Safe haven assets that can protect you from stormy markets

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Finding the best place for your money should be one of your concerns, especially when faced with the unpredictability of stormy markets. This is a sound and practical advice for both beginner and seasoned investors, but choosing the right “safe haven” assets is sometimes easier said than done.

Some stocks and investment options, for instance, may not always fall on the list of the safest choices for investing. For one, constantly changing market conditions can make once common safe haven assets vulnerable. The good news is, there are still others that are strong enough to withstand the very same challenges. Here are the strongest and most stable safe haven assets that you should include in your investment portfolio.

Gold

Gold is considered the ultimate safe haven asset. In fact, its resiliency and non-dependence on changes in interest-rate policies of any government in the world make it a reliable physical asset. Even in the face of U.S. dollar decline, the resulting inflation lures investors to gold because that is where the money is. For this reason alone, experts believe that gold will never lose its safe-haven asset status. This is the very reason that major financial institutions, such as LOM Financial, have departments that are specifically intended for dealing in all manner of precious metals and associated derivatives.

Treasury bills

As a form of debt securities, treasury bills (also known as T-bills) rely on the stability of the U.S. government. Backed by the full confidence and credit of one of the most economically powerful nations in the world, it’s not surprising that treasury bills top the list among the highest valuable safe haven assets today.

Diamonds

Diamonds are not overrated, especially when it comes to choosing the best investment option for your portfolio. In fact, experts agree that it’s a great non-gold safe-haven asset that can be a better alternative to against other types of assets. Although diamonds can be less liquid than gold, this type of asset is less volatile.

For infant industries and highly industrialized nations, tariffs matter

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A country’s tariff system may have uneven benefits, but it is undeniably an important source of revenue especially for developing markets as well as advanced industrial nations. Basically, it is a tax imposed on imported goods that enter a domestic market. Additionally, it is also an economic tool that reduces competition against domestic industries. Any change in the tariff system may be an important financial considerion amongst investors and portfolio managers, including the likes of LOM Financial.

The importance of tariffs and why such trade barrier matters can be seen through how they are used by developed as well as infant industries.

The imposition of tariffs on imported goods from foreign competitors is the government’s way of protecting the state of domestic employment. If foreign companies can produce and sell goods cheaper, it presents production abroad a much more suitable option for business owners, thus leading to unemployment and local companies going bankrupt.

Tariffs don’t only allow a country’s chance of empowering its workers. It can also be used to protect its ordinary consumers from possibly harmful foreign goods and products. Higher tariffs can be a tougher barrier for these goods to enter the country.

Most importantly, tariffs may serve as a defensive tool against another country’s unfavorable trading practices. For instance, the on-going trade war between the United States and other countries (China, Mexico, Canada, and EU) describes such scenario where tariffs are used by the two or more parties as a retaliatory tool against one another.

According to latest updates on this present trade war, President Donald Trump imposed a tariff of 25% on steel imports and another 10% on aluminum on its allies, EU, Canada, and Mexico. Another $50 billion worth of tariffs also targeted Chinese goods. As news of retaliation from these countries made it to the headlines, Trump promises more measures and trade barriers that could escalate things further.

Latest developments and trends that are shaping international finance

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The state of international finance has continuously achieved monumental and dramatic changes over the years. While there are several aspects that may have contributed to its transformation, there’s no denying that the main drivers of these changes come from three major factors: technology, geopolitical climate, and economic policies by the world’s leading decision-makers.

Here are the latest updates from around the world that are slowly transforming international finance.

  1. China’s global trading conquest.

As the second largest economy in the world, China has the power to stir dramatic changes on a global scale. The economic giant recently reached out and forged partnerships with other countries. Additionally, its famed “One Belt One Road” initiative is set to create a modern Silk Road, providing a massive infrastructure through efficient land and sea access among China, Russia, Europe, and other neighboring countries.

  1. Financial Technology in Banking

Technology has touched almost every aspect of the modern world, and the Finance Industry is no exception. Innovations such as blockchain technology, data analytics, artificial intelligence (AI) as well as cloud computing are slowly transforming modern banking and investing. In offshore investment centers like Bermuda, firms are increasingly capitalizing on digital platforms. LOM Financial’s OPUS system, for example, offers self-directed online trading access on all major global markets and exchanges.

  1. Japan’s rising ETFs.

Last year was a great one for the stock market, and it’s not just participants from the West that enjoyed its benefits of the soaring financial markets. Japan, for instance, experienced a surge in Exchange Traded Funds. Experts suggest that the reelection of Shinzo Abe as the country’s prime minister caught the attention of investors, benefiting two of Japan’s leading ETFs: iShares MSCI Japan ETF and WisdomTree Japan Hedged Equity Fund.

How crude oil can fuel growth or ignite economic downfall

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Crude oil is a fossil fuel that can be converted to various forms as highly-efficient and useful products—one of the very reasons oil companies are a staple in most investment portfolios, including offshore mutual funds. Most experts say that the discovery of this non-renewable energy source has literally and figuratively fueled technologies and economies around the world – and the mere fluctuation of this material’s prices can make or break global economics.

Generally, the increase in oil prices can also create a corresponding increase in inflation and at the same time, dramatically reduce global economic growth. An increase in this product’s prices on a global scale can affect everyone: manufacturers, companies in every industry, and even ordinary citizens who rely on hundreds of petroleum products in their day to day operations and activities.

