ABSTRACT. Gold is the asset most often associated with the concepts of safe haven and hedge, due to the general belief that it is uncorrelated with most asset types, even though there is no theoretical model to explain this connection. The development of financial markets has led to an increased level of risk, so that investors are more interested in including hedging or safe haven assets in their portfolios. The question is whether an investor in the United States or in the United Kingdom equity and bond markets would have benefited from holding long positions in gold, during the 2004-2014 period and especially during the 2008-2009 bearish market. In actual fact gold is not a hedge for either stocks or bonds. It works as a safe haven in the United Kingdom during bearish markets, but not in the United States or during bullish markets. Excessive use of gold as an investment vehicle during the last decade has negatively affected the hedge and safe haven properties of gold.

Keywords: hedge; safe haven; gold; risk hedging; investment decisions