Is Gold Still a Safe-Haven Asset?

Posted - November 29, 2022
Is Gold Still a Safe-Haven Asset?

What is a Safe Haven?

Traditionally, a safe haven is exactly what it infers. Smart investors tend to put a focus on specific investments or assets in order to limit their exposure or potential losses during troubling economic times. According to Investopedia, there are a number of safe-haven options that investors tend  to flock to such as Treasury Bills, Defensive Stocks (health care, biotech, etc.) cash or gold. 

A clever thought would be to invest in each, favoring a more diverse portfolio over time. However, the question now becomes which is the better of the lot as it comes to properly developing an investment safe haven? Each has its pros and cons but many, for the long term, choose gold as a safe-haven asset. 

Will Gold Protect Against Inflationary Times?

Gold has a sterling reputation as it comes to hedging well against inflationary or uncertain economic conditions. Still, the question is especially important now. Can gold stand well against the myriad of chaotic conditions the world is currently facing? 

From a persistent pandemic to climate issues to the war in Ukraine to the very real possibility of a deep recession, people are clamoring for an answer. There is a clear need for some steadfast resolve that will act as a proper cushion to the potential hard landings ahead. And while war and recessions are nothing new, other unique issues are taking fold. 

Simply consider the near daily pressing threats of a nuclear exchange to the actual ban of Russian gold across international markets. While it is true that the gold ban didn’t quite jar the markets as some predicted, it’s clearly an unprecedented political and financial maneuver. So, yes, gold’s reputation shines on as it historically has proven to do in troubling times and gold remains a safe-haven asset.

Is it Wise to Invest in Gold Now?

According to our good friends at Business Standard, demand for gold was rising even before the invasion of Ukraine. While prices still wax and wane, the point is that the demand will always be there both in the short and long term. Gold always seems to have a firm read on the market and responds accordingly.

As well, other investment alternatives are not as appealing as they once were. In other words, diverse investment choices, such as the cryptocurrency market, are losing influence. This is not to say that these options won’t come back around in the long term, but that gold’s spotlight has not yet dimmed, suggesting that it can or will become the TINA (there is no alternative) safe-haven asset to own. 

Is gold still a safe-haven asset? The quick answer is yes. Gold’s shine persists and as this year and the years to come press on, demand is most likely to rise. Now is a good time to put a keen eye on gold as a proper safe-haven investment. 

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