In times of economic crisis, what are the safe havens to secure your money?

 

In times of economic crisis, what are the safe havens to secure your money?

The economy is a business that goes through cycles. Throughout history, a series of economic and financial crises have occurred one after the other. During these times, the value of most assets falls or even collapses at the same time. When the economy is in turmoil, investors try to protect themselves by rushing into investments that are considered safe and less susceptible to fluctuations.

1 - The first safe haven was gold

Furthermore, the price of gold is not directly related to financial market fluctuations. While most stocks are based on a company's results, the yellow metal is solely based on the supply and demand from buyers versus sellers.

Because gold has historically been regarded as a safe haven, the price of gold rises as the economy becomes more unstable. Furthermore, its stocks are physically limited. As a result, production cannot be increased indefinitely to compensate for increased demand. Because of its scarcity, the metal's only variable is the price of an ounce of gold.

Even the market rates of government bonds, which are normally considered benchmarks, have no impact on the price of gold, Only the supply and demand law remains.

2 - Le refuge de Pierre

Authorities frequently see real estate as the precise definition of a safe haven, particularly among individuals. Clearly, the value of a property varies due to a variety of circumstances. The geography, the population trend, the economic position... Yet, real estate, more than gold, has the virtue of being a physical and tangible item.

It looks concrete in our common mind. In reality, real estate has a use value that serves the basic need for dwelling, as represented by the renowned Maslow pyramid. Real estate also has a high exchange value since it may be rented or sold, allowing it to generate a return or recoup at least a portion of the original cash.

Nevertheless, one unquestionable virtue of real estate is its ability to last across time. Its possessor can thereby project himself beyond years, decades, and even generations. Because the property may be sold or inherited, the numerous price fluctuations associated with the economic condition will have less of an influence on the property in the long run.

3 - The Swiss safe

The Swiss franc's status as a safe haven stems from the country's stability as well as its low debt. Switzerland appears to be historically, politically, and financially indifferent to the numerous shocks that have shook the world since the 1930s. As other currencies are failing one by one, the country's enormous gold reserves have allowed the currency to survive the Great Depression.

Switzerland declined to join the Bretton Woods accords, which anchored currencies on the US dollar, in 1945. These accords expire in 1971, and the world's currencies return to the gold standard. The Swiss franc may then re-open its safe and emerge stronger than ever.

While the Swiss franc held up well throughout the 2008 financial crisis, its image as a safe haven has dwindled in recent years, with many commentators now preferring the yen or the dollar.

Yet, no value is ever completely secure, and all economic marketplaces are vulnerable to a variety of changes. These so-called safe havens must, above all, be used to diversified one's investment portfolio, not as a place to put all of one's eggs.