Safe-Havens: Gold, Treasuries, Dollar, and Bitcoin Compared

A safe-haven asset is one that tends to preserve value and perform better than risky assets during times of severe market stress, according to the IMF. This does not mean it must rise every time stocks fall; rather, its value becomes uncorrelated or negatively correlated with other assets.

The traditional examples of safe-haven assets are gold, U.S. Treasuries, and the dollar. However, Bitcoin is increasingly being discussed alongside them, although its behavior is less consistent. In fact, its volatility is much higher than that of gold, Treasuries, or major currencies.

Gold is unique because it's not another institution's liability; it doesn't depend on a company, bank, or government making payments. This helps explain its long history as a reserve asset, used for capital preservation, diversification, and liquidity during stress.