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Gold, Swiss Franc Are No Longer Safe Havens, UBS’ Friedman Says

Gold and the Swiss franc are no longer safe havens for investors seeking protection from financial market turmoil, according to a UBS AG wealth management unit.

“As we enter 2012, neither gold nor the Swiss franc retains a safe haven status,” Alexander Friedman, Zurich-based chief investment officer at UBS Wealth Management, said in a monthly report yesterday.

Intervention by the Swiss National Bank to cap the franc’s gains this year and rising volatility in gold have removed the two from the safe-haven assets list, according to the report. At the start of 2011 investors considered gold, the Swiss franc, the U.S. dollar, U.S. Treasuries and Japanese government bonds as safe havens, UBS said.

Bullion’s 100-day volatility is at the highest since April 16, 2009, according to data compiled by Bloomberg. Gold for immediate delivery, up 12 percent in London this year, fell as much as 7.5 percent on an intraday basis on Sept. 26 and as much as 4.2 percent on Dec. 14.

Still, investment in bullion makes sense as a protection against currency debasement and as negative real interest rates reduce the opportunity cost of owning gold, UBS said.

“Investors should not, however, buy gold expecting it to act as a safe haven during severe, liquidity-driven market sell-offs,” Friedman said.

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