Rates
Many traditional investment vehicles are subject to Kiyosaki’s disdain during his interview. He believes investing in the stock market for long-term gains is foolish, because there is no connection between stock price and reality. In fact, he goes so far as to say if you do invest in the stock market today, “…you’re crazy.”
Traditional savings are also seen as an insane investment by this ardent financial advisor. When rates are nominal, non-existent, and even negative, it makes no sense to leave assets in paper currency savings, particularly with the prospect of greater inflation. (Though not specifically mentioned, Kiyosaki is undoubtedly aware that “safe investments” such as bonds are included in this view, as nearly $12 trillion of these instruments now have negative yields. 2)
A Gleam of Hope
According to the Rich Dad author, gold is one of the only instruments that has a gleam of value for both current and long-term investors. Claiming that he has been buying gold since it was only $70 an ounce, Kiyosaki thinks it is the only viable alternative to a U.S. dollar that “…is going to be toast in a few years.” Moreover, he acknowledges that even if he is wrong, he will still be comforted by his gold holdings.
While Kiyosaki is adamant that gold is the right investment for everyone at this time, he acknowledges that the ultimate gold price is hard to determine. With ranges of future prices per ounce ranging from $250 an ounce to $10,000, 3 he simply and totally believes that whatever the market price of gold, his holdings will protect his purchasing power. That, of course, is the ultimate determination of true value.
Seeing Opportunity in Crisis
While this popular financial prophet is known for his positive views, his concerns cannot be minimized. He actually sees an opportunity coming in a market crash for those who have the right assets, not just mere “money,” such as devalued paper currencies. His view is: “I make most of my money when the markets crash.”
Convinced that the U.S. and global economies are too far gone for any quick fix, Kiyosaki is not expecting the American elections to change anything. While he has a lot of confidence in what Trump might attempt, he states, “I don’t think it makes any difference at this time. The problem is too big.”
For those who follow this well-known financial expert, these predictions will provide sobering guidance concerning the proper diversification of their holdings into assets such as gold.
2 – http://www.zerohedge.com/news/2016-06-29/there-now-staggering-117-trillion-negative-yielding-debt
3 – http://usawatchdog.com/one-on-one-with-james-rickards/