A generic guide steering you up to make investments to earn those sky-high benefits is now a stereotypical thing. What needed next is the manuscript that would save you from specific market turbulence trends in particular. Here’s to your saviour: the ultimate directive guide!
To those who might wonder the literal interpretation of ‘safe heaven’, here’s the explanation to your query- commonly it bears the connotation of a protected disposal or place. Talking about in the financial pretexts it would be an investment that is expected to hold fast its value or even increase its worth in times of market upheaval.
Financial ‘safe havens’ are much sought after by investors to limit their losses in times of economic conflicts in the market sphere. Much is the need of such cushioning disposals which could take the shock-waves of monetary chaos and disarray.
‘Gold’- the safe haven asset
“The desire of gold is not for gold. It is for the means of freedom and benefit”
-Ralph Waldo Emerson
The said quote so aptly fit in the notion. Indeed, the pretext of owing those precious stones has massively evolved over time. Our ancestors bragged it enthusiastically to display the royal supremacy and today in the top-notch society with ample financial assets to vouch for gains, gold stands tall to hail the tag of the ‘safe haven’ amongst all!
The recent consensus among the asset allocation experts, financial researchers and top analysts has identified ‘gold’ to be the safest financial asset owing to its historical records.
The importance of possessing gold in a strategically drafted portfolio has mention in numerous research journals as well. Evidently over the historical paradigm, gold has protected its owners from pangs of inflation, stock crashes, asset confiscation and currency debasement nuances.
Why only gold?
Financial assets that bear the credit risk in particular can’t be categorized as financial safe assets. Since, gold doesn’t necessarily belong to that group; hence it can be gladly hailed to be one so. The gold bullion specifically can turn out to be the most protective asset in times of economic and market conflicts. There has been quite pondering researches which weighed out the logistics behind possessing the gold in particular. Much reference could be dug out from the historical journals as well!
Baur and Lucey in 2010 hinted gold to be a hedge and a safe haven indeed but limited its potentiality to just stocks case neglecting its ability to stand as a safeguard for bonds. This in particular was well comprehended considering the fact that it’s just a tangible asset in the end and not a paper one which could have then served to protect the bonds as well. The same research even suggested the procurement of gold bullions on limited periods of trading days essentially in turbulent cases.
The same manuscript even extended to issue an advisory to the probable investors. The speculators were suggested to buy gold on days of extreme negative return specifically and sell back their gold assets at times when the market competitors seemed to have regained back the confidence keeping an eye on low volatility too.
Such theories and research studies on similar pretext were manifold indeed. All testified the innate characteristics of gold to reduce overall risk and performance boosting by enhancing returns on investments as well! Its ability to smooth off the fluctuations in investment’s portfolio especially in highly volatile periods is indeed rewarding too.
Another such mention traces back to the research conducted by Baur and McDermott in 2009. This empirical research studied the historical records and prophesized gold to be both a safe-haven asset and a hedge for major world equity markets. Owing to this status, it suggested gold’s usage as a major portfolio diversifier specifically.
So here’s the abstract which encompasses the findings from the entire academic and experts’ researches so far:
- Gold is the ultimate money:
Although it isn’t used as a prevalent currency in the physical world today, yet one can’t ignore its supremacy of 3,000 years old store value. All major currencies have depreciated in contrast to the gold over the years and hence it is surely the safe-haven. One can even glance at the Central bank trends in acquiring gold assets lately.
- Gold can be ‘Confidential’:
One of the few assets that offer the ‘gem of confidentiality’ and private form of wealth off course is essentially our beloved gold bullion perhaps! It has the peculiarity of going anonymous to some extent thereby granting that extra privacy. If youchoose that feature to get on roll obviously none can get a clue about your gold belongings. This can act as a boon in times of monetary conflicts and currency debasements specifically.
This simply dictates the fact that gold is easily convertible to cash in the form of the nation’s native currency. This in general explains that gold is liquid enough!
It is ideal indeed because you can sell it off very easily without any intermediary liabilities to finally save you in times of crisis. Additionally the process involved is lucid enough to be implemented by any unlike the selling of stocks in your brokerage accounts which require longer and tedious procedures.
It’s perhaps suitable to fell in the task of selling off gold at crisis than to get stuck in the stock- stupidity stuff!
“The possession of gold has ruined fewer men than the lack of it”
Investor Implication: Grab- Gold -Fast