Top 5 Safe Haven Assets
Welcome back to another week in the markets. Today, we’re looking at safe haven assets. Plus we’ll run through the top trading events of the week. Let’s go!
Wait, what’s a safe haven asset?
A safe haven asset is one that is generally expected to either maintain or increase in value during periods of economic uncertainty and market turbulence. Hence the “safe” bit. These assets are often seen as a way to preserve wealth and protect against losses when the financial seas are looking a little choppy.
Safe haven assets are typically very liquid, which means that they can be easily bought and sold, which is great. There’s nothing worse than needing something you can’t get at, right? These assets are a great way to diversify your trading portfolio and reduce overall risk, no matter what the current political climate.
The best safe haven assets in 2023
This is obviously debatable and a little subjective, but we’ve tried to be as fair as possible and not just go with the usuals. If you’re interested in investing in safe haven assets, we’d recommend checking out the following.
#1 Gold
Gold is one of the usuals. It’s a genuine safe haven asset that has been used for centuries to preserve wealth and protect against losses.
Gold is a physical asset that is not subject to inflation or government interference. It’s hard to get at and its stock is finite, so its value appreciates the less supply there is.
One great example of gold as a safe haven was during the 2008 financial crisis, when the influx of investment caused its price to rise by nearly 24% during 2009 alone.
As far as safe haven assets go, gold is the king.
Source: The Royal Mint
#2 US dollar
GBP had been the world’s reserve currency up until World War II, when it was replaced by the US dollar.
For the last 75 years, this heavyweight currency backed-up the global economy and is seen as a safe haven asset due to the strength of the US economy and its political stability.
USD/EUR
Source: Google
#3 Japanese yen
The Japanese yen (JPY) is another traditional safe haven asset known for its low volatility and stability.
After World War II, the Japanese economy was restructured enabling it to catch up with other global economies. As a result of this, the Bank of Japan (BoJ) achieved highly respected status and the yen became a major global currency.
Despite Japan’s high levels of public debt, the country’s large economy and significant external assets contribute to the yen’s safe haven status.
USD/JPY
Source: Google
#4 Swiss franc
The Swiss franc is another great safe haven currency. The franc is the official currency of Switzerland and Liechtenstein and is one of the strongest currencies in the world.
Switzerland’s strong economy, low debt levels, and history of political neutrality make the Swiss franc a popular choice for investors seeking safety and security in times of turbulence.
USD/CHF
Source: Google
#5 Government bonds
Government bonds, such as US Treasury bonds, are seen as a safe haven asset due to the low risk of default. They’re a bit like a fixed term ‘I owe you’ from the US government.
Their status as a safe-haven asset is based on the credit status of the US government, and the high quality of income in US dollars. Also, investors know that anything invested will be repaid in full once the bill has matured.
As safe-havens go, there aren’t many safer than US government bonds.
Your turn!
Are you actively trading safe haven assets? What’s your go-to? Join the conversation over at @_contentworks.
Top fundamental events this week
Here’s what’s coming up this week in the markets…
Monday
No major events are scheduled.
Tuesday
● EUR — German GfK Consumer Confidence; German HCOB Manufacturing PMI Flash
Wednesday
● AUD — Inflation Rate YoY
● EUR — German Ifo Business Climate
● CAD — BoC Monetary Policy Report
Thursday
● EUR — ECB Interest Rate Decision; ECB Press Conference
● USD — Durable Goods Orders; GDP Growth Rate QoQ Adv
Friday
● EUR — French GDP Growth Rate YoY Prel; French Inflation Rate YoY Prel
● USD — Core PCE Price Index MoM; Personal Income; Personal Spending MoM; UoM Consumer Sentiment Index
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon!
The Contentworks team
