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Does gold offer a better protection against losses in sovereign debt bonds than other metals?

Agyei-Ampomah, Sam, Gounopoulos, Dimitrios and Mazouz, Khelifa 2014. Does gold offer a better protection against losses in sovereign debt bonds than other metals? Journal of Banking & Finance 40 , pp. 507-521. 10.1016/j.jbankfin.2013.11.014

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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
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Uncontrolled Keywords: Gold; Precious metals; Industrial metals; Sovereign bonds; Hedge; Safe haven
Additional Information: PDF uploaded in accordance with publisher policy at http://www.sherpa.ac.uk/romeo/issn/0378-4266/ [accessed 10/10/2014]
Publisher: Elsevier
ISSN: 0378-4266
Date of First Compliant Deposit: 30 March 2016
Last Modified: 26 Feb 2019 11:59
URI: http://orca.cf.ac.uk/id/eprint/56686

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Cited 7 times in Web of Science. View in Web of Science.

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