When Kiyosaki was serving in Vietnam in 1972, he first learned about the value of gold. His tutor, the “rich dad,” wrote him that President Nixon had removed the currency from the gold standard. The world is going to change, so be careful.
The dollar’s gold backing up to that point restricted the amount of money the government could issue. After the gold standard was abandoned, dollars were reduced to “fake money,” or government IOUs that could be printed indefinitely.
Kiyosaki and another soldier flew 25 miles into enemy territory in Vietnam in an attempt to purchase gold from locals at the fictitiously low $35–40 per ounce U.S. price, not realising that the global spot price was already $55. Kiyosaki had read about the lifting of the gold standard in The Wall Street Journal. Their lowball offer was sharply rejected by an elderly woman they encountered, who informed them that the price of gold is the same everywhere in the globe.
Even though their goal was unsuccessful, Kiyosaki took away an important lesson: unlike paper dollars, which governments have the power to devalue at will, gold is genuine money with a value that transcends borders.
As the currency dropped, Kiyosaki anticipated that precious metals would appreciate significantly, leading him to establish gold and silver mining firms in 1996. His reasoning was that there was a lot of upside potential in gold and silver since they had recently fallen to multi-decade lows relative to the dollar, with gold trading at $275 an ounce and silver at $5.
He perceived the low cost of oil ($10 per barrel at the time) and the inflated currency as indicators of impending significant shifts in the financial system. As gold is currently trading at around $1,830 and silver at about $23, and the dollar has lost about 95% of its purchase value owing to inflation, Kiyosaki’s predictions have proven to be accurate.
According to Kiyosaki, a currency crisis or hyperinflation of some kind is unavoidable due to central banks’ money creation operations and careless government spending. He uses the divergent post-World War I strategies of the United States and Germany to highlight the ways in which monetary disaster might occur.
By refusing to manufacture money and adhering to the rigid gold standard, the United States caused deflation and the Great Depression. Germany devalued the German mark in 1923 as a result of abandoning the gold standard, printing enormous quantities of money, and experiencing severe hyperinflation.
According to Kiyosaki, present American policies are setting the stage for hyperinflation a la Weimar, and the Federal Reserve has decided to print trillions of dollars in order to support the economy, devaluing the currency in the process.
According to Kiyosaki, foreign governments and investors are becoming less convinced that the United States has the budgetary restraint to keep its currency strong. The epidemic has caused a rise in debt and growing government deficits, which are eroding confidence in the currency.
The only alternatives available to the Fed are to either increase interest rates to support the currency and depress the economy and stock markets, or to print more money to weaken the value of the dollar. For the dollar, Kiyosaki sees no simple path to success. That explains his intense interest in gold, as do other wealthy individuals.
Rich people are well aware that gold has been the ideal form of money throughout history, holding its value over generations. According to Kiyosaki, when the dollar and financial system of today falter due to high debt levels and money creation, gold will rise to its former monetary prominence.
Many people discount gold as an investment, but Kiyosaki views it as a safeguard against the inevitable depreciation of paper money—a lesson that has been shown over millennia. People laugh at it until something goes wrong and exposes the true worth of unbacked government money.
According to Kiyosaki’s team, the upcoming dollar crisis—which might be brought on by a U.S. debt default—will result in “the biggest transfer of wealth in modern history” within the next ten years. He believes that when the currency collapses, savings will be completely lost.
However, Kiyosaki claims that when bubble assets like stocks, bonds, and real estate fail, wise people would utilise their money to acquire cheap assets, much as Warren Buffett did when he bought silver in the 1990s despite being mocked for doing so. The astute with money will profit from the crisis while others are left holding the bag.
According to Kiyosaki, the majority of Americans are still unaware of the existence of actual money, such as physical gold and silver, which makes this a unique opportunity. Millions of people will rush into precious metals in desperation as the inevitable dollar crisis materialises, driving up prices.
You may put yourself on the winning side of the impending wealth shift rather than becoming its victim by being informed and taking wise action now. Take a cue from Warren Buffett: show greed when others show fear and fear when others show greed.
Kiyosaki concludes by saying that nobody can precisely foresee how the dollar’s hegemony would come to an end. But given the enormous debt load, it’s safe to say that the dollar’s days as the world’s reserve currency are running out.
The dollar might collapse suddenly in a debt crisis or gradually through inflation. In any case, Kiyosaki advises people to act independently. It is pointless to rely on funds from the government and banking organisations; instead, safeguard yourself with actual assets. Now is the time to get ready.