As Donald Trump ushers in an era of economic and political change in America, there has been a lot of discussion about “safe haven assets.” These are low risk financial instruments that provide a protective shelter for wealth and capital. They tend to retain their value “come what may” and can even thrive in times of uncertainty.
JP Morgan Wealth Management describes safe havens this way:
“When there is a widespread shock or calamitous event in the world – the Ukraine-Russia war, the coronavirus pandemic, the Global Financial Crisis of 2008-09, to name a few examples – investors begin to fear a stock market crash. A flight to safety usually ensues as a way for investors to mitigate potential losses in their portfolio. These safe havens are parts of the market investors rely on to limit their exposure to market, economic or political instability.”1https://www.chase.com/personal/investments/learning-and-insights/article/what-are-safe-haven-assets
Safe havens help to offset risk, mitigate loss, and balance portfolios to soften the impact of policy uncertainty, market mayhem, and financial downturns.
What Constitutes a Safe Haven?
Safe haven assets have certain traits that help them retain value and contribute to their financial resilience. According to the global online trading and investment company, IG Bank, the following characteristics are often associated with the safe haven temperament:
- Liquidity: the asset needs to be easily convertible to cash, at any time
- Functionality: the asset needs to have a use that will continually provide long-term demand
- Limited supply: the growth of supply should never outweigh the demand
- Certainty of demand: the asset is unlikely to be replaced or become outdated
- Permanence: the asset should not decay or rot over time2https://www.ig.com/en/trading-strategies/what-are-safe-haven-assets-and-how-do-you-trade-them–181031
Notable safe haven assets include certain currencies like the Japanese yen and the Swiss Franc, government bonds like treasury bills, defensive (or non-cyclical) stocks that are not correlated to business cycles like utility, consumer staples, and healthcare stocks — and precious metals like gold, silver, platinum, and palladium.
Why are Investors Worried About Risk?
The U.S. economy seems sound and continues to enjoy solid growth, but does America have a false sense of security? Indeed, Wall Street has been upbeat, bullish, and celebrating record highs and most investors feel good about their portfolios heading into 2025. But unease is starting to stir about sticky inflation, endless wars, overvalued markets, and unsustainable debt levels.
Things have been uncharacteristically quiet and according to Forbes we may be ripe for a market correction:
“The most prevalent analysis and valuations point to continued strength and allow for optimism. However, it may not be wise to expect the extreme stability of the past two years to become commonplace. Historically, peak-to-trough declines are characteristic of the annual lifecycle. On average, the S&P 500 experiences annual drawdowns of over 16%. By comparison, 2023 and 2024 saw maximum declines of just 10% and 8.5%, respectively.”3https://www.forbes.com/sites/wesmoss/2025/01/14/10-market-themes-to-watch-out-for-in-2025
As Trump takes the helm, old risks persist along with potentially new perils with respect to tariffs, trade wars, geopolitics, and the return of inflation. According to foreign affairs thinktank, The Henry L. Stimson Center, Trump’s ambitious agenda could prove disruptive and even chaotic:
“2025 risks deeper strife, conflict, and uncertainty in an unsettled, contested world. Fears of a Rogue America unraveling the very global order the U.S. created after WW2; growing global—and most troubling—developing nation debt, worsening already fragile and failing states; trending toward a climate tipping point; and confrontation with Mexico are among the top things to worry about in 2025.”4https://www.stimson.org/2025/top-ten-global-risks-for-2025
Is Volatility Now Just a News Cycle Away?
The financial markets can be sensitive, reactive, and emotion-driven. They are influenced by everything from economic data and the news cycle — to investor sentiment and world events.
US News & World Report identifies several key risks for a possible 2025 market downturn:
- Soaring Public Debt
Stock valuations are high and should remain that way into 2025, and while market experts don’t think high valuations will trigger a crash – other factors might like soaring national debt. - Tough Trump Tariffs
Trade tariffs are likely to be a cornerstone of Trump’s economic policy with levies on commodities like steel and aluminum imports. These policies could add uncertainty, trigger an inflationary response, and undermine fiscal sustainability. - A Federal Reserve Pivot
The Fed has been on a rate-slashing roll of late, cutting its benchmark federal funds rate by half a percentage point in September and by 25 basis points in November and December. These could be the last rate cuts for a while as the Fed takes a wait-and-see attitude on the economy and the new Trump administration’s economic policies in 2025. - Consumer Anxiety About Housing
According to a new U.S. housing market outlook from the real estate data and services firm Clever, 45% of buyers and 47% of sellers say home prices in their region will increase in 2025. Another 68% of buyers are worried that rising home prices will force them to delay their new home purchase in 2025. - An Overall Murky Market Picture
Earnings growth has been uneven recently, and there’s weakness in consumer discretionary spending. In addition, companies are contending with higher costs, particularly labor and health care, and supply chain challenges that have altered consumer behavior.
Gold is the Definitive Safe Haven
Investors are attracted to gold for its stability, resilience, and overall safety profile. It has a long history as a portfolio diversifier and thrives in economic uncertainty.
Gold has not only provided investors with retirement security and portfolio protection; it is up over 35% in the past year and more than 75% over the past five years.
According to the Royal Mint, it is unrivaled as the world’s most respected and reliable safe haven asset:
“In times of economic uncertainty, investors seek refuge in assets that offer stability, protection against inflation, and a safe harbour during times of market crisis and uncertainty. Gold, with its enduring appeal and historical significance, has consistently held the title of the ultimate safe haven.”5https://www.royalmint.com/invest/discover/gold-news/five-reasons-why-gold-remains-the-ultimate-safe-haven-asset
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1 https://www.chase.com/personal/investments/learning-and-insights/article/what-are-safe-haven-assets
2 https://www.ig.com/en/trading-strategies/what-are-safe-haven-assets-and-how-do-you-trade-them–181031
3 https://www.forbes.com/sites/wesmoss/2025/01/14/10-market-themes-to-watch-out-for-in-2025
4 https://www.stimson.org/2025/top-ten-global-risks-for-2025