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

See all articles by Fahad Almudhaf

Fahad Almudhaf

Department of Communication Disorders Sciences - Department of Finance and Financial Institutions

Date Written: 2017

Abstract

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

Almudhaf, Fahad, Market Timing in Precious Metals Is Detrimental to Value Creation (2017). Almudhaf, F. and Alkulaib, Y. (2017) “Market timing in precious metals is detrimental to value creation”, Applied Economics Letters, 24(14), 1019-1024. , Available at SSRN: https://ssrn.com/abstract=3660102

Fahad Almudhaf (Contact Author)

Department of Communication Disorders Sciences - Department of Finance and Financial Institutions ( email )

Kuwait

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