Does gold offer a better protection against sovereign debt crisis than other metals?

Agyei-Ampomah, Sam, Gounopoulos, Dimitrios and Mazouz, Khelifa (2014) Does gold offer a better protection against sovereign debt crisis than other metals? Journal of Banking and Finance, 40. pp. 507-521. ISSN 0378-4266

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Abstract

It is a commonly held view that gold protects investors’ wealth in the event of negative economic conditions. In this study, we test whether other metals offer similar or better investment opportunities in periods of market turmoil. Using a sample of 13 sovereign bonds, we show that other precious metals, palladium in particular, offer investors greater compensation for their bond market losses than gold. We also find that industrial metals, especially copper, tend to outperform gold and other precious metals as hedging vehicles and safe haven assets against losses in sovereign bonds. However, the outcome of the hedge and safe haven properties is not always consistent across the different bonds. Finally, our analysis suggests that copper is the best performing metal in the period immediately after negative bond price shocks.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences > HG Finance > HG0179 Personal finance
H Social Sciences > HG Finance > HG4501 Investment, capital formation, speculation
Depositing User: Dimitrios Gounopoulos
Date Deposited: 07 Nov 2013 08:19
Last Modified: 07 Mar 2017 10:19
URI: http://sro.sussex.ac.uk/id/eprint/46962

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