Category Archives: Original Analysis

Are Government Bonds Really ‘Safe’?

By Dickson Buchanan Jr., Director of International Development

One of the striking ironies of our modern economy is that government bonds are considered safe-haven investments, while gold is a “barbarous relic” to be avoided at all costs. Since the 2008 financial collapse, the bond market has been on a tear, thanks to the Federal Reserve’s endless interest rate suppression. This has only served to reinforce the traditional notion that government bonds are “safe.”

Meanwhile, the financial media argues that gold is no longer relevant to today’s investors. They conveniently ignore the fact that gold has been a safe-haven for thousands of years, while government paper has only been around for a handful of decades.

However, government bonds fall short of traditional investment goals. A look at the history of government-issued bonds in the 20th century reveals terrible performance. Applying this historical knowledge to our current economic climate, and bonds don’t stand a chance when compared to time-tested gold bullion.

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