When I say "safe-haven asset," gold is probably the first thing that comes to mind...
The metal is a currency of sorts – one that the government can't print. It can't be messed with or manipulated. Its supply is stable. So it has a history of rising in value during uncertain times.
The problem with gold is that much of the investment world sees it as niche. It's hard to buy and sell in bulk. So big institutions – the ones that really move money around – don't turn to it in times of crisis.
As I explained yesterday, we're entering a new era of geopolitical uncertainty. The Taliban's recent takeover of Afghanistan is the latest shake-up... And the repercussions could be far-reaching. So finding the best safe-haven investment is crucial for investors right now.
The answer isn't gold. Instead, you should consider something else...
Specifically, you should consider what big institutions do turn to in times of crisis. Again, it isn't gold...
It's U.S. Treasury bonds.
You might think government bonds are the antithesis of gold... You own the metal if you're worried about the U.S. dollar losing value. And Treasury bonds are, well, practically the thing that gold is a hedge against, right?
But to institutional investors, Treasury bonds are a fantastic safe haven. Here's why...
Treasury bonds act like cash in crazy times – cash that earns interest. If institutions want to limit their stock exposure, they move to the safest asset possible that they can easily buy and sell. Like it or not, that's a U.S. Treasury bond.
Again, institutions buy Treasury bonds because 1) they're easy to buy and sell, 2) the world trusts them, and 3) they pay interest. It might not be your favorite safe haven. But it is the big safe haven for institutional investors.
We can't know how severe the global disruptions will be now that the U.S. has left Afghanistan. But if these global changes end up spooking big investors out of stocks, then a significant amount of that money will end up in U.S. Treasury bonds.
Remember, bond prices and interest rates have an inverse relationship. So when cash floods into Treasury bonds, it raises their prices, causing interest rates to fall.
That's interesting when you consider the state of inflation today. Inflation has been hitting multidecade highs in several categories. Given that fact, you'd expect interest rates to be soaring. But they haven't been.
Steve explained this to DailyWealth readers last month. Here's what he said...
The rate on the benchmark 10-year government bond has fallen to 1.2%. And even more impressive, U.S. 30-year mortgage rates actually hit all-time lows early this year – below 3%...
How can interest rates be falling if inflation is really here to stay?
That's an important question. And the answer is simple... It isn't.
Interest rates are surprisingly "smart." In a way, they represent the collective beliefs of trillions of dollars invested. So interest rates do a decent job of "forecasting" inflation and the economy much better than any one person can.
Interest rates have been falling despite record-setting inflation numbers. The 10-year Treasury yield is still at just 1.38% as I write... And 30-year mortgage rates are still at less than 3%.
That's the market's way of telling us that high inflation shouldn't last for long. And with rates trending lower, it's likely that they'll continue to fall, too.
That's especially true given the new uncertainty in the world. The instability will drive investors into Treasury bonds... and drive interest rates even lower.
This contrarian bet is the right one to make today.
U.S. Treasury bonds are the top safe haven in times of crisis... even better than gold. It's what all the big investors around the world turn to when they're looking for security in the face of uncertainty. And I'm betting folks will want that security in the weeks and months to come.
It's why boring Treasury bonds are the right bet today... as geopolitical uncertainty rears its ugly head.
Good investing,
Brett Eversole
P.S. In the latest issue of True Wealth, we found a specific way to make this trade. It allows us to capitalize on uncertainty in a hugely contrarian way. And our recommendation has much more upside than simple Treasury bonds... You can learn more about True Wealth – including how to gain access to this opportunity – right here.
Further Reading
"Some of the world's greatest investors use this strategy," Mike DiBiase writes. With all of the uncertainty in the world, the stock market is even more unpredictable than usual. And that makes it a great time to take advantage of opportunities outside of stocks today... Get the full story here: The Government Doesn't Have Your Back as an Investor.
"It's a way to earn equity-like returns with far less risk than investing in stocks," Mike DiBiase writes. If you're worried about a market crash, you can still make solid gains while protecting your potential downside... Read more here.
In a world of uncertainty, you need to have your financial house in order. And one of the most important tools in finance can help you do it...
SHARES OF THIS CHIPMAKER SURGE AS THE 'BIG TECH' TREND CONTINUES
Today, we're looking at a company that's thriving as folks continue to rely on tech...
Longtime readers know computer chips are more prevalent than ever. People use their phones, laptops, and "smart" appliances every single day... And that means the companies that produce the tiny chips to power these gadgets are profiting. Today's business is a perfect example...
STMicroelectronics (STM) is a $40 billion semiconductor giant. It makes the chips that power a wide variety of products like smartphones, cars, washing machines, and even electric toothbrushes. With folks stuck at home during this pandemic and turning to their devices for entertainment, STMicroelectronics has performed well... In the second quarter, the company posted revenue of roughly $3 billion, up 43% year over year.
As you can see in today's chart, STM shares have been rocketing higher. They're up 135% over the past two years... And they recently hit a fresh multiyear high. As long as we continue to depend on tiny chips to power our technology, semiconductor makers should continue to benefit...
