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Investment potential and risk hedging characteristics of platinum group metals

James Ross McCown and Ron Shaw

The Quarterly Review of Economics and Finance, 2017, vol. 63, issue C, 328-337

Abstract: We examine the investment potential and risk-hedging characteristics of platinum, palladium, and rhodium by analyzing returns on their spot prices and comparing them with gold, crude oil, and stocks. The three characteristics that we examine that may be of the most importance to investors are the correlation with inflation, the correlation with foreign exchange rates, and the systematic risk of the investments. We find platinum is useful as a hedge against all three factors, and is also useful as a safe haven in periods of extreme stock market declines. Palladium and rhodium do not show the same extensive hedging capabilities.

Keywords: Platinum; Palladium; Precious metals; Investments (search for similar items in EconPapers)
JEL-codes: G11 G12 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:quaeco:v:63:y:2017:i:c:p:328-337