What is a Shelter Value?

Privately-owned and independent, Abacor has become a trusted name in investment gold, providing you with all the information you need about gold. Since 1996, our teams have been advising and guiding private investors looking for a safe haven to protect their assets from economic and financial crises. Let's discuss the definition of a safe-haven investment.

Definition of a Safe Haven

A safe-haven asset is an investment that protects and secures wealth in times of crisis. It is an asset whose value remains stable or even increases in times of crisis.

Why invest in a safe haven?

Investing in a safe-haven asset is first and foremost a way of protecting the holder's wealth at a time when other investments are losing value. Since it is supposed to preserve its holder's purchasing power in times of crisis, a safe haven must be a relatively secure investment. However, it is not intended to make money, and therefore does not guarantee the absence of loss.

When should you invest in a safe-haven investment?

Safe-havens are generally sought after when the outlook is negative, during periods of economic and financial uncertainty. This may be before the market downturn occurs, or when it has already begun for fear that the situation will worsen.

In any case, these assets are not intended to be held outside crisis periods. In fact, outside these dark periods, these investments offer lower average returns than equities.

What are the main safe havens?

The more severe the anticipated crisis (from a simple recession to an economic crash and the collapse of the financial system), the more safe havens will need to be dissociated from finance and the economy.

If your fears are strong and you doubt the survival of your bank or insurer, or if you fear a collapse of the global economy and the financial system, you can turn to radical safe havens: physical assets.

If you anticipate a contraction in the financial markets and an economic recession, but still have confidence in the financial system, you'll turn to risk-free bank and financial savings solutions, usually reserved for precautionary or project savings. These include Livret A (or LDDS) passbook savings accounts and the euro funds of life insurance policies.

Another option is to consider certain currencies as safe havens in times of crisis, even if they remain locked into the international monetary system.

Let's focus on physical assets.

#1 Gold, the safe-haven par excellence

Gold is the safe-haven asset par excellence. The yellow metal is the historic safe-haven, and every time there is an economic, monetary or political crisis, the price of gold rises. Indeed, investors always take refuge in the precious metal, and supply is always limited.

Here are the reasons why gold is the ultimate safe-haven investment:

Gold exists physically, has real industrial applications and does not alter over time, as it possesses exceptional chemical and mechanical properties.
The price of gold is not directly linked to financial market trends, unlike shares, which depend on a company's results.
The yellow metal is not dependent on a government or on key interest rates.
Gold offers no direct return, and its price depends solely on supply and demand.
Finally, it is a product whose supply is limited by its rarity.

If you are tempted to invest in gold, choose physical gold rather than a financial product that replicates the price of gold or shares in a mining company. Indeed, if you invest in gold as a safe-haven asset, it's precisely because you don't want to be tied to the financial markets.

#2 Residential real estate, the favorite of the French

In addition to the symbolic and emotional value of the home, real estate is widely regarded as a safe and profitable investment. Indeed, everyone will always need a roof over their head, whatever the economic climate.

The French have always loved real estate, and 58% of them own their main residence, half of whom also own a second home.

According to a November 2020 survey by OpinionWay, 87% of French people want to invest in real estate despite the crisis. They see real estate as a profitable, practical and secure investment.

Financial and economic crises have had little impact on real estate values. However, the real estate market also goes through cycles of growth and recession.
As a result, the value of a property can fall over time. In fact, real estate is sometimes too numerous and too expensive, when it's not poorly located. The value of a property will never fall to zero, but that doesn't mean it can't decrease significantly. In addition, households and businesses are likely to suspend rent payments.
As a result, it is generally advisable to favour urban residential real estate over student, business and tourist accommodation, in order to own properties that retain their value better in times of economic stress.