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

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journal contribution
posted on 2023-06-08, 16:17 authored by Sam Agyei-Ampomah, Dimitrios Gounopoulos, Khelifa Mazouz
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.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Journal of Banking and Finance

ISSN

0378-4266

Publisher

Elsevier

Volume

40

Page range

507-521

Department affiliated with

  • Business and Management Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2013-11-07

First Open Access (FOA) Date

2013-11-07

First Compliant Deposit (FCD) Date

2013-11-07

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