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Or so Daniel Brawdy claims in Seeking Alpha. According to him a safe haven must produce yield and protect principal, and he thinks gold and silver do neither.

August 05, 2011 – Or so Daniel Brawdy claims in Seeking Alpha. According to him a safe haven must produce yield and protect principal, and he thinks gold and silver do neither.

That’s rather narrow minded thinking. For one thing, I’ll take double digit capital gains over negative inflation-adjusted interest every time. As for principal, what can I say? If Mr. Brawdy measures principal in terms of rapidly fading fiat money, more power to him. I’ll take the hard stuff – something proven over the centuries to preserve purchasing power.

If you read between the lines I think it is clear that Brawdy’s main gripe is the now ragged theory that precious metals are in a bubble. As evidence he cites gold’s relatively mild decline in 2008 after which it quickly rebounded, nearly doubling the price. What he doesn’t mention is that it doubled from the trough, which was 70% of the trend. Instead of a 100% gain it was a correction with a 40% gain. Still very healthy, but consistent with the decade long bull trend.

Brawdy quite correctly states that “no matter how you look at it, there is no safety in a crowded trade,” and he’ll get no argument from me that crowded trade allows bubbles to form. I’m just a little confused about what he considers ‘crowded.’

For some, crowded brings to mind the streets of New York at noontime. To others a crowd is encountering another canoe on some backwoods Canadian lake. The gold market, which accounts for considerably less than 1% of total global financial assets, is far more akin to the latter. For almost everyone down here in the lower 48, that’s not even close to crowded.

We are all entitled to our opinions, regardless of how convoluted the logic behind them may be. Brawdy see things as he sees them and he feels compelled to show others the error in their ways. That is relatively benign, but sometimes misguided opinion given as fact can be extremely dangerous.

Brawdy’s offhanded dismissal of the threat of hyperinflation is just such a case. “That story has come and gone and the evidence clearly says no,” he proclaims. There is no such evidence and the threat has not only gone away, it grow stronger every day our politicians skirt the real issues and ply us with hype.

It is foolhardy not to consider threats and suicidal to ignore the very serious ones. Every one of us needs safe haven today more than at any other time in our lives. And contrary to Mr. Brawdy, gold and silver offer the safest haven, just as they always have and always will.

Shannon King

Senior Staff Writer – GoldSilver.org

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