As stocks sold off, investors seem to have shrugged off traditional
haven assets such as gold in favor of bitcoin.
Like stocks and commodities, cryptocurrencies are highly speculative and risky assets, while investors always rush towards safe -
haven assets such as gold and bonds during the period of high volatility.
So, while there is no common thread between the drop in equities and bitcoin, the correlation between the two has strengthened — and that's most likely because the investor community is still not ready to accept notoriously volatile bitcoin as a safe
haven asset such as gold and U.S. treasuries.
Not exact matches
This perceived safe
haven also tends to rally ahead of «known unknowns»
such as elections with binary outcomes, then lag after the event as the lifting of uncertainty boosts risk
assets.
They consider a range of arguments for owning gold,
such as: (1) gold hedges inflation; (2) gold hedges currency decline; (3) gold is attractive when other
assets are not; (4) gold is a safe
haven in times of crisis; (5) gold is a de facto world currency; and, (6) central banks and investors in aggregate are still underweighting gold.
Kelly Escobedo is Managing Director at Blue
Haven Initiative, where she is responsible for overseeing the deployment of capital across the family office's
asset classes, from traditional equities and direct investments to real
assets,
such as real estate.
With the U.S. ramping up military action overseas, including its dropping of a devastating bomb in Afghanistan on Thursday, many investors are lightening their risk
assets in favor of «safe
haven» instruments
such as gold and Treasuries.
Russ
Haven, general counsel for the New York Public Interest Research Group, an Albany - based government watchdog group, said in an email Saturday that
such financial disclosure gives the public useful information about candidates» work,
assets and potential conflicts of interest.
This perceived safe
haven also tends to rally ahead of «known unknowns»
such as elections with binary outcomes, then lag after the event as the lifting of uncertainty boosts risk
assets.
They can invest in a variety of safe -
haven assets,
such as gold, cash and Treasuries, or can have a dedicated short bias, meaning they only short stocks.
«Cryptocurrencies are seen as a safe
haven asset now from global macroeconomic events
such as currency devaluation or even events like the «Brexit».»
While much of that money may initially be parked in more liquid
assets like US Treasury bonds and safe -
haven currencies
such as the Swiss franc, there is growing evidence that foreign property sales may receive a boost.