gold investing

Is Kiyosaki Now Against Gold Investing And Silver Investing? Creating Wealth with Kiyosaki

gold investingFor the last ten years or so, Robert Kiyosaki, a strong advocate for creating wealth, had been stressing the importance of gold investing or silver investing and the need for owning physical bullion.  However, in the last many months or so, he seemed to have “gone off” gold and silver; if nothing else he seemingly stopped promoting it.

I found this interesting as the fundamentals for investing in silver or investing in gold had not changed, if anything they had gotten better:

  • the Fed has continued to print money while our national debt continues to expand with no end in sight,
  • unemployment and jobless counts remain high,
  • inflation continues to rise across the board as the economy still continues to struggle forward even with all the government’s efforts to stimulate and prop it up…

So I found it strange that Kiyosaki, having touted gold investing since it was only $250 an ounce (now almost $1600/ounce) and silver when it was only $3 an ounce (now over $36/ounce), no longer seemed to be an advocate for the precious metals (though to be clear he has never advocated against gold and silver either).

But then I attended one of his seminars (where he discusses the importance of financial education and creating wealth) recently and heard something shocking that I think pretty much explains why…

Kiyosaki on Creating Wealth

During his seminars, Kiyosaki usually uses some of his own antidotes and personal expereinces to illustrate his points and show examples of what he means.  He has always been a strong advocate of accumulating assets, more specifically investments and businesses and such that put money into his pockets each month (versus  investments others like to make purely or mostly for capital gains, ie, flipping homes, buy low to sell high, etc a much riskier way to invest, especially today).

Over the past year or so he has made reference to investments in large resort properties in Arizona, large apartment buildings in the South, oil and gas drilling and wells, along with gold investing via a gold mine in China…

Each of these investments again was made due to the great investment fundamentals each showed, in that each asset had the ability to provide a large cash flow once the asset was “put into production” so-to-speak (apartment units all constructed and rented out; wells pumping out gas and/or oil; mine producing tons of gold, etc).

And then it came out at this recent seminar at the very end during a question and answer about investing in gold or investing in silver. You could tell Kiyosaki was thinking carefully about how to formulate his response.  This question brought out some real passion.  He answered the question saying that although he liked the Chinese as a people on a personal level, and that the people of China make him a lot of money (from all his books and games perhaps?), he would NEVER AGAIN do business with the Chinese (you’ll see what he meant shortly).

That was quite a shocking statement, both in it’s delivery and in the message itself. Kiyosaki usually makes short statements like these and then expounds on them further to allow the message to sink in and really get the lesson across.  It was clear from his expereince that Kiyosaki HIMSELF had just learned a very important lesson…

He then went on to explain how his gold mine that he had been investing in and developing in China for a few years now – a venture you could tell he was very excited about whenever he mentioned it previously – had recently struck gold.  The problem is that as soon as he struck gold the Chinese took the mine – it was no longer his!  He lost out, everything gone, finished.  No more gold mine, no more gold investing…  He went on to say how China will become the most powerful country in the world very soon and that we should all prepare for that accordingly.

This isn’t the first time an asset or business has been taken over in a country.  China has a history of this and today has major influence or control over many important resources, namely rare earth minerals (material neccesary for the latest technology today, from iPhones and iPads to solar panels and Hybrid cars).

Yet the same thing has happened in other countries where the government simply takes over a business (Saudi Aramco Oil in Saudi Arabia – one of the largest oil companies in the world for example – used to be an American-owned oil company prior to the Saudi’s nationalizing it).  Be on the lookout for this trend to continue in the future as resources around the world become scarce, as energy becomes more expensive and as the global economy continues to wobble…

From this relation by Kiyosaki and his recent experience specifically, you can fully understand and appreciate his deep hatred for communism.  Yet, though we may view ourselves as capitalists here in the USA, he pointed out that we are heading down the same path in our country (he will not invest in California or New York for these very reasons).  People are wanting the government to provide more and more yet expecting and demanding to work less and less.  Take from the rich and give to the poor.  More and bigger government.  More entitlement programs.  You name it. While Eastern Europe continues to fight off communism from the past, we in the USA appear to be fighting the emergence of communism.

