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What makes a safe haven a safe haven? How do we classify a safe haven from a non‐safe haven, and especially a good one from a not‐so‐good one?

These questions go directly to the heart of our goal as investors: to increase wealth by mitigating risk. It's important to remind ourselves because much of the investment world would convince us that this is not possible. To their way of thinking, risk mitigation is a necessary evil—a pound of flesh, as it were—extracted in the name of prudence; it accepts bad results, all in the name of safety from bad results. So, because we believe that it is, indeed, possible to increase wealth while mitigating risk, we had best be sure that we are choosing the optimal safe haven for the job—one that can. We can't rely on the followers of modern portfolio theory to tell us; if they acknowledge the question at all, they can't answer it with the superficial tools at their disposal. And if we naïvely expect someone to hand a safe haven to us, tied up neatly in a box with the assurance of “trust me—it works,” then we might as well abandon the scientific rigor of our demonic dice games and go find some back‐alley game of craps.

No, we must do the hard work (but take heart, it's not that hard) to investigate our questions: of the “what” and “how” of safe havens, and how they compare, each against the other. We are empowering ourselves ...

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