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Revisiting the inflation-hedging properties of precious metals in Africa

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  • Sephton, Peter S.

Abstract

Recent work has suggested that precious metals can be used as inflation hedges in several African nations. A closer examination of the data suggests there is little merit to using precious metals for this purpose. While consumer prices, platinum prices, and (potentially) the exchange rate may be threshold cointegrated in Ghana, Morocco, and Tanzania, whether platinum can be used as a respite from an inflation shock depends on the regime in which the shock occurs. Independently of the degree of central bank independence and the inflation targeting regime, the search for a suitable inflation hedge in many African nations continues.

Suggested Citation

  • Sephton, Peter S., 2022. "Revisiting the inflation-hedging properties of precious metals in Africa," Resources Policy, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:jrpoli:v:77:y:2022:i:c:s0301420722001830
    DOI: 10.1016/j.resourpol.2022.102735
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    References listed on IDEAS

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    Cited by:

    1. Chi-Wei Su & Kai-Hua Wang & Oana-Ramona Lobonţ & Meng Qin, 2023. "Continuous Wavelet Transform of Time-Frequency Analysis Technique to Capture the Dynamic Hedging Ability of Precious Metals," Mathematics, MDPI, vol. 11(5), pages 1-18, February.
    2. Adekoya, Oluwasegun B. & Oliyide, Johnson A. & Olubiyi, Ebenezer A. & Adedeji, Adedayo O., 2023. "The inflation-hedging performance of industrial metals in the world's most industrialized countries," Resources Policy, Elsevier, vol. 81(C).
    3. Valadkhani, Abbas & Nguyen, Jeremy & Chiah, Mardy, 2022. "When is gold an effective hedge against inflation?," Resources Policy, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    Precious metals; Inflation; Hedging; Fractional integration; Threshold cointegration; Africa;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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