Safe haven is an investment asset that has a low level of risk, when the global economy is uncertain or there is geopolitical turmoil. The problem is, a type of safe haven investment is a safe haven, so that this type of investment is no longer safe haven. That is, safe haven assets are assets that are used as an escape when global economic conditions are considered unsafe. So, under certain conditions, safe haven assets may no longer be safe haven assets when conditions are considered safe. Examples of Safe Haven Assets There are several types of safe haven assets today, including US government bonds, gold, silver, land and property. The thing you need to know is to decide when you will get into these assets.
The currencies that are often used as safe haven assets are the Japanese Yen and the Swiss Franc. However, there are also some investors who position the US Dollar as a safe haven. Historically, the US Dollar is expected to be stable and maintain its purchasing power as other currencies decline. Since the Bretton Woods Agreement during World War II - which created the fix exchange rate system - several countries have been forced to buy US Dollars as foreign exchange reserves. At that time, their commodities were denominated for foreign trade, so the value of the US Dollar soared and made it a safe haven. When there is political or economic turmoil, the US Dollar and US government bonds behave the same as gold because investors fled to the two assets to secure their investment. Responding to this, one of the IMF's senior economists expressed their disapproval. Olivier Blanchard, the economist, said that since the financial crisis, the Dollar's reputation as a safe haven currency is vulnerable, because the link between its strength and the amount of "flight" to US Treasuries has also declined. In addition, Blanchard warned that although the US economy has improved, there are still problems with debt payments looming. Politically, the US economy is also uncertain. For this reason, it is doubtful to regard the US Dollar as a safe haven asset.
Determining the time to invest in safe haven assets is probably a difficult decision. After the end of the global financial crisis, the market will rebound and it's time you enter. But when there is a recession, you can glance back at safe haven assets. In determining the time to invest in safe haven assets, you should also pay attention to the economic cycle of a country from the targeted assets. You don't have to switch to safe haven assets only when economic conditions are uncertain. If you diversify well into your assets, safe haven assets can also be included in the portfolio. That is because safe haven can still be profitable, both when economic conditions are expanding or when it is uncertain.
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