Safe Haven Assets: What You Need To Know
It is possible – according to many financial experts – that we could be at the beginning of a difficult economy. In 2008, the financial crisis left numerous Americans in absolute fiscal ruin, with their retirement savings and 401(k) accounts depleted. As we enter a new year having only barely recovered from the beating we endured not even 10 years ago, how do we protect ourselves against such dangerous economic fluctuations?
One answer: Safe haven assets. But, how do they work?
The Function of Safe Haven Assets
Safe haven assets aren’t necessarily going to make you wealthy in the blink of an eye. These are assets that retain – and maybe even increase – their value over the course of several decades, even during fiscal crises or periods of inflation.
Even cash itself isn’t a safe haven asset. Think about it – in the 1950s, you could buy a home for roughly $8,500. Today, the average home price is approximately $350,000. If you held on to your $8,500 from 1950, you’d have currency that had lost approximately 97% of its value!
What are the best safe haven assets?
While there used to be several categories of safe haven assets to choose from – government bonds, and the U.S. dollar were among them –one reliable safe haven asset that has stood the test of time is Gold.
Gold has universally agreed-upon intrinsic value. It is also a physical asset that doesn’t solely exist on paper; it’s a commodity you can hold in your hand. Historically, the value of gold has gone up in times of economic recession, because consumers know that it’s something tangible that has had remarkable spending power for nearly all of human history.