Economists and several other experts know very well of the power of oil and how it can either drive even the most powerful nations into recessions or can easily cause regimes to collapse. It’s important that any subtle change in oil prices must be closely analyzed, and events that can cause a disruption in the oil market may correspond to changes in the economic performance of the affected nations.

One perfect example of how changes in the oil prices can cause a major impact on a global scale is during the Iranian revolution and the following Iraq-Iran war in 1979-1980. The anticipated shortage in oil supply and the resulting price shocks greatly affected the GDP of major economies, more specifically the U.S. This event triggered the American recession – eventually spreading the aftermath on other smaller economies that largely rely on the nation’s stability.

What makes the Bahamas a financial sanctuary?

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The Bahamas is a natural Atlantic paradise that attracts millions of tourists every year but it’s not only tourism that makes it an international favorite—it’s also an important global financial services center for offshore investments, offshore portfolio management, and offshore discretionary management, among others. The island-nation has a stable economy and is considered one of the few tax-neutral jurisdictions that serve as financial sanctuary not just to its residents but also to international investors and businesses.

Non-residents can enjoy the benefits of working and investing in the country because of several tax treaties in the Bahamas. However, it’s important to take note that living full-time in the Bahamas does not excuse foreign residents from fulfilling their tax responsibilities in their home country.

Income tax and national insurance

One attractive benefit of working in the Bahamas is its zero personal income tax policies. Both employed by a company and self-employed individuals, however, are not excluded from paying a national insurance on salary if you are a resident.

The proceeds of these funds keep the country’s benefits system alive. However, the fund will only benefit Bahamian residents. Refunds, depending on how long they’ve been working in the Bahamas, can be claimed by expats after retirement, given that they return to their home country.

Value Added Tax

As of January 2015, a new tax policy—the value added tax—has been introduced to the Bahamas. Because of this, hotel, home rental, and similar services will have to pay 7.5 percent of the VAT, as an alternative to the previous 10 percent guest tax.

Stamp Duty and other taxes

This tax policy covers a different variety of circumstances. Examples are real estate transactions or even large amounts of currency transactions abroad. The fees are shared and divided between the two parties, the buyer, and the seller.

The Bahamas don’t have inheritance taxes and wealth taxes. Moreover, there is no need for a declaration of earnings in the country. This Caribbean gem holds very high regard to its bank privacy law.

The Forex market: How big and liquid is it exactly?

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The Foreign Exchange Market (Forex) is a 24-hour over-the-counter market for trading of currencies. Since it has a global scope and is decentralized type of market, transactions take place everywhere in the world with no central and physical location unlike other financial markets like the London Stock Exchange (LSE) and the New York Stock Exchange (NSE). In addition, since there is no clearinghouse or a central exchange, dealers and brokers conduct negotiations directly with one another.

The Forex market is the largest financial market in the world, and not to mention it’s also the most popular among individual investors, central banks, commercial banks, and financial institutions. Since it’s an extremely liquid market, it allows huge trading volumes to take place without greatly affecting price or price action. However, depending on the time of the day and the currency pair, its relative liquidity could influence the market depth.

The Forex market is composed of traders representing hundreds of international banks, central banks, governments, institutional investors, and millions of private traders trading currencies on a daily basis. This huge volume of participants contributes to the market’s turnover rate and based on recent data, it continues to grow.   According to the Bank for International Settlements, the daily trading was $5.1 trillion (as of April 2016). In 2010, it was the average daily turnover was just estimated to be $3.9 trillion.

There are different currencies being traded in the forex market but the ones from highly industrialized countries with the most active economies lead the rank. As of 2017 data, the U.S. dollar against other currency remains the most traded in the market, followed by the Euro.  Other highly traded currencies include the Japanese yen and Chinese yuan.

For more insights into the forex market—and investing as a whole—read up LOM Financial’s posts on their Facebook page.

The divide between high culture and popular culture

In the humanities, several debates have emerged focusing entirely on how people define and accept the different representations and subsets of culture in contemporary living. As a manifestation of the human intellectual achievements, a culture is expressed through different art forms, movements, economic systems, and even products for public consumption.

 

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However, the main focus of these discussions is addressed on the great divide between high culture and popular culture.  This idea springs from the concept that although high culture represents the best that has been thought and written in the world, it is on its way to extinction. In fact, many believe that it is already “lost” because of the emergence of the more recent popular culture.

 

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In definition, high culture resides on the lifestyle, literature, attitudes, and activities that set the refined elites and members of the ruling class apart from the generic, mass society. One particular example is how the privileged can enjoy specific forms of art like the opera while such access to this Renaissance art form is not available to the general public.  However, the sudden emergence of the popular culture has disrupted this reality, replacing the once dominant position of high culture with something that can be shared by the masses of the society—the pop culture.

 

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Popular culture encourages totally different consumption patterns, and believe in a more general type of literature and lifestyle. In fact, it lacks the sophistication of the high culture. Nonetheless, this humility makes it more attractive to the general public. One perfect example is the popularity of fast food chains over epicurean fine dining.

 

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The influence of the wide dissimilarities between these subcultures and how one is more favored than the other have effects that are not limited to the humanities and its philosophical debates but also to the society as a whole. Just like how ideas change histories, these positions can also affect social policies and contribute to the shaping of cultural institutions.