(Bloomberg) — For much of the past half century, US Treasuries have handily outpaced gold as a buy-and-hold investment. Now, bonds’ status as the ultimate haven is facing one of its biggest challenges yet.
Investors traditionally flocked to US debt as a super-safe investment paying steady income, and backed by the world’s economic powerhouse. For buyers ranging from individual savers to sovereign nations, these attributes made it a superior investment to gold, which doesn’t generate cash flows as bonds do, though it is still coveted as a scarce commodity and inflation hedge.
This relationship has been shifting lately, with recent trends moving in gold’s favor. The benchmark Bloomberg Treasury Total Return Index is on track for its third annual decline in four years, extending its loss from a peak in 2020 to 11%. In comparison, gold set a fresh record this week to clock in a 15% return so far this year alone.
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