The most noteworthy safe-haven commodity is gold, which has historically shown a reliable negative correlation with stocks. This highly-coveted physical asset is in high demand, exists independent of monetary policy decisions, and has a tight supply. The value of gold is driven by demand. When demand is high, the value of gold goes up. When demand is low, the value of gold goes down. Demand for gold has been increasing after Corona virus economic crisis of 2020 and traders are worried about the damage that could be done to the U.S. economy if states and cities reinstate or intensify their lockdown orders.  Gold is negatively correlated to the U.S. dollar, a strong dollar makes bullion more expensive to buy and hold and therefore pushes gold prices lower and vice versa. At times when the USD is trading lower, investors tend to pile gold.

You can see that gold has climbed all the way back up to where it was trading in the aftermath of the 2008 Financial Crisis. And also in 2009 investors flocked to gold following the financial crisis, prompting a three-year bull run taking the price to $1,900 in August 2011 and the precious metal topped out at $1,923.70 per ounce. In fact, the price of gold is $1500 per ounce when the Corona 2020 world crisis starts and now Gold is trading just below $1800 per ounce.

Overall, XAU/USD is enjoying an uptrend that may continue. There is still a long way to go to reach a peak near $2,000 recorded in 2011, leaving substantial room to rise within the chartered territory. Gold continues enjoying an uptrend even in the Corona virus Scare.  While the metal saw a torrid run in the two years to follow, a prolonged bear market beyond that was never sustained, reinforcing its safe-haven status.

The chart below gives a picture of the main price moves since the turn of the century.

JPY is recognized as one of the most reliable safe-haven currencies due to its trade surplus and status as net creditor to the world, its demand in currency carry trade transactions, and the self-fulfilling prophecy caused by these factors as well as its historic stability. The devastating earthquake, tsunami, and nuclear disaster in Fukushima in 2011 resulted in a rush to the yen – despite the catastrophe for the island nation. While its status has eroded since then, the currency benefited from tensions around North Korea and, more recently, Iran. It remains in demand also with the corona virus.

The chart below demonstrates three instances where the allure of JPY as a safe haven can be seen in risk-off markets over three decades. A number of factors are responsible for creating the dynamic in which investors flock to the Japanese yen during periods of global risk aversion.

While we look at the shape of Bitcoin’s overall price trajectory since 2012, and compare it to gold’s price trajectory (Gold became “freely traded” in April 1968) Bitcoin has reached the peak level with in 10 years.  Bitcoin shows big moves in the past years. Bitcoin is a safe haven asset, just like gold. Bitcoin can be easily predicted using technical analysis figures, making your trading more profitable. as its price is determined by so many other factors that are unrelated to the global mood. Hacks of exchanges, regulation, movements from altcoins to the BTC, hash rate, whale activity, and many other crypto-related factors are all in the mix.

Bitcoin still hasn’t lost nearly as much as it did when the bubble of its $20,000 peak burst at the end of 2017, shedding an even more jaw-dropping two-thirds in value.  Additionally, after the panic drop of early March 2020, Bitcoin’s price has stabilized in the $6,000–$7,000 range for the month of March 2020 at the time of World Crisis and as of now it has reached $9,500.

Examples of other safe havens include defensive stocks, such as utility, healthcare, biotechnology, and consumer goods companies. These stocks tend to withstand recession because regardless of the state of the market, consumers are still going to purchase food, health products, and basic home supplies. There is a another safe haven currency Swiss Franc. The Swiss franc’s recent scrapping of its cap versus the euro may make it easier to flee to in times of volatility. Bonds can still be strong diversifiers (given our long-term outlook for modest growth, low inflation and still low rates) but many no longer offer protection and a coupon. Infrastructure has safe haven characteristics similar to those of real estate and a promising outlook given the demand for green projects.

SAFE-HAVEN ASSETS: KEY TAKEAWAYS

1. Keep a close eye on the fundamentals:  Fundamental factors such as employment statistics and business confidence can predict market downturns and economic prosperity alike. Accordingly, following as many fundamental factors as possible will give you a good measure of when to move into – and out of – safe havens.

2. Consider technical indicators: Indicators such as the Relative Strength Index will reveal when an asset moves into overbought/oversold territory. Combined with fundamental factors, this can give a clearer picture of when to enter or exit trades.

3. Historical price action matters: Bear in mind there will be times when a safe-haven asset may not behave as expected. For example, now gold in 2020 might have been expected to soar as the financial crisis hit – but instead, it remains gains in the World Crisis of Corona the reason behind in this Deman of Gold and trader’s fears of other investments.