The author of Rich Dad Poor Dad is urging his followers to use their stimulus checks to buy silver. | Image: kiraziku2u/shutterstock.com
- Rich Dad Poor Dad author wants you to buy silver on account of its profitability.
- If economists are to be believed, the world is likely headed for deflation.
- Traditionally, precious metals have been used as a hedge against inflation, not deflation.
The author of the best-selling personal finance book Rich Dad Poor Dad, Robert Kiyosaki, is discouraging Americans from saving the $1,200 coronavirus stimulus checks they will get from Uncle Sam.
Instead, Kiyosaki wants them to purchase commodities such as silver. In a tweet, Kiyosaki urged his followers to “buy gold, silver, Bitcoin”. He was especially keen on silver, adding:
Silver $20. Best Buy for future security. Everyone can afford $20, especially with free fake money.
Why you shouldn’t buy silver
Urging people to buy silver just because the price is within reach for nearly everyone just proves Kiyosaki cannot differentiate price from value.
Silver is cheap, but that doesn’t mean it’s worth holding. Penny stocks are even cheaper but that doesn’t make the majority of them a worthwhile investment.
The world’s most famous investor Warren Buffett put it best when he branded silver and other precious metals as unproductive assets. As an unproductive asset, silver is one of the worst-performing of the last decade.
Since hitting an all-time high in April 2011, Silver has fallen by nearly 70%.
Silver has fallen nearly three times from its 2011 record high. | Source: TradingView
Over the same period gold has depreciated by just 8%. Year-to-date gold is up by nearly 10%. Silver has fallen by 12% since the year started.
Promoting silver as an investment is not only misguided — it’s downright dangerous.
This isn’t the time for precious metals
Precious metals are the go-to assets when inflation is expected because they conserve value as the purchasing power of fiat currencies falls.
With that in mind, precious metals are hardly the right investment for a likely deflationary future.
Why you should ignore the Rich Dad Poor Dad author
Other than the dubious suggestion to invest in a value trap at best and a money-losing metal at worst, there are many other reasons you shouldn’t be listening to investing advice from Kiyosaki.
Kiyosaki’s record is enough to prevent him from offering anyone investment advice. His use of scare tactics to sell personal finance books and to fill up wealth creation seminars is well known.
Economies are always going through cycles but Kiyosaki specializes in pushing doom and gloom all the time. On a long enough timeline this is definitely going to happen. Problem is, Kiyosaki says it like he has a monopoly of insight with his only goal being to profit from the fear.
Unfortunately for his fans, and his reputation, he has largely been inaccurate.
Kiyosaki’s doomed prophecies
In 2014, Kiyosaki had an urgent warning for Australians –your country’s property bubble is about to burst. His warning suggested that a market collapse was imminent.
Three years later, property prices in Australia reached a record high. And while there have been fluctuations in Australia’s property values, the market has not crashed. Epic fail.
This was not an isolated case. Kiyosaki also predicted that the biggest stock market crash would come in 2016.
Though U.S. stocks entered bear territory this year, the Dow and S&P 500 touched record highs in February following a decade-long bull market.
When it comes to your money, the Rich Dad Poor Dad author is not the guy to listen to.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Sam Bourgi.