Gold outshines Treasurys, yen and Swiss franc as the ultimate safe haven

Gold is outperforming traditional safe-haven assets like the Japanese yen, Swiss franc and U.S. Treasurys, with spot prices up 30% year-to-date as investors seek refuge from fiscal sustainability concerns and geopolitical instability. Experts at the Asia Pacific Precious Metals Conference highlighted gold's appeal as an asset free from government liabilities, contrasting it with sovereign bonds and currencies tied to specific economies and political risks. Demand for U.S. debt instruments has been compromised by volatile policymaking, while other safe havens face their own challenges, further bolstering gold's attractiveness as a liquid and apolitical store of value.

Analysis

Gold has significantly outperformed traditional safe-haven assets in 2025, with spot prices surging approximately 30% year-to-date, recently trading at $3,403.09 per ounce after peaking above $3,500 in April. This outperformance contrasts sharply with the U.S. Dollar Index, which has weakened nearly 10% YTD, and U.S. Treasurys, where the 10-year yield has fallen by around 19 basis points, indicating higher prices but also reflecting compromised investor confidence due to volatile U.S. policymaking, including tariff rollouts and a credit rating downgrade by Moody's that pushed 30-year yields above 5%. The Japanese yen and Swiss franc, while strengthening about 8% and 10% respectively against the dollar, face headwinds; Japan grapples with structural issues and interest rate differentials (10-year JGB yields up 39 bps YTD, BOJ policy rate at 0.5%), and the Swiss National Bank's policies, including a 0.25% policy rate and potential negative rates, may discourage inflows. Experts attribute gold's ascendance to its unique characteristic of being no one else's liability, its apolitical nature, and its intrinsic value, free from counterparty risks associated with government-issued assets. Demand is further fueled by global instability, fiscal sustainability concerns regarding major economies, and significant central bank purchases, with net additions of 1,044.6 tons in 2024, marking the third consecutive year above 1,000 tons, and gold now constituting about 20% of global reserves, surpassing the euro as the second-largest reserve asset.

Key Decisions for Investors

• Investors should consider re-evaluating their safe-haven allocations, potentially increasing exposure to gold (GLD) given its strong outperformance, positive sentiment (GLD: 0.9), and fundamental drivers such as its independence from government liabilities and counterparty risk.
• Exercise caution with traditional safe havens: U.S. Treasurys (GOVT: -0.7) face fiscal and policy uncertainty, the Japanese yen (FXY: -0.3) is impacted by interest rate differentials and structural issues, and the Swiss franc (FXF: -0.3) may be constrained by national bank policies aimed at discouraging excessive inflows.
• Monitor geopolitical developments, U.S. fiscal policy, and global central bank actions closely, as these factors are significantly influencing safe-haven asset performance and are likely to continue driving gold's appeal.
• Given gold's characteristic as an apolitical, liquid market with limited supply, investors might view it as a strategic long-term holding to hedge against systemic risks and currency debasement concerns.