This would reduce borrowing costs for troubled countries and create a safe asset for banks to hold.
Treasurys are the only sure-fire safe asset around, even though real yields on shorter-dated U.S. debt are negative.
It should be apparent that housing is not a safe asset, even when we are not in a bubble.
The bubble scenario is this: US Treasuries are a safe asset only as long as investors believe they are.
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Wall Street knows that breaching the debt ceiling would be catastrophic, but they need the safe asset that Treasuries provide.
Bonds have always been thought of as the safe asset for investors.
As the safe asset, they command incredibly low interest rates.
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Bank of America are all outperforming the market dramatically over the past six months, while gold, eternally seen as a safe asset, is down hard in the same time period.
However, the financial crisis in 2008 reduced returns across riskier asset classes, which resulted in investors pulling their money out and parking them in safe asset classes (low yield sovereign treasury bonds, fixed deposits, etc).
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It acted more like a risk asset than a safe-haven asset.
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Locke, 61, reminded China reporters that despite the downgrade, investors were still treating Treasury debt as the global safe haven asset of choice.
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The gold market has recently behaved more like a risk asset than like a safe-haven asset, to the consternation of gold market bulls.
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Although US bonds remain the safe haven asset during an investment climate of risk aversion, it has become clear that investment grade emerging debt is the reliable second choice.
Importantly, investor sentiment is ever-changing and at some point down the road gold will be back in vogue as an investment asset especially a safe-haven asset.
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In recent weeks the gold market has tended to follow the other raw commodities and act like a risk asset, instead of a safe-haven asset.
Gold has been acting more like a risk asset in recent weeks, and less like a safe-haven investment asset.
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Remember that gold has been acting more like a risk asset in recent weeks, and less like a safe-haven investment asset.
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The yen also resumed its role as a safe-haven asset as it strengthened against the U.S. dollar.
Research by Nomura shows that gold has the capacity to act both as a risky and a safe-haven asset.
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Most gold market bulls would prefer their metal act like a safe-haven asset.
Still, given that gold is a safe-haven asset the yellow metal could rally if the EU crisis once again escalates.
The EU debt crisis is still a major underlying bullish factor for the gold market, due to its safe-haven asset status.
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Given that gold is also a safe-haven asset the yellow metal could also rally if the EU crisis once again escalates.
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Such would be a significantly bullish factor for the safe-have asset gold.
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These risk off days recently have been more bearish than bullish for the gold market even though gold is perceived as a safe-haven asset.
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Despite being a safe-haven asset, the gold market is not presently being supported by the escalation in the European Union sovereign debt crisis.
Despite being a safe-haven asset, gold has failed to get upside traction from the recent uncertainty regarding the EU debt and financial crisis.
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Despite being a safe-haven asset, the gold market felt selling pressure from a sharply higher U.S. dollar index and generally weaker commodity sector Wednesday.
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Despite being a safe-haven asset, the gold market is not presently seeing fresh demand due to the escalation in the European Union sovereign debt crisis.
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The gold market this week is acting more like a safe-haven asset and less like a risk asset, which is frustrating the yellow metal bulls.
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