Burned by booms and busts in Internet stocks and real estate, investors can't be blamed for not wanting to get stung a third time. And some experts worry the next bubble may have already formed in one of two asset classes investors have flocked to for safety: gold and U.S. Treasuries. Legendary investor Warren Buffett warned his shareholders in Berkshire Hathaway last year that the bubble in government bonds could rival the two that came before it. 'The U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary,' he wrote. Another famous billionaire, hedge fund guru George Soros, fretted about the run-up in gold earlier this year. 'When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,' he told MSNBC. 'The ultimate asset bubble is gold.' Complicating things, investors in each asset type need a different scenario to play out to come out whole. Gold prices could spike if rising deficits usher in inflation. Treasuries could keep rising in value if the modest recovery loses steam, causing deflation or falling prices. And while analysts can paint a scenario where both gold and government bonds do poorly, they have a harder time seeing how both can keep outperforming like they have. 'There is something inconsistent with gold rallying and Treasury yields coming down,' said Paul Kasriel, director of economic research at Northern Trust in Chicago. During the depths of the credit crisis in the fall of 2008, investors flocked into U.S. government bonds, more worried about return of capital than return on capital. Unlike corporate stocks and bonds, which can become worthless, governments in theory guarantee their obligations, with the U.S. considered the strongest of the bunch. Despite massive deficits that have boosted the supply of Treasuries, and consumer inflation of around 2 percent, investors have kept yields on the 10-year U.S. Treasury below 3.5 percent, a historically low level. A low yield reflects high demand for a bond as investors bid up the price and anyone holding those bonds makes money. But when demand lessens, the bonds need to yield more, which shows up in a drop in price. A Bloomberg index that tracks prices of 10-year government bonds has risen 30 percent since the subprime crisis began in the summer of 2007 -- an enormous move for the normally conservative asset. Robert Bush, a fixed income analyst with ERIC Forecasting in Denver, does see a day coming when economic growth translates into higher interest rates, which would lower the price of bonds. But with Europe a basketcase, China slowing and the U.S. recovery modest at best, deflation is more likely near-term, keeping bonds attractive, he said. Also, the volatility in stocks and paltry returns offered in savings accounts make government-guaranteed debt attractive. 'No bubble in Treasuries, just appropriate reflection of U.S. and world circumstances,' Bush said. Spot gold prices have risen from around $275 an ounce in 2000 to $1,245 in recent trading, ranking the precious metal a top performer the past decade. Gold backers argue the heavy debts governments are issuing -- which bond investors are snapping up -- are inflationary. Given the political difficulty of cutting spending and increasing taxes, governments will create more money, effectively devaluing their currencies. Gold offers a store of value against that scenario. 'Printing money not backed by an asset will eventually reduce the buying power of the money you are printing,' said Scott Carter, an executive with Goldline International, a Santa Monica, Calif., seller of gold. And while gold prices may seem high, adjusting for inflation, gold would need to reach $2,300 an ounce to match the highs reached in the early 1980s, he said. Also he doesn't see the popular buzz around gold that surrounded Internet stocks and residential real estate when they bubbled. If anything, people are talking more about the jewelry they sold rather than the bullion bar they bought. Even affluent investors still hold a low 2 percent of their portfolio in gold, said Carter. Carter recommends investors keep 5 percent and no more than 20 percent of their portfolio in the metal and hold it for at least three to five years. Another scenario is that the recovery gains strength, inflation stays moderate and deficits are brought under control. Carter calls that the worse possible scenario for gold. And stocks would thrive under that environment, making bonds less attractive. Michael Englund, chief economist with Action Economics in Boulder, is hesitant to describe either gold or government bonds as in a bubble, given that a real supply is meeting fundamental demand. Practices like buying on leverage and flipping, common in the dot-com and housing booms, aren't present. But that doesn't mean both markets won't eventually correct. 'I would guess that the Treasury bid ... may reverse itself fairly quickly over the summer, while gold prices remain firm into 2011 and possibly beyond,' Englund predicts. 