Rich Dad Author: If You Want To Be Rich, Hold Gold
(Kitco News) - Despite reaching all-time highs this week, one famed investor says that any long-term rallies in the market won’t hold.
Robert Kiyosaki, best-selling author of “Rich Dad Poor Dad” and his latest book “Why The Rich Are Getting Richer,” said that a market crash is imminent within the next two to three years.
The S&P 500 Index has sustained its second-longest bull market in history, climbing 19% in 2017. The S&P 500 last traded up 9 points to 2,785.
"Something has to happen,” Kiyosaki warned, “I don’t mean to be an alarmist, because I like crashes, that’s when everything goes on sale, so when everything goes on sale, I’m back in the market.”
Kiyosaki told Kitco News in an exclusive interview that the world has been in a debt bubble since 2004, and that “the problem with debt bubbles is that when they come down, they come down like an avalanche so I don't think it's too long [away.]”
According to data from the Federal Reserve Bank of St. Louis, the U.S. federal debt-to-GDP ratio has climbed to 103%, up from 60% in 2004, and is currently at the highest level since World War 2.
While the last financial crisis saw debt levels rise dramatically, U.S. equities lost more than 35% over the course of the recession.
On his view of financial assets, the self-proclaimed gold bug is one of few investors to be bullish on both bitcoin and gold, noting that the cryptocurrency will slowly erode fiat currencies’ relevance, while gold will act as an important hedge instrument.
“When I talk to people, I say, ‘what do you think will be here in 2040? Will gold still be here? Well, it’s been here since eternity. Will the dollar be here? I don’t think so. Will blockchain be here, I think so,’” he said.
Gold has rallied 6% since the Fed raised rates in December, while bitcoin has dropped 50% from its all-time high last month. Some analysts attribute this decline to bitcoin outflows back into gold, which some cryptocurrency traders view as a competing safe haven asset.
Still, Kiyosaki maintains that bitcoin will outshine traditional fiat currencies in roughly twenty years.
“The way I see the world today is that there’s three kinds of money,” Kiyosaki said, “there’s God’s money, which is gold and silver, there’s government money, called fiat money, or currencies, and the third type of money now is cyber money. That’s really the way I look at the world and currencies, is what’s going to be here in 22 years.”
Kiyosaki has been “collecting” gold ever since Richard Nixon removed the dollar from the gold standard in 1971, and is today, a self-proclaimed gold bug.
His love affair with the yellow metal can be traced back to his days flying in Vietnam, when he met a guru who convinced him that gold is “the tears of God.” “If you want [steady] income,” Kiyosaki said, “just use real gold and keep it near you.”
“I will never sell gold,” Kiyosaki added, “gold has made me very happy.”