Stephen Carroll hosts this episode of Bloomberg's Here's Why podcast, featuring Joe Weisenthal, host of Bloomberg's Odd Lots podcast, discussing how traditional safe haven assets are performing during current geopolitical crises.

The conversation explores why classic safe havens like US treasuries, the dollar, Swiss franc, and gold behaved differently during 2024's tariff tensions versus the current Iran conflict. Weisenthal explains how safe haven properties activate differently depending on whether markets face investment concerns or existential fear.

The discussion covers the fundamental characteristics that make assets attractive during turmoil, examining why some traditional safe havens underperformed expectations during recent crises, and how investors' immediate liquidity needs can override long-term safe haven strategies.

What Makes Assets Safe Haven Quality

Safe haven assets are "not strictly correlated to growth or to risk assets" and can "hold their value even if things aren't going great" - Joe

Gold qualifies because "people have been using it for money for thousands of years" and its "performance is not contingent on things going particularly well in the economy" - Joe

US treasuries offer safety through "legally required payments from the US government" that "will happen regardless of whether the economy is strong or bad" - Joe

The dollar benefits from "very little inflation over the years" and being "accepted almost everywhere" globally - Joe

Tariff Turmoil vs War: Different Safe Haven Dynamics

During 2024 tariffs, "the US looked like a less attractive place to invest" as it "would be more costly to do business here" - Joe

The dollar "performed like an investment asset" during tariff tensions, weakening as investors avoided US exposure rather than seeking safety - Joe

Iran war represents true crisis where "people are not thinking about is the US a good place to invest right now? They're thinking, I am scared" - Joe

War triggers demand for assets that "roughly retain value for a year and now five years from now" regardless of investment attractiveness - Joe

Treasury Inflation Headwinds During Wartime

Wars create inflation pressure through "oil prices spike," increased "fiscal expenditure," and strains on "resources of all sorts" - Joe

Military production demands like "massively ramp up missile production" put "strains on the real economy" - Joe

Investors may accept treasuries despite inflation erosion, similar to paying for "safe deposit box" with "negative yield" for "peace of mind" - Joe

Treasury appeal persists because "the fact that I will get my principle back at the end of the term" provides security during "extreme anxiety" - Joe

Gold's Surprising Underperformance Despite Multi-Year Rally

Gold rallied significantly over recent years during "sustained high inflation" and "multiple wars around the world since twenty twenty two" - Joe

As referenced in Number Go Up, gold's price appreciation reflected demand for "dollar alternative" amid currency debasement fears

Russia sanctions in 2022 made people think "maybe I want to hold fewer dollars because this could happen to me too one day" - Joe

During crisis, immediate needs dominate: "I have a rent bill to pay, I have a Bloomberg bill to pay" and "can't pay your bills in gold" - Joe

Gold's physical limitations become problematic when "physical movement is under stress" and investors need assets "available at a moment's notice" - Joe