What are Safe Haven Assets?
Safe haven assets are financial instruments that are presumed to maintain or even accumulate value amidst turbulent economic markets. Assets that fall into the safe haven category are either negatively correlated or de-coupled from the economy, meaning that they could gain value during market crashes.
These types of assets are worth investing into if you are looking to safeguard your portfolio during unstable markets. By identifying assets that have the potential to increase in value while other assets decline, investors can make sure they go into uncertain markets with a diversified portfolio built to sustain even the more dire market crashes.
What Will I Learn?
Best Safe Haven Assets 2023
Our largest recommendation to Americans in early 2023 is that they need to invest in precious metals. Every waiting day is a chance for the market to crash, the inflation numbers to recalibrate, and if you ask me, the world economy is a ticking time bomb. We urge investors to use their retirement portfolio to invest in precious metals, and allocate 5-20% of their current holdings to physical metals.
We’ve been urging people to take advantage of this for years, and early movers are already up 30%+ on their purchases. We also know the guesswork that goes into picking a company to invest with, and for this reason our research team has been compiling reports to assist investors in making this decision. Our list of the best gold IRAS is updated frequently and among the most detailed you will find.
Or, if you want to simply pick up a free wealth protection guide from our top recommendation, click here.
Now, on to our list of the best safe haven assets for 2023:
The first asset that many people think of when they hear the word “safe haven assets,” is gold. Gold is not only a physical commodity, but its price isn’t influenced by central bank decisions related to interest rates, which is totally the opposite of what happens with paper currencies like the U.S. Dollar.
I mentioned above how gold is something you should get into ahead of the recession, and I’ll show you a recent historical example of why.
The 2008 financial crisis caused the price of gold to go up by nearly 24% in the year 2009, and it continued its upward path well into 2011.
Compare this to the stock and housing markets, which saw massive declines in value. Some real estate markets went down as far as 80%, and some companies traded on major exchanges flat out went out of business!
Don’t risk your net worth this time around or set yourself back many years by not doing a simple task and investing in precious metals.
The gold chart below shows how stable it is when there isn’t turbulence in the markets, and it shows you how good of a safe haven asset it is when the markets get choppy.
#2: Government Bonds
When you invest in government bonds, you are basically entering a contract with the government that has them owing you money with period payments. Both notes and treasury bills are types of bonds. A treasury bill has a maturity date of up to one full year, while the treasury bonds can go out greater than ten years.
US Treasury bills are the most popular type of bonds you’ll find, as investors flock to bonds that are issued by more developed and established countries.
This isn’t a sexy investment or anything that will grow exponentially, but it’s a safe haven asset.
#3: Foreign Currencies
Both the Japanese Yen and the Swiss Franc fall into this category because when global signs of stress are active, these currencies tend to appreciate in value.
Japan has a very high surplus versus debt, which makes the Yen attractive.
Switzerland has a world class banking center and a neutral government, which makes the Franc attractive.
#4: Defensive Stocks
Think of the things that will be needed in any type of market, whether bull market or bear market. Utilities, food, consumer staples, health care, and I’d argue even beer and tobacco. These sorts of products have high demand in any market and will have a stable volume of people buying them during any market condition. You will always eat, need health care services, and utilities, am I right?
In Closing – Why Do Safe Haven Assets Attract Investors?
As someone who has seen it all, from good, bad, to ugly, I gravitate towards the safe haven investments for protection. However, here’s a fluid list of reasons you shouldn’t think twice about protecting yourself with some safe haven assets:
- They are Liquid and can be quickly turned into cash
- They have long term needs and functions
- The supply is controlled and limited
- The asset won’t become obsolete – EVER
- The asset won’t decay over time
Hopefully I connected with some readers as to how urgent they need to start making moves. What are you doing to protect your net worth?
Perhaps the strongest example of gold as a safe-haven was following the 2008 global financial crisis. The influx of investment caused the price of gold to rise by nearly 24% during 2009 alone, for example, and it continued this upward trajectory into 2011.
There are certain characteristics that assets often have that contribute to their reputation as a safe-haven, which include:
- Liquidity: the asset needs to be easily convertible to cash, at any time
- Functionality: the asset needs to have a use that will continually provide long-term demand
- Limited supply: the growth of supply should never outweigh the demand
- Certainty of demand: the asset is unlikely to be replaced or become outdated
- Permanence: the asset should not decay or rot over time