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Comparative Analysis of Gold, Art, and Wheat as Inflation Hedges

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  • Nguyen Thi Thanh Binh

    (Department of Accounting, Chaoyang University of Technology, 168 Jifong E. Road, Wufong District, Taichung City 41349, Taiwan)

Abstract

This study confirms gold’s role as a reliable inflation hedge while introducing new insights into lesser-explored assets like art and wheat. Using advanced methodologies such as the ARDL framework and LSTM deep learning, it conducts a detailed analysis of inflation-hedging dynamics, exploring non-linear relationships and unexpected inflation impacts across various asset classes. The findings reveal complex dynamics. Gold demonstrates strong long-term inflation hedging potential. The negative coefficient for the US dollar index suggests that gold acts as a hedge against currency depreciation. Furthermore, a positive relationship between gold returns and inflation during high inflation periods highlights its effectiveness in protecting purchasing power. Art presents a more intricate picture. Long-term analysis suggests a weak mean-reverting tendency, but a negative relationship with inflation, potentially linked to economic downturns. Interestingly, unexpected inflation positively correlates with art returns in the long run, hinting at its potential inflation-hedging abilities. No statistically significant connection between wheat prices and overall inflation was observed; the short-run analysis reveals a dynamic interplay between inflation, real GDP growth, and wheat prices at different time points.

Suggested Citation

  • Nguyen Thi Thanh Binh, 2024. "Comparative Analysis of Gold, Art, and Wheat as Inflation Hedges," JRFM, MDPI, vol. 17(7), pages 1-24, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:270-:d:1424768
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    References listed on IDEAS

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