Safe Haven Assets
Safe Haven Assets

Author(s): Vessela Todorova
Subject(s): Economy, Supranational / Global Economy, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: safe heaven; safe heaven asset; safe heaven currency; risk aversion; risk spectrum; safe heavens
Summary/Abstract: Safe haven assets protect from unexpected market volatility. In the past precious metals, currencies, stocks from definite sectors have been noted as safe haven assets. In different market volatility safe-havens react differently. There is no consistent idea. Investors sentiment is a constant market force, but it`s impossible always to be clearly defined. In times of economic stress like the Great Recession the flight to safe havens may produce surprising – even confounding – macroeconomic effects. Gold is a safe haven for investors during crisis. But it is not necessary to be in times of confidence in the fundamentals of the economy. Whilst most safe haven assets behaved as expected during the global financial crises, the dollar unexpectedly rose. In every uncertainty of the US equity market as well as the decline of the US dollar the investor may consider investing in a safe haven currencies like the yen or the Swiss franc. Bitcoin in particular has become more attractive to investors. It is not directly exposed to political forces provoking market turbulences and they weren't sure elsewhere.

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