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Diamonds versus precious metals: What gleams most against USD exchange rates?

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  • Bedoui, Rihab
  • Guesmi, Khaled
  • Kalai, Saoussen
  • Porcher, Thomas

Abstract

Historically, commodity market, particularly the metal market has been used as a hedge for stock market and currencies during time of distress. In this paper, we shed light on a new alternative asset and examine the hedging and safe haven ability of diamonds and five precious metals that is, gold, silver, palladium, platinum and rhodium by using copula process. Then, we compare the performance of diamond versus metals in terms of hedging and safe haven against USD depreciation. Our empirical results show that gold, silver, palladium and platinum outperform diamonds and rhodium in term of hedging against USD movement. Our finding for safe haven study reveals that both precious metals and diamonds serve as a weak safe haven.

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  • Bedoui, Rihab & Guesmi, Khaled & Kalai, Saoussen & Porcher, Thomas, 2020. "Diamonds versus precious metals: What gleams most against USD exchange rates?," Finance Research Letters, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:finlet:v:34:y:2020:i:c:s1544612319305288
    DOI: 10.1016/j.frl.2019.08.001
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    References listed on IDEAS

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    Cited by:

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    2. Salisu, Afees A. & Raheem, Ibrahim D. & Vo, Xuan Vinh, 2021. "Assessing the safe haven property of the gold market during COVID-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 74(C).
    3. Cheng, Sheng & Zhang, Zongyou & Cao, Yan, 2022. "Can precious metals hedge geopolitical risk? Fresh sight using wavelet coherence analysis," Resources Policy, Elsevier, vol. 79(C).
    4. Potrykus