Robert Kiyosaki, a prominent entrepreneur and author of Rich Dad Poor Dad, believes that the dollar is doomed and that wealthy people are investing in assets such as gold, silver, oil and real estate rather than hoarding cash. We have long warned that investing protects your wealth. His warnings are based on a lifetime of studying financial history and observing how governments inevitably destroy their own currencies through reckless overspending and money printing.
Search: 8 ways to get rich without investing in stocks
See our list: 100 Most Influential Money Experts
According to Kiyosaki, this is why rich people don't rely on the US dollar, and it's the same reason why you would be wise not to rely on it either.
The gold standard meant that printing money was limited.
Kiyosaki first recognized the importance of gold in 1972 while stationed in Vietnam. His “Rich Dad” mentor sent a letter to Mr. Kiyosaki saying, “President Nixon took the dollar off the gold standard. Rich Dad.” Be careful, the world is about to change. ”
Until then, the dollar was backed by gold, which limited the amount of currency that governments could print. When the gold standard was abolished, the dollar became a “counterfeit currency,” nothing more than a government loan document that could be created without limit.
After reading about the abolition of the gold standard in the Wall Street Journal, Mr. Kiyosaki and his fellow soldiers went to Vietnam to buy gold from locals at artificially low U.S. prices of $35 to $40 an ounce. He flew 45 miles to enemy territory. The world spot price was already $55 per ounce. An elderly woman they met flatly rejected their low-level offers, telling them that gold was traded at the same price all over the world.
Although their mission failed, Kiyosaki learned that gold is a valuable commodity that, unlike paper dollars, which governments can devalue at will, is real money whose value transcends borders. Lesson learned.
Learn: How to invest in gold
bet on dollars
In 1996, Mr. Kiyosaki founded a gold and silver mining company, anticipating that the value of precious metals would rise significantly as the dollar depreciated. His logic is that gold and silver are at multi-decade lows in dollar terms, with gold at $275 an ounce and silver at $5 an ounce, so there is significant upside potential. was.
He saw the dollar's overvaluation and low oil prices (at $10 a barrel at the time) as signs of big changes to come in financial markets. Kiyosaki proved to be a visionary. Gold currently trades at about $1,830 and silver at about $23, while the dollar has lost almost 95% of its purchasing power due to inflation.
Central bank policy causes currency crisis
Kiyosaki believes that some kind of dollar crisis or hyperinflation is inevitable due to the government's reckless spending and central bank money printing. He points out that the differences in the approaches of the United States and Germany after World War I point to a path to monetary disaster.
The United States maintained a strict gold standard, which prevented the printing of money and caused deflation and depression. Germany abolished the gold standard, printed tons of money, and suffered a devastating hyperinflation that destroyed the Deutsche Mark in 1923.
Kiyosaki believes that current U.S. policy is laying the foundations for future Weimar-style hyperinflation, with the Federal Reserve sacrificing trillions of dollars to support the economy. He added that he chose to print it.
lose faith in the dollar
Kiyosaki believes investors and foreign governments are losing confidence that the United States has the fiscal discipline to maintain a strong currency. Widening budget deficits and soaring debt, accelerated by the pandemic, are undermining confidence in the dollar.
The only options are unpleasant ones: the Fed can print more money to make the dollar cheaper, or it can raise interest rates to prop up the dollar, crushing the economy and the stock market. Kiyosaki believes there are no easy solutions for the dollar. That's why he and wealthy people like him are interested in gold.
gold as eternal money
Throughout history, gold has emerged as the ultimate money, retaining its value over centuries, something the wealthy know all too well. Kiyosaki predicts that when today's dollar and financial system collapses under the weight of excessive debt and money printing, gold will regain its monetary status.
Although many people discount gold as an investment, Kiyosaki believes that gold is insurance against certain deterioration of paper money. This is a lesson that has been proven for thousands of years. People will scoff at it until a crisis makes clear the value of unbacked government funding.
wealth transfer is coming
Kiyosaki's team suggests that the next decade will see “the largest transfer of wealth in modern history”, likely due to the onset of a dollar crisis caused by a U.S. debt default. He expects his savings to disappear if the dollar collapses.
But as bubble assets such as stocks, bonds, and real estate collapse, visionary individuals use cash to scoop up undervalued assets, like Warren Buffett, who bought silver in disdain in the 1990s. Kiyosaki says. Financially smart people will take advantage of this crisis, but others will be caught empty-handed.
take action before rushing
Kiyosaki says it's a rare opportunity today because most Americans are still ignorant about real money, like physical gold and silver. Once the inevitable dollar crisis occurs, millions of people will desperately rush into precious metals, causing prices to soar.
By educating yourself now and acting carefully, you can be on the side of the winners rather than becoming victims of the coming wealth transfer. Follow Warren Buffett's example. Be greedy when others are afraid, and fear when others are greedy.
What does that mean?
Finally, Kiyosaki said no one can predict exactly how the dollar's dominance will end. However, it is certain that the era of the dollar as the world's reserve currency is coming to an end due to massive debt overhang.
A dollar collapse can occur slowly through inflation, or it can occur suddenly with a debt crisis. In any case, Kiyosaki urges his individuals to take matters into their own hands. It is wasteful to rely on government money and financial institutions. Protect yourself with real assets. Now is the time to prepare.
GOBankingRates Details
This article originally appeared on GOBankingRates.com: Robert Kiyosaki: Why the Rich Don't Rely On the US Dollar
