24 July 2025
When markets tremble and headlines scream uncertainty, investors do what they’ve done for centuries: they run to safety. But what exactly makes an asset “safe”?
Is it durability, liquidity, regulatory protection, or is it, perhaps, something far more elusive - consensus confidence?
At its core, the concept of a “safe haven” may not be rooted in an asset’s intrinsic characteristics at all, but rather in our collective faith in its resilience. Safe havens may function not because they're immune to risk, but because enough of us believe they are.
In that sense, are safe havens really about safety? Or are they just highly effective, market-wide self-fulfilling prophecies?
No asset better captures this duality than gold.
Across human history, roughly 216,000 tonnes of gold have been mined; all of it could fit into a cube just 22 metres across. Despite this physical scarcity, gold has acted as money, collateral, jewellery, and insurance for over 5,000 years.
It yields nothing, generates no dividends, and isn’t backed by any cash flows. Yet central banks hoard it, investors rush to it in panics, and entire economies have once been tethered to its price.
Why? Because gold offers something few assets can: permanence without promise. It requires no central bank, no legal enforcement, and no trust in institutions. It’s simply there - immutable, borderless, and beyond the reach of policy error.
Gold’s safe-haven status persists not because it does something, but because everyone agrees it means something. In a world built on confidence, gold is what remains when confidence collapses.
History also reminds us that not all safe havens stay that way.
· The Swiss franc was once the go-to currency for crisis, until its peg to the euro was suddenly removed in 2015, sending shockwaves through FX markets.
· The UK gilt market, once a bastion of fiscal discipline, was rattled by a political misstep in 2022 that forced emergency central bank intervention.
· Even US Treasuries, long considered the global benchmark for safety, now carry tail risks due to debt ceiling brinkmanship and ballooning deficits.
These events reveal something important: safe haven status is fragile. It can erode with policy errors, political volatility, or simple overexposure. What was once unquestioned becomes priced with risk.
If safety is psychological and contextual, then the next generation of safe havens may not look like the last.
· Tokenised treasury funds combine the reliability of US government debt with the real-time liquidity and transparency of blockchain, creating a new type of digital cash equivalent for institutional flows.
· Carbon credits, particularly high-integrity, nature-based offsets, are being considered as long-dated hedges against both climate risk and regulatory shifts, turning sustainability into a store of value.
· Mission-critical infrastructure assets, ranging from data centres and logistics networks to clean water and rare earth processing, are increasingly viewed as safe harbours due to their inelastic demand and real-asset nature.
· And yes, Bitcoin, despite volatility and criticism, is gaining adherents as a decentralised hedge against fiat debasement and institutional distrust. It may not be “safe” in price terms, but belief continues to grow.
In each case, it’s not the balance sheet that guarantees safety. It’s the emerging consensus - investors coalescing around new ideas of resilience, independence, and utility.
Perhaps the most essential truth about safe havens is this: they are rarely permanent - they shift, evolve, and sometimes break.
More often than not, they are built not on yield curves or inflation models, but on narratives. They are the places capital runs to when trust elsewhere is questioned, and that makes them as much about human behaviour as financial theory.
So, are safe havens self-fulfilling prophecies? In many ways, yes.
But that doesn’t make them any less powerful. In fact, it may be the very reason they work.
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