Creating Wealth: Gold Investing?  Silver Investing?

Kiyosaki finished his response to the question of gold investing or silver investing by saying that purchasing physical silver or physical gold of course does NOT produce any cash flow or generate any income.  So in terms of creating wealth, just buying these precious metals in the physical form will NOT get you closer to financial independence nor will it increase your passive income…

However, it is prudent to have a good 6 months or so worth of savings set aside just in case – something very evident in today’s economy – but NOT in dollars (they are going down in value, fundamentals are very bad for US dollars as they are for all fiat currencies today) but rather in precious metals like gold and silver.

He finished by saying investing in gold or investing in silver is more a way of preserving your wealth, protecting your purchasing power, rather than as a method for creating wealth and that he would much rather save gold and silver than paper money today.

So given that gold and silver are more a means of protecting your purchasing power against the dollar and a way to hedge or protect yourself from inflation and the potential collapse of the monetary system, what then can you do today to move towards financial independence in terms of creating wealth?

Kiyosaki suggests building assets that produce cash flow. You want to improve your financial intelligence by increasing your financial education so that you are able to create passive income – income that comes in month after month whether or not you work.  Once that level of passive income exceeds your personal expenses, right then and there you are financially free!

That’s the game plan for creating wealth!  So how do you do it?  Start here: 3 Things Anyone Can Do

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23 Comments

  • Great post! I am a HUGE fan of Robert Kiyosaki and have read many of his books. It was his adviser series book on gold and silver investing that got me into the market to begin with! And after this past year I finally realized that if I want to escape the rat race I need income streams that produce without me having to babysit it. That is why I have started my online business. =) I am at a point now that I have enough silver and don’t plan on buying anymore for a while, but do admit that I am much more confident in it that paper (monopoly) money.

  • I blog quite often and I really appreciate your information.
    This great article has truly peaked my interest.

    I’m going to book mark your website and keep checking for new information about once per week. I opted in for your RSS feed as well.

  • I totally agree and I was thinking of getting quite a bit of junk silver and storing it in the bank. I feel this would be a good safety net in the event of the dollar collapsing.

  • Can’t I preserve my wealth in a more affordable way? I know that precious metals are the best way. But I only have so tiny amount to invest which is not enough for the purpose.

  • Karen@seo los angeles says:

    Wow this was a really interesting read. It seems like gold and silver are still viable means of preserving wealth, but not for creating it. Unless you have lots of money to invest, you can’t really grow wealth simply by purchasing gold. You can however purchase gold as a safety net, since its a precious metal and the price won’t decrease like the dollar. Thanks for clarifying this issue!

    • Hey Karen, at the risk of re-complicating the issue, several mining companies are now actually offering dividends – payable in gold or silver – for stock holders in their company. And with prices for mining stocks as low as they are right now, it’s like getting gold or silver in the ground at a fraction of the price and then still receiving income in the form of gold and silver from it. Not a bad way to go! The mining companies are getting clever…

  • Karen @ seo los angeles says:

    I would be irritated if I had a gold mine and it was taken from me too!! This scares me a little, that you mention China as being such a powerful force to watch out for – I agree with you, but it’s scary because I feel like lately I’ve been seeing quite a few articles about China and it’s power.

    • Hey Karen, check out my other article about China buying up all the rare earth minerals – the same important materials we rely on to create our iphones, ipads, solar panels, street lights, hybrids, even military weapons and things. Although it surely irritated Kiyosaki, I’m sure he’ll be ok with his eggs spread across many different assets and classes of assets. Good lesson to learn though!

  • Rudy Leard says:

    That’s a big risk on the part of Kiyosaki. Still, his move to invest rather than trade is something to be admired. Not a lot of people would make a switch based on a single event, but it takes guts like his to make great business moves.

  • Great post Hans, Gold and silver are great to invest for those that have the disposable income. One must ensure that liabilities in ones life are taken care of. So many people do not have the disposable income that they once had due to many factors. We must live within our means. With this said we still must pay ourselves first I am a believer of 10% goes to me off the top. Thanks Hans and I look forward to future posts.

  • Dereck says:

    Hans,

    I love the article. You know, there are so many people who still don’t heed the words of those who might know a bit more than the average bear.

    Roberts words has always rung true and its great to hear he still endorses gold and silver for the obvious reasons.

    However, it sucks to hear that about his mine!

    Thanks for spreading the word and keep up the good work!

    -Dereck

  • Hi, Hans,
    I find interesting Kiyosaki’s advice on needing to have savings in precious metal rather than in money, particularly dollars (but also any other currency which tends to fall down with its valor).
    Lately, I have been stopped in almost every shopping mall by people giving me brochures on gold, asking if I am willing to sell any.
    As it is gold fever everywhere around.
    Though, no one seems to be interested in silver. Why is that so? (I personally prefer silver, if you ask me)

    • Hey Kristina, great question! In fact, I am going to a write an entire post to answer that question as it’s probably too long for a comment reply. Thanks for your comments and question! (Answer coming out in blog post soon…)

  • Linnea says:

    Hi Hans,

    What a terrific (and well-written) article. I wholeheartedly agree with Kiyosaki, you and others that building passive, income-producing assets is the way to go especially with the current economy. It’s just a shame that we didn’t ‘get’ that many years ago, before everything came crashing down around our ears and so many people lost so much. Thanks for this great post and keep up the good work.

    • Hey Linnea, that’s the problem with inflation. In the beginning it’s great – house prices rise, the stock market rises – people feel wealthy because everything in nominal terms is going up. People were able to simply refinance their homes and access this inflated wealth from their equity without having to actually work for it. So with that scenario, why go to the trouble of creating real wealth and passive income when you can just buy a big home which most people thought of as a big ATM. Today of course, it’s now become obvious that creating passive income is the only way to get ahead in good times AND in bad times. That’s what happens when you have a FED that messes around with monetary policy, creating one bubble after another. In the end, passive income is the only way to ensure you’re able to create wealth. Thanks for the comment!

  • Peter Fuller MBA says:

    Thanks for the interesting post Hans

    Kiyosaki is exactly right gold and silver do not produce a cash flow.

    And silver is a different beast than gold.

    Peter

    • Hey Peter, yes silver and gold are very similar and have similar fundamentals, however they are not the same. Silver is much more volatile in nature (smaller market for one and much less supply for two and it’s an industrial commodity for three…). But the fact that these precious metals do not produce cash flow (generally) is something that gets overlooked frequently. I am a strong believer in having gold and silver, however not for the purposes of creating wealth (for hedging against the dollar, etc). Passive income is and always will be the key to creating wealth. And for most people that means a residual income business. Thanks for your thoughts Peter!

  • Clare Kelway says:

    Hi Hans,
    What a well-written article and discussion! Thank you for sharing this debate – how relevant. I think there is much speak about gold and silver but firstly we all need to create residual income. Asset protection is another topic and one I wished I had learned earlier in my career before I lost my assets in shaky investments!
    Look forward to connecting with you more!

    regards
    Clare

    • Hey Clare, you make a good point. Silver and Gold are for preserving wealth, but if you have no wealth to preserve, then it may defeat the purpose. Yes, there is the capital play but that’s just speculation. You can make money doing that, but it won’t help people quit their job or become financially free. Passive, residual income is the name of the game. I do suggest people set aside some gold and/or silver as a safety net as Kiyosaki advises as you never want to be caught off guard should there be some kind of disruption where you need to ensure you have something that will always be worth something, BUT betting the farm on gold or silver when all you’ve got IS the farm – not such a good idea. Turn that farm into a factory that puts income in your pocket each month whether you work or not – then you speculate for fun!