R. Kiyosaki warns rising gold prices are ‘not necessarily a good sign’

As gold continues to record stellar returns in 2024, Robert Kiyosaki, the author of the best-selling personal finance book Rich Dad Poor Dad, has warned that the momentum might not be a good sign.

Kiyosaki issued the cautionary outlook, noting that gold’s recent gain is not always indicative of economic health but possible turbulence ahead, as he noted in an X post on October 12.

While acknowledging the value that gold has provided for investors, he cautioned that rising prices often signal broader pessimism within financial markets.

According to the investor, high gold prices coincide with increased investor uncertainty. This shift, he argued, could foreshadow a looming stock market downturn—a scenario he has repeatedly warned of in recent years. Interestingly, stocks, on the other hand, continue to rally to new highs, with the S&P 500 hitting record levels. 

“Unfortunately, higher gold prices generally means investors are becoming pessimistic.  Many investors shift out of stocks and start buy defensive assets. So higher gold prices are not necessarily a good sign,” Kiyosaki said. 

Possible market crash 

Furthermore, the financial educator explored the potential impact of a significant stock market crash on various demographics. He suggested that such a downturn could mainly impact individuals without holdings in assets like gold, silver, and Bitcoin (BTC), which Kiyosaki believes are valuable in economic instability.

“If a major stock market crash occurs…. Which I am expecting…. Because the stock market has been high for too many years…. This is not good news for people who do NOT own gold, silver, and Bitcoin,” he added. 

Reflecting on the effects of market cycles on different social groups, Kiyosaki noted that “even non-investors and poor people are happier in a bull market,” even if they don’t necessarily grow wealthier.

However, he pointed out that wealthy and well-prepared investors often emerge in a stronger financial position in a crash. These investors, he claimed, are already “selling at a market top” and building cash reserves in anticipation of buying opportunities that could arise post-crash.

For those who may not have participated in the recent bull market, Kiyosaki offered a message of optimism, advising them to seize the opportunity to learn and prepare. He recommended joining investment clubs, studying market trends, and watching for bargains that may arise in a downturn.

Indeed, Kiyosaki has already warned of a market crash, blaming the Federal Reserve’s monetary policies for this situation. To this end, the author has maintained that precious metals and Bitcoin are ideal assets to protect wealth in such a situation. Interestingly, he cautioned against comparing gold and Bitcoin, noting there is no winner between them, as they serve the same purpose.

Gold’s momentum continues 

Regarding gold’s price, the yellow metal ended the last trading session valued at $2,657 per ounce, reflecting daily gains of over 1%. Based on recent momentum, most market players are looking at a target of $3,000, focusing on catalysts such as the prevailing geopolitical tensions in the Middle East.

Regarding the next price target, CyclesFan‘s analysis on October 10 acknowledged that the metal is maintaining a strong uptrend, with bullish momentum aiming for the 2.618 Fibonacci extension level near $2,686.

This target is derived from the retracement levels of the 2020-2022 bear market, suggesting a potential rally toward this mark in the next few weeks if a breakout above $2,686 occurs.

According to the expert, the 10-week moving average (MA) currently sits at approximately $2,510 as a key support level. Should gold fail to surpass $2,686, a pullback to the 10-week MA or even lower could be on the horizon.

In conclusion, Kiyosaki’s warnings highlight the complexities of the current financial landscape, where rising gold prices may indicate deeper instability rather than prosperity. However, market participants need to remember that both upward momentum and potential corrections could shape the investment climate.