Explanatory mining for gold: Contrasting evidence from simple and multiple regressions

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Abstract

Gold traditionally has been used as a store of value and an inflation hedge. More recently, gold is also viewed as a hedge against uncertainty and a safe haven. This paper demonstrates that many properties regularly associated with gold are only valid in a simple regression framework but significantly change in a multiple regression framework. A descriptive and econometric analysis of gold and US economic and financial variables for monthly data from 1979 to 2011 shows that gold primarily serves as a hedge against a weaker US dollar and against higher commodity prices. In contrast, gold is not a hedge against consumer price inflation. The empirical results also indicate that gold only recently evolved as a safe haven asset. © 2011 Elsevier Ltd.
Original languageEnglish
Pages (from-to)265-275
JournalResources Policy
Volume36
Issue number3
DOIs
Publication statusPublished - 2011

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