Robert Kiyosaki has never hidden his deep skepticism toward paper assets. For years, the author of Rich Dad Poor Dad has consistently advised investors to choose physical assets over paper investments, which he views as mere promises. Now, he points to the global silver market as a clear example of this inherent risk.
Silver Prices Hit Record Highs
Kiyosaki's comments come as silver prices soar to unprecedented levels. On the MCX, silver approached ₹3.2 lakh per kilogram, setting fresh records. Internationally, Comex silver futures for March delivery reached a historic peak of $94.74 per ounce.
The Paper Silver System
In a recent Facebook post, Kiyosaki explained that most silver trading in Western markets occurs on paper. Prices are determined through futures contracts, derivatives, and similar financial instruments. The vast majority of trades settle in cash, with very little physical silver actually changing hands.
He noted that this system functions because banks and large institutions often sell silver exposure without any intention of delivering the metal, as most buyers never request physical delivery. "This is not a conspiracy," Kiyosaki stated. "It's how the system has worked for decades."
China's Physical Demand Disrupts the Norm
What truly worries Kiyosaki is the trend emerging outside this established system, particularly in China. According to him, Chinese buyers are avoiding "paper games" and instead purchasing physical metal—bars, inventory, and deliverable supply. To secure this silver, they are willing to pay premiums of $10 or more per ounce above Western spot prices.
This behavior has created two distinct prices for silver: one in the physical market and another in the paper market. Kiyosaki argues that this gap offers crucial insight into silver's availability. If silver were abundant, arbitrage would quickly eliminate the difference.
Why the Premium Exists
Kiyosaki attributes the premium in silver prices to three key factors:
- Rising industrial demand
- Limited above-ground inventories
- Tight physical supply
He emphasizes that futures markets can generate unlimited claims, but mines cannot produce metal on demand. The trend in China reveals a focus on availability rather than spot prices. "When there are two prices, believe the one tied to reality," Kiyosaki advises.
Understanding Market Stress
Kiyosaki clarifies that his analysis is not a prediction of a sudden spike in silver prices. Instead, he aims to explain how stress manifests within the system. This stress appears gradually through persistent premiums, delivery concerns, regional price divergence, and widening price gaps.
He draws on history, noting that when physical markets decouple from paper pricing, the eventual adjustment is neither gentle nor smooth. "Silver will not run out loudly. It disappears quietly—right before the price resets," he warns.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions.
