May 11, 2021

Shelter assets continue to rise although they have little way to go

Safe-haven assets, such as gold, some countries ‘sovereign debt or the US dollar, have traditionally been investors’ bet in times of economic uncertainty such as today, but some do not have much of an upward trend, according to the experts consulted. by Efe.

Although not all safe-haven assets have been affected equally by the crisis stemming from the pandemic, some of them have recorded significant losses in March, during a “first phase of panic” in which investors were seeking liquidity, as explained the adviser of Anattea Luis Benguerel.

For example, gold fell in March to $ 1,460 from the 1,600 at which it was trading.

The safe-haven values ​​keep an upward trend although, being at quite high levels, they are close to reaching their resistance, as in the case of gold or the dollar.

Gold, a safe haven par excellence, is approaching resistance at $ 1,800, a price it reached in 2011, in the midst of the financial crisis.

This week the precious metal has traded between $ 1,705 and $ 1,780, so it reached levels of August 2011 although it has been deflating.

“Gold has practically everything in its favor in an environment of close to zero or negative rates, fiscal policies that put other assets at risk, an ultra-expansive monetary policy and a strong dollar,” said the chief investment officer of A&G Banca. Private, Diego Fernández Elices.

However, the co-founder of Flossbach von Storch Bert Flossbach has stressed that the price of the precious metal is very difficult to predict, since it is influenced by many factors, although he did admit that investing in gold is like “insurance” against unknown risks of the current financial system.

Silver and palladium are other metals that could be considered safe haven assets, although Allianz Global Investors chief economist Stefan Hofrichter distinguishes them from gold, as these are indeed used in industry, while the former acts only as ” deposit ”of value.

“The fewer precious metals used as a store of value, the less they will be considered safe haven assets. In short, the only real safe haven value is gold, especially since it has been that way for thousands of years, ”said Hofrichter.

IG Market analyst Aitor Méndez points out that the behavior of palladium seen in the chart is similar to that of gold, despite the fact that the demand prospects for the automotive sector have been severely damaged.

Palladium is primarily used in the catalysts of gasoline and diesel cars to convert harmful exhaust gases into less harmful ones.

In the currency market, the dollar remains strong, although XTB analyst Joaquín Robles has insisted that, although it can still cut its distance against the euro further to 1.06 dollars, the currency has little travel, since it is located in the environment of 1.08.

The sovereign debt of some countries is another of the most frequent investments in times of economic uncertainty, although the A&G chief investment officer has explained that in Europe bonds have not served as a refuge in the second part of this crisis because, given the current valuation, do not have an upward trend and, therefore, have no value as a refuge against liquidity.

As for cryptocurrencies, the chief economist at Allianz Global Investors defends that, although their predecessors consider them as a refuge, they are not “safe” assets due to their dependence on an algorithm, to which their volatility is added.

Bitcoin, the best-known cryptocurrency, has traded this week between $ 6,890 and $ 7,150, after the asset fell to $ 4,600 in March from which it has later recovered.


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