Tempted by ‘safe’ assets in times of uncertainty? Think again

GEOPOLITICAL events seem unprecedented because they are largely unpredictable, and the factors that trigger them rarely happen in the same way twice.

But this is consistent – tensions and uncertainties always prompt plentiful bets on which investments are “safe”, and which are not.

Traditionally, US 10-year Treasuries, the US dollar, and selective commodities such as gold and oil, are considered safe-haven assets. Gold, in particular, has a reputation as a store of value. In times of geopolitical instability, when the value of paper currency and other financial instruments can be volatile, gold is perceived to have a stable intrinsic value.