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Safe Haven

What is a 'Safe Haven'

A safe haven is an investment that is expected to retain its value or even increase its value in times of market turbulence. Safe havens are sought after by investors to limit their exposure to losses in the event of market downturns. However, what are considered safe havens alter over time as market conditions change, and what appears to be a safe investment in one down market could be a disastrous investment in another down market.

Explaining 'Safe Haven'

Fortuitously timed buy and sell decisions can make an investment appear to be a safe haven when it may not actually be one.

Gold is typically considered a safe haven when currency markets are volatile. United States Treasury Bills are also considered a safe haven even in a tumultuous economic climate because they are backed by the full faith and credit of the U.S. government. In the forex market, the Swiss franc is considered a safe haven currency. Finally, if an entire economic sector is performing poorly but one company within that sector is performing well, its stock could be considered a safe haven.


Further Reading


Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven?
www.tandfonline.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier?On the hedge and safe haven properties of Bitcoin: Is it really more than a diversifier?
www.sciencedirect.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Safe haven currenciesSafe haven currencies
academic.oup.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Can cryptocurrencies be a safe haven: a tail risk perspective analysisCan cryptocurrencies be a safe haven: a tail risk perspective analysis
www.tandfonline.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Is Bitcoin a better safe-haven investment than gold and commodities?Is Bitcoin a better safe-haven investment than gold and commodities?
www.sciencedirect.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Is gold a safe haven? International evidenceIs gold a safe haven? International evidence
www.sciencedirect.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Is gold a hedge or safe haven against oil price movements?Is gold a hedge or safe haven against oil price movements?
www.sciencedirect.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Is gold a safe haven or a hedge for the US dollar? Implications for risk managementIs gold a safe haven or a hedge for the US dollar? Implications for risk management
www.sciencedirect.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

Is gold a hedge or a safe haven? An analysis of stocks, bonds and goldIs gold a hedge or a safe haven? An analysis of stocks, bonds and gold
onlinelibrary.wiley.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …

What precious metals act as safe havens, and when? Some US evidenceWhat precious metals act as safe havens, and when? Some US evidence
www.tandfonline.com [PDF]
… Bitcoin for energy commodities before and after the December 2013 crash: diversifier, hedge or safe haven … of Bitcoin, as well as its volatility (See Figure 1), practitioners and researchers have recently started to assess Bitcoin from the perspective of economics and finance …



Q&A About Safe Haven


What factors contribute to the hard status of a currency?

The stability and reliability of the respective state's legal and bureaucratic institutions, level of corruption, long-term stability of its purchasing power, the associated country's political and fiscal condition and outlook, and the policy posture of the issuing central bank.

What is a safe haven currency?

A safe haven currency is a globally traded currency that serves as a reliable and stable store of value.

Is there more than one type of softness in relation to currencies?

Yes, there are two types. One being erratic behavior due to weak legal institutions or political instability within an associated country; another being depreciation due to poor economic conditions such as high inflation rates or low growth rates within an associated country.

What are some examples of investments that may appear to be safe but may not be?

Gold and U.S Treasury Bills are typically considered safe havens when currency markets become volatile, however fortuitously timed buy and sell decisions can make these investments appear to be a safe haven when they may not actually be one.

What is a safe haven?

A safe haven is an investment that is expected to retain its value or even increase its value in times of market turbulence.

What are considered safe havens?

Safe havens can change over time as market conditions change, and what appears to be a safe investment in one down market could be a disastrous investment in another down market.

How do you define softness in relation to currencies?

Softness refers to erratic or depreciating behavior against other currencies. This behavior typically results from weak legal institutions or political instability within an associated country.

Are all investments labeled as "safe" actually so?

No, not all investments labeled as "safe" are actually so.

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