Investment and financial bestseller “Rich Dad, Poor Dad” author Robert Kiyosaki recently warned that with gold reaching historical highs this year, it may not be a good sign for the stock market. A stock market crash may be imminent, so is there a direct correlation between the trend of gold and U.S. stocks?
Against the backdrop of geopolitical tensions, inflation concerns, and uncertain U.S. presidential election results, the hedging sentiment is rising. Combined with strong demand from global central banks, gold prices have reached historic highs this year, breaking through the $2600 mark, with an increase of nearly 30% year to date.
Robert Kiyosaki warned that the rising gold price may not be favorable for the stock market. While many investors have performed well by investing in gold, an increase in gold prices typically means that investors become more pessimistic. Many investors withdraw from stocks and start buying defensive assets. Kiyosaki suggested that people should take the time to learn, join investment clubs, and pay attention to cheap goods. He believes that those who do so will become the richest and smartest investors in a few years when another bull market emerges.
In fact, there is no direct relationship between the movement of U.S. stocks and gold prices. However, there is an indirect relationship between the two. The U.S. dollar is also an important factor affecting the price of gold. Overall, there are indirect relationships between U.S. stocks and gold price trends in terms of hedging demand, inflation expectations, and the U.S. dollar exchange rate. Therefore, investors need to consider various factors comprehensively to make wiser investment decisions.