Why do rich put their money in gold

Question

I have been listening to Robert Kiyosaki (author of rich dad poor dad) podcasts and I always hear him say the rich put their money in gold. He never says why though. So, I am just curious to know why the rich put their money in gold.

Answer 1

I suspect he claims "the rich" put their money in gold so that you'll sign up for whatever gold service he's pitching on his podcast using his coupon code.

Answer 2

I can't speak to the accuracy of Kiyosaki's belief that rich put their money in gold but there are a number of reasons that people do so.

The most obvious is that people think that it's a timely speculation or investment.

Others believe that it's a store of value and and is therefore a safe investment in times of uncertainty. It's widely viewed as an inflation hedge, protecting against purchasing power risk.

Then there are the gold bugs, many of which oppose fiat currency, distrust the banking system or ascribe to various conspiracy theories such as the imminent collapse of the world economy. They're a bit of a fringe element.

Answer 3

Such statement is constructed in a way that when person who have 10 billions would put one dollar in gold (buying some jewellery on flea market) it would be true. A rich person put their money in gold.

Here you can find a nice chart showing in what REALLY rich people put money in. https://www.visualcapitalist.com/chart-assets-make-wealth/ Gold is liquid asset. Notice how percentage of wealth invested in such lowers with net worth. Yet the $1B is still larger than what $100K would have "in gold".

Answer 4

In 2015, Robert Kiyosaki predicted a global financial crash in 2016 and advised people to prepare for that crash by converting their assets into gold. Kiyosaki's rhetoric trademark is to frame all his advice as "Rich people do X, so you should do X". According to his critics, the claim that all his advice is based on observing "rich people" isn't always true. So if Kiyosaki uses that phrasing, it should generally be understood as "I would personally advise you to do X".

When fiat money, stocks and other financial instruments lose value, precious metals like gold usually retain their value. However, his prediction didn't come true. It's now 3 years later and there is still no crash. So in hindsight, his advise wasn't very good.

The podcasts you listened to might be from that time. Or maybe he still believes in his theory that a big crash is imminent?

Answer 5

According to current statistic, 17% of the golds are consumed by electronics and other industrial products. 52% is made into jewellery, Gold bar, coins and central bank purchase total up 31%. If you look at the spread, Gold is hardly an investment but for leveraging.

If you live in a country like West Europe or US, holding Gold will not yield any good return. However, if you live in a high inflation country with no access to other currency leveraging tools, Gold maybe your best leveraging option.

However, Gold derivatives have their own catch. Since Gold price is stagnant in first world country, any jewelry that relies on the leveraging mentality actually losing money (Gold doesn't generate interest fee). So some country Jewelry shop comes out with a Ponzi scheme to make quick bucks, in which, so-called "gold investment certificate" is sold without any real deposit or Gold metal backing.

IMHO, though no statistic support, I always think chicken soup books like rich dad poor dad partially contribute to the subprime loan crisis. Any idea from Robert Kiyosaki is no better than Bernard Madoff Ponzi Scheme.