“The world is getting more and more fat tailed..” —Philo
“I play it close to the West.” —George Soros
Historically, you could count safe havens on the fingers of one hand — these days you’d be lucky to count them on one finger.
What do I mean?
Well, the world ain’t what it used to be…. Traditional safe havens are losing their lustre while modern ones are creeping up.
What are safe havens?
Safe havens are assets that carry (or perceived to carry) one or more of the following functions: 1) preservation of wealth (+income) 2) safety from inflationary spikes/demise of currency and 3) safety from political turbulence, military conflicts, regime changes etc.
Today we will look into the following categories of safe havens:
Precious Metals
Real Assets
Government Bonds
1. PRECIOUS METALS
“Gold is money, everything else is credit.” —J.P. Morgan
Well, gold used to be money until the US pulled a Kansas City shuffle on the rest of the world. Today, all currencies are fiat currencies — that is to say, not backed by gold. In this world of naive Keynesianism and endless budget deficits, money is anything BUT sound.
This keeps people up at night, and makes them look for safe places to park their wealth. The absolute classic of safe havens is of course, GOLD.