Veteran investor and author of the famous book Rich Dad Poor Dad, Robert Kiyosaki, has just issued a warning to investors holding Bitcoin, gold, and silver through ETFs (exchange-traded funds). He believes that these paper-based financial instruments cannot replace the ownership of actual assets.
Kiyosaki likens ETFs to 'having only a picture of a gun' for self-defense — useful in peacetime, but completely useless during a crisis. He argues that ETFs make assets like Bitcoin or gold more accessible to individual investors, but do not provide actual ownership of the underlying assets.
He writes:
'Sometimes it's best to have real gold, real silver, real Bitcoin, and… a real gun.'
Kiyosaki's skeptical stance is nothing new. He has previously called on his followers to abandon 'fake money' — meaning fiat currency — and shift to ownership assets like Bitcoin, gold, and silver to hedge against inflation and a weakening USD.
Kiyosaki argues that paper asset certificates can become worthless if the issuing organization does not have enough actual reserves. During a crisis of confidence, ETFs or banks lacking liquidity could face massive withdrawals and collapse.
Meanwhile, ETFs are becoming increasingly popular, especially as many investors want to access the cryptocurrency and precious metals markets without worrying about cold storage or renting storage space.
In the U.S., many spot Bitcoin ETFs launched this year are trading with billions of USD in volume every day. However, Kiyosaki argues that this convenience comes with risks: buyers only own a 'claim' to the asset, not the actual asset.
ETF experts counter: 'Bitcoin ETFs are backed 1:1'
However, ETF experts argue that Kiyosaki's concerns are unfounded. Eric Balchunas — a senior analyst at Bloomberg — shared with Cointelegraph that ETF funds strictly adhere to regulatory requirements and always maintain a clear separation between the issuer and the custodian.
He asserts:
'All ETF shares are backed by real Bitcoin at a 1:1 ratio, there’s no such thing as 'paper promises'.'
Balchunas acknowledges that the cryptocurrency community often distrusts traditional finance, but emphasizes that the ETF industry has operated for 30 years with an 'impeccable reputation'.
He also argues that for those holding a lot of Bitcoin, using ETFs might be even safer as self-custody could make them targets for theft or ransom. On the other hand, storing physical gold and silver can be costly and complex, especially for retail investors, while a managed ETF might be a more reasonable option.
The great debate between financial freedom and the traditional system
The debate between Kiyosaki and ETF experts reflects the deep divide between two worlds: one side supports decentralized asset ownership, while the other upholds the traditional financial system.
While spot Bitcoin ETFs have attracted billions of USD in inflows and made digital assets more accessible to a broader range of investors, skeptics like Kiyosaki still believe that: 'When a crisis occurs, nothing is more valuable than owning real assets directly.'