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Not all gold shines in crisis times — Gold firms, gold bullion and the COVID-19 shock

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  • Baur, Dirk G.
  • Trench, Allan

Abstract

This paper analyses the impact of the coronavirus pandemic on the share prices of three different types of gold firms — explorers, developers and producers. Despite the fundamental link of these companies to gold price movements and gold’s relative strength during the COVID outbreak, we find a COVID-induced decoupling of gold companies from the price of gold illustrating that gold shares are exposed to market risk and not a safe haven. The equity market and gold exposures differ systematically between explorers, developers and producers in normal times but are higher and more similar in crisis times. Our findings demonstrate that investors treat gold companies differently in normal times and more equally in crisis times implying temporary mispricing and profit opportunities.

Suggested Citation

  • Baur, Dirk G. & Trench, Allan, 2022. "Not all gold shines in crisis times — Gold firms, gold bullion and the COVID-19 shock," Journal of Commodity Markets, Elsevier, vol. 28(C).
    • Handle: RePEc:eee:jocoma:v:28:y:2022:i:c:s2405851322000186
    DOI: 10.1016/j.jcomm.2022.100260
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    Cited by:

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    2. Maghyereh, Aktham & Awartani, Basel & Virk, Nader S., 2022. "Asymmetric risk transmissions between oil, gold and US equities: Recent evidence from the realized variance of the futures prices," Resources Policy, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    Gold; Gold shares; Safe haven; COVID-19; Crises; Contagion;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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