Are Safe Haven Assets Becoming Extinct?

Vector graph showing an investor grappling with bearish market

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In a matter of months, the COVID-19 pandemic grew from a considerable health threat to a global financial crisis. What followed was a torrent of sell-offs and fund transfers to so-called safe havens, such as gold, government bonds, and the Japanese yen, which quickly weakened the stock markets to an extent comparable only to the worst of market recessions.

The en masse and almost simultaneous investor migration from medium- and high-risk financial instruments to traditionally strong assets in times of crisis inevitably had us asking the question: what are the hidden risks of investing in safe havens in 2020?

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Are gold investments coming to an end?

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COVID-19 continues to spread at a worrisome pace, and by March 4th more than 90,000 people in over 20 countries had already contracted the virus.

And while shares on the Hong Kong stock exchange are being traded at their worst prices since 2004, the US30 index tumbled with more than 3%, the oil market continues to shrink and airlines cancel flights, gold is actually experiencing a long-unseen renaissance. 

Despite that, some financial analysts argue that the inflated gold price for the past few months would actually end up hurting the market more than helping it.

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Where to invest in 2020?

What to invest in the year 2020.

Source: DeltaStock

The past 2019 was everything but calm. The markets were shaken by trade wars (mainly between the US and China, but there was also an air of hostility between the US and the EU) and US President Donald Trump’s tweets. Last year also saw growing tensions between the US and Iran, an ongoing drama surrounding Brexit, and concerns about an impending global crisis.

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