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GOLD AS AN INFLATION HEDGE: A COMPARATIVE STUDY OF SIX MAJOR INDUSTRIAL COUNTRIES
Author(s) -
Chua J.,
Woodward R.S.
Publication year - 1982
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.1982.tb00985.x
Subject(s) - hedge , inflation (cosmology) , economics , monetary economics , gold as an investment , investment (military) , gold standard (test) , financial economics , mathematics , ecology , statistics , physics , politics , theoretical physics , political science , law , biology
This study considers whether or not gold has been an effective hedge against inflation for investors in six major indusrial countries over the period 1975 to 1980, Gold is considered a hedge against inflation if changes in the returns on gold investments systematically offset changes in the general price level of a particular country. The results indicate that gold has only been an effective hedge against US inflation, and only over one and six month investment holding periods. When the actual inflation rate was decomposed into an expected and unexpected component, it was again found that only US investors could hedge themselves against inflation using gold.