Smith warned that a movement of just 50 basis points or a hundred basis points would be "catastrophic" for sovereign governments as well as for corporations.
He likened the bond market to the massive oil spill, calling it a "deep horizon well of the financial markets" where out of 42,000 wells dug in the Gulf of Mexico, it only took one to create the greatest natural disaster in U.S. history.
"It only takes one bad apple and then all of a sudden, rates go flying up to their hundred year historical average...It only makes sense that sooner or later, we're gonna revert to the mean," he continued.
Gold Continues to Shine
A great alternative to being in bonds, or cash, is to be in real money, like gold and silver, Smith advised.
"The issue is that bonds, real estate, anything that produces a yield, is leveraged," he said. "Gold has no liability, it has no leverage."
"The United States government is the largest holder of gold in the world, as well as most of the other major countries in Western Europe. So obviously they know something."
Comments? Questions? Send them in here.
Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."