Safe Haven Assets 101
https://www.chase.com/personal/investments/learning-and-insights/article/what-are-safe-haven-assets
Some parts of this page will be directly ripped from this article, others I'll translate for my own knowledge, and there will be splicing of the two.
What makes an asset a "safe haven"?
Safe-haven assets typically have certain characteristics that help them retain value:
- Liquidity: Assets are liquid, meaning investors can buy and sell the asset relatively easily.
- Scarcity: The demand for the asset exceeds its supply, helping it maintain its value.
- Functionality/purpose: The asset needs to have long-term use that will continually provide demand.
- Continuous demand: There should be future market demand for the asset; otherwise, it can’t be a store of value.
- Permanence: There should be some certainty that the asset’s usefulness won’t deteriorate over time – that it doesn’t decay.
Safe haven examples
Precious Metals
Gold and other precious metals are physical commodities, and they are not usually affected by monetary policy decisions made by central banks. Economic factors, like currencies, interest rates and inflation, typically have a limited impact on precious metals prices.
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Gold is easy to buy and sell, and it’s a physical commodity, so it is less impacted by economic factors, such as changes in interest rates and inflation. The precious metal is considered a safe investment because it can retain its value even amid inflation. However, a safe haven does not mean the asset is necessarily safe by default. Gold can be volatile and unpredictable, even during market crises.
While the minor rugpull in February 2026 may have sent people into a frenzy, precious metals do stay stable because of this separation from policy decisions associated with paper currency.
Stable currencies
In moments of economic turmoil, investors may flock to certain currencies because of their country's political stability and the currencies' tendency to be highly liquid. They are also considered attractive havens because foreign countries often store these currencies in their reserves, indicating the security in holding such currencies and confidence in the creditworthiness of the currencies’ countries of origin.
I did a quick search for what the most stable currencies in the world are, since the article points to the USD as stable for obvious reasons, but even as it weakens, the US Dollar is still up there. Sourced from https://fxssi.com/top-10-world-most-stable-currencies, their top 10 are:
- Swiss Franc
- Japanese Yen
- Norwegian Krone
- Swedish Krona
- European Union Euro
- Singaporean Dollar
- United States Dollar
- Australian Dollar
- British Pound Sterling
- Canadian Dollar
The article lists a few honorable mentions as "up and comers" in the stability market:
- New Zealand Dollar
- Czech Koruna
- Danish Krone
While these are "safe" currencies, the reality is that anything can happen and it doesn't make the stability of any of these currencies guaranteed.
Government bonds
Bonds, specifically government bonds, are the go-to "safe asset" that everyone without financial literacy cites in conversation. Well, they are. Government bonds, such as U.S. Treasury bills, are a quintessential safe-haven asset because they have low volatility and are regarded by many investors as “risk-free.” This means that investors have high levels of confidence in the government’s creditworthiness, so they know any principal will most likely be repaid when the bond matures.
Defensive stocks
Defensive stocks are known to maintain relatively stable performance regardless of the current state of the economy. Defensive companies typically make products considered necessities – things consumers will buy even in downturns. That’s why they’re less prone to cyclical effects of expansions and recessions. There will always be demand for non-discretionary consumer goods, utilities and health care – even when the economy is in decline.
When you hear "defensive stocks" you can safely imagine commodity stocks: food, medicine, energy, etc.
What's the catch
Anything that's a safe haven will inevitably see usage when times turn tough. The Covid Pandemic proved nothing behaved as people believed it should when times got tough. From the article:
For instance, gold did not behave like a traditional safe-haven asset at the onset of the COVID-19 pandemic in 2020. The price of gold followed the general direction of the S&P 500 index lower; gold lost 4.9% of its value on March 12, 2020, while the S&P 500 index dropped by approximately 10%. Indeed, the Swiss franc outperformed the U.S. dollar as a safe-haven asset during the pandemic even though they both proved to be safe during the Global Financial Crisis of 2008–09.
Safe havens are meant to balance out risk in your greater portfolio both as a normal practice and during tough times in the market. They're mostly resilient and easy to sell but neither invulnerable to market effects that surround them nor invulnerable to the irrationality of people.
Additionally, if you're putting everything into safe havens, you're exposing yourself to loss as your safe assets may retain the same price but purchasing value of the currency you intend to use weakens.
Markets – and therefore investment portfolios – don’t always go up. In periods of financial crisis or acute market uncertainty, investors seek out safe-haven assets as a way to weather these downturns. Safe-haven assets behave differently in varying economic environments, and investors can use these types of investments to diversify their portfolios and have some degree of assurance that they will retain value amid a downturn.