Investment Potential and Risk Hedging Characteristics of Platinum Group Metals

40 Pages Posted: 27 Sep 2013 Last revised: 19 Apr 2016

See all articles by James Ross McCown

James Ross McCown

University of Oklahoma - Division of Finance; Toltec Group

Ron Shaw

Oklahoma City University

Date Written: April 13, 2016

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, investments

JEL Classification: G11

Suggested Citation

McCown, James Ross and Shaw, Ron, Investment Potential and Risk Hedging Characteristics of Platinum Group Metals (April 13, 2016). Available at SSRN: https://ssrn.com/abstract=2330977 or http://dx.doi.org/10.2139/ssrn.2330977

James Ross McCown (Contact Author)

University of Oklahoma - Division of Finance ( email )

Norman, OK 73019
United States

Toltec Group ( email )

Oklahoma City, OK
United States

Ron Shaw

Oklahoma City University ( email )

2501 North Blackwelder
Oklahoma City, OK 73106
United States

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