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Inside the Market

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Battle of the havens: Gold versus bonds Add to ...

Gold has performed splendidly during the stock market turbulence that began in July, but so have U.S. government bonds. So what happens when you pit these two popular haven investments against one another? Which comes out on top?

For the showdown, we looked at the spot price of gold, quoted in U.S. dollars. And for bonds, we looked at the iShares 7-10 Treasury bond fund – an exchange traded fund that gives us a total return performance for medium-term U.S. Treasuries.

Since July 22, gold has outperformed bonds, with a 9.6 per cent return versus a 5.6 per cent return for the bond fund. Both assets, of course, demolished the 14.4 per cent slide for the S&P 500.

Over the longer term, though, gold’s lead over bonds becomes more pronounced. In 2011, gold has gained 25 per cent, which is more than double the total return for the bond fund -- although both trounced the 7.5 per cent decline for the S&P 500.

Over the past year, the difference is huge: Gold has soared 46.5 per cent versus a 7.9 per cent return for bonds.

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