Rational Reaction: Why Are Precious Metals Considered “Safe Havens”?
These metals have historically been viewed as stores of value during periods of economic uncertainty because they tend to hold their worth when other investments face challenges.
Here are some relevant facts:
• Central banks around the world have been consistent buyers of gold in recent years as they have diversified away from dollar-denominated reserves, which demonstrates institutional confidence in gold as a protective asset.
• When the dollar weakens or concerns about currency debasement arise due to deficit spending and accommodative monetary policy, investors often favor gold as a store of value, especially during periods of elevated stock market volatility. However, gold and other assets are also prone to booms and busts, so careful consideration is needed.
• One important trade-off to consider is that gold generates no income, unlike bonds or dividend-paying stocks, which means its value comes purely from price appreciation rather than ongoing returns.
While precious metals can play a role in a diversified portfolio, it's important to maintain a long-term perspective and remember that different asset classes serve different purposes in helping you work toward your financial goals over time.
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Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of the portfolio team and are no guarantee of the future performance of any Avantis fund. This information is for an educational purpose only and is not intended to serve as investment advice. References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.