While large-scale disasters such as the coronavirus pandemic can have a significant negative impact on the global economy, causing certain stocks and shares to plummet, there are certain investments that are more likely to retain or even gain value during times of severe market instability.
Here, we’ll explore the concept of these safe haven assets and discuss how they are being affected by the current crisis.
The value of a particular safe haven asset depends on the nature of any crisis and on the areas of the world that are affected at the time of investment. For example, the Japanese yen, the US dollar and the Swiss franc may be considered safe haven assets during different scenarios.
While US currency is highly liquid and often stands strong against the tender of other territories, investing in the dollar may not be as sensible during a crisis that significantly affects the states. In situations of this kind, it may be advisable to invest in the yen, which tends to grow in value whenever the dollar decreases.
While it is difficult to find a country or economy that has not been severely impacted by the pandemic, the yen is currently performing well against the dollar as a result of the two countries’ different response to the virus.
The franc is favored during far-reaching crises thanks to the strength of the Swiss economy and the balanced nature of the country’s administration. Predictably, the franc has also boomed as a result of the coronavirus crisis.
Gold and other precious metals fall into this category, meaning they are also appreciating significantly at the present time.
On the other hand, oil – which is usually a very popular option for these types of investments – has taken a major hit as a result of a huge market crash stemming from both political and practical aspects of the pandemic.
Certain Stocks, Shares and Bonds
During a crisis, many traders decide to invest in defensive goods and services – commodities that are relied upon more heavily during difficult times. For example, as a result of the coronavirus, shares in companies that supply energy, pharmaceuticals and groceries have risen considerably in value.
Government bonds attract significant attention from traders when an economy is unstable, as they may not only increase in value but will also pay out interest. This type of asset is also proving very popular within certain countries at the present time.
However, when it comes to stocks and shares in general, it may not be advisable to take too many risks right now. When using a CFD platform or any other trading resource, always proceed with caution.
Where to Invest Now
If you want to play it safe with your investments, the assets that look most promising at present are precious metals, especially gold.
While the yen and the Swiss franc are also performing well, it is important to remember that the coronavirus is a global pandemic that is highly unpredictable, and may negatively impact any territory at any time.
For this reason, investing in assets that are not attached to a particular country’s economy may also be something worth considering.