It’s likely to have been on the mind of every investor since the beginning of what has become an almost global tightening of monetary policy. Skyrocketing inflation is being taken to task by many major developed nations, and their central banks are walking a fine line between dumping their local economies into recession or stagflation and preventing these new price increases on goods and services from becoming entrenched over a long period.
Let’s take a look at some promising asset classes that are worth further research and potential investment in times of prevailing global uncertainty.
However, if you choose to take advantage of the current market volatility, find a regulated and secure broker like easymarkets to help you safely and conveniently implement your strategy to get the most out of your trading.
Gold
Most experts will tell you that gold can be a good way to diversify your portfolio when recessions loom. It’s both a commodity and a kind of currency; it’s liquid, it doesn’t disintegrate, and it’s used for jewelry and also current and emerging technologies.
Although some believe that the precious metal is overrated as a safe haven, especially in the case of increasing interest rates as it has no yield compared to other assets, it may become more popular if inflation remains high and if central banks slow the pace of interest rate increases in the future.
Non-cyclical stocks
Whether times are good or bad economically speaking, there are always certain products and companies that are going to be fairly essential. These include those items that the majority of the population, regardless of their socioeconomic background, need every day or can’t live without, like food, hygiene products, beverages (including alcohol), and household items.
Discount stores have favored well so far this year, as well as a number of food manufacturing and distribution stores.
On the opposite side of the spectrum are things like emerging technologies, clothing stores, hotel groups, or airlines example, that are less likely to perform well during a downturn.
Taking advantage of these stocks when they are cheap, provided they survive the difficult current economic challenges they all face, could be a great way to earn solid returns as their local economies return to earlier prosperity.
Safe-haven currencies
Certain currencies are characterized as ‘safe havens ’because they’re generally expected to hold or even increase value in the face of geopolitical dramas or when risky assets experience a quick sell-off. Most agree that these include the U.S. dollar, the Swiss franc, and the Japanese Yen.
The theory doesn’t always hold true, but when it does, it’s generally because these countries carry a large volume of assets in other currencies and can sell them if global risks arise, therefore re-strengthening their own currency.
Sometimes, just the assumption that these currencies will strengthen is enough to drive traders to buy them in anticipation of global uncertainty. Demand increases on the back of historical movements, and a spiral of growth occurs as a result.
