In practice
In times of fear, money leaves risky assets and moves into those expected to hold their value. Traders read the flows as a gauge of mood: gold, the yen and the Swiss franc rising while stocks fall is a classic risk-off picture.
Knowing the mood helps with direction. In a risk-on market, traders favour stocks and higher-yielding currencies; in a risk-off market they are cautious with them.
What to watch for
Safe havens are not safe in the sense of never falling. In a severe panic investors sometimes sell everything, gold included, to raise cash, and the relationships can break for days.