Hedging Geopolitical Risk with Precious Metals (Summary)

CFA Institute Journal Review summarizes "Hedging Geopolitical Risk with Precious Metals," by Dirk G. Baur and Lee A. Smales, from the Journal of Banking & Finance, August 2020.

Overview

This paper examines the effectiveness of hedging geopolitical risk (GPR) via precious metals. Holding precious metals in an S&P 500 portfolio lowers GPR impact. Gold and silver possess both hedging and safe haven properties. Precious metals respond primarily to threats, not to realized acts. Palladium responds to normal GPR but not during extreme GPR periods; the opposite is true for platinum.

To read the full summary click here .

CFA Institute Journal Review is written by CFA Institute members for practitioners, bringing the findings of the most relevant journal articles to you in a quick, easy-to-read format.