Market Timing in Precious Metals Is Detrimental to Value Creation
Almudhaf, F. and Alkulaib, Y. (2017) “Market timing in precious metals is detrimental to value creation”, Applied Economics Letters, 24(14), 1019-1024.
Posted: 2 Sep 2020
Date Written: 2017
Few number of days accounts for most of the returns delivered by precious metals (gold, silver, platinum and palladium). A passive buy and hold investment strategy in precious metals outperforms market timers who miss the best 5, 10 and 50 days by 51%, 71% and 98%, respectively. Likewise, long-term performance of precious metals is largely determined by the return of few outliers (black swans). Thus, investors should reconsider trying to predict when to be in and out of the precious metals markets and support investing in precious metals ETFs.
Keywords: black swans, precious metals, gold, outliers, market timing
JEL Classification: G11, G12
Suggested Citation: Suggested Citation