Gold Versus Stocks as an Inflationary Hedge: The Case of Spain

Nesrin Ozatac (), Mohamad Kaakeh () and Bezhan Rustamov ()
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Nesrin Ozatac: Eastern Mediterranean University
Mohamad Kaakeh: Eastern Mediterranean University
Bezhan Rustamov: Eastern Mediterranean University

Chapter Chapter 5 in New Trends in Finance and Accounting, 2017, pp 49-59 from Springer

Abstract: Abstract This study empirically observes two models based on Fisher hypothesis (1930): (1) long-term hedging ability of the stocks and (2) long-term hedging ability of gold against inflation in Spain. Zivot–Andrews (1992) unit root test allowing for one structural break, Maki (2012) cointegration test allowing for five structural breaks, and vector error correction model (VECM) techniques have been applied to monthly data covering the period of January 1994–July 2015. Our results show that stocks and gold are in a long-term equilibrium relationship with inflation. The negative association between inflation and gold with inelastic coefficient and the positive relationship between inflation and stocks with the elastic coefficient are observed. Hence, our findings suggest that only stocks are the hedging instruments against inflation in Spain.

Keywords: Inflation; Stocks; Gold; Hedge; Investment (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-49559-0_5

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DOI: 10.1007/978-3-319-49559-0_5

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