Should you buy gold stocks or paper gold?

Jonathan A. Batten, Harald Kinateder and Peter G. Szilagyi

Finance Research Letters, 2024, vol. 69, issue PB

Abstract: We analyze which type of gold investment is better for investors by studying the determinants of returns on gold mining stocks (gold stocks) and gold exchange-traded commodities (gold ETCs) over the period from March 2012 to February 2024. We find that gold ETCs outperform gold stocks in both returns and risk, and respond significantly more positively to economic policy uncertainty (EPU), offering investors more favorable safe-haven properties. Gold stocks are also more sensitive to oil price increases than are gold ETCs, and their relative price performance is negatively related to both oil price changes and Gold VIX. We conclude that investing in gold stocks is less suitable for investors who buy gold as a safe-haven asset.

Keywords: Gold price; Gold exchange-traded commodities (ETCs); Gold stocks; Gold miners; Economic policy uncertainty (EPU); Oil price; Gold VIX; Portfolio decision; Safe haven (search for similar items in EconPapers)
JEL-codes: G10 G11 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pb:s1544612324012315

DOI: 10.1016/j.frl.2024.106202

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