Any investor who has been in either gold, the Swiss franc, the yen or a multitude of other so-called “safe haven” assets has experienced extremely poor returns of late. Moreover, this has been taking place behind a backdrop of falling global equities and rising credit spreads, symptomatic of deteriorating economic momentum. Geopolitical risks have been on the rise too, with the recent Paris terrorist attacks highlighting the volatile playing field that a multipolar distribution of power has created. Multiple global powers are able to pursue their foreign policy independent of one another, creating ripe conditions for conflicts.
Geopolitical, economic and financial risks are often linked to demand for safe haven assets. For example, the 1973 Yom Kippur War triggered a 16% correction in the S&P 500, the September 11th terrorist attacks triggered a 26% decline, and the Great Recession triggered a 58% peak-to-trough plunge. During all these episodes, there was a central theme that determined what asset played the role of a safe haven – the economic and geopolitical regime of the time.
The Geopolitical Strategy team recently published a Special Report entitled: “Geopolitics And Safe Havens”. In this Special Report, we delve into the drivers of safe haven flows and answer the most important question: How likely are these assets to outperform in the event of severe market turmoil?
To access the Special Report entitled “Geopolitics And Safe Havens”, please click here.