Does gold offer a better protection against losses in sovereign debt bonds than other metals?
Agyei-Ampomah, S. Gounopoulos, D. Mazouz, Khelifa
Agyei-Ampomah, S.
Gounopoulos, D.
Mazouz, Khelifa
Publication Date
2014-03
End of Embargo
Supervisor
Rights
Peer-Reviewed
Yes
Open Access status
closedAccess
Accepted for publication
Institution
Department
Awarded
Embargo end date
Collections
Additional title
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.
Version
No full-text in the repository
Citation
Agyei-Ampomah S, Gounopoulos D and Mazouz K (2014) Does gold offer a better protection against losses in sovereign debt bonds than other metals? Journal of Banking & Finance. 40: 507-521.
Link to publisher’s version
Link to published version
Link to Version of Record
Type
Article