Not all Gold Shines in Crisis Times - COVID-19 Evidence

31 Pages Posted: 23 Aug 2020

See all articles by Dirk G. Baur

Dirk G. Baur

University of Western Australia - Business School; Financial Research Network (FIRN)

Allan Trench

The University of Western Australia

Date Written: August 20, 2020

Abstract

This paper analyses the impact of the coronavirus pandemic on the share prices of gold firms, whose activities are spread across gold exploration, project development and gold mining with markedly different risk characteristics. We find evidence for COVID-induced stock market contagion leading to a decoupling of gold companies from the price of gold illustrating that gold shares are not a safe haven. The equity market and gold exposures differ significantly between explorers, developers and producers in normal times and are higher and more similar in crisis times. Our findings demonstrate that investors treat different firms differently in normal times and more equally in crisis times leading to mispricing and profit opportunities.

Keywords: gold, gold shares, safe haven, COVID-19, crises, contagion

JEL Classification: G01, G02, G12, G14, Q30

Suggested Citation

Baur, Dirk G. and Trench, Allan, Not all Gold Shines in Crisis Times - COVID-19 Evidence (August 20, 2020). Available at SSRN: https://ssrn.com/abstract=3677925 or http://dx.doi.org/10.2139/ssrn.3677925

Dirk G. Baur (Contact Author)

University of Western Australia - Business School ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Allan Trench

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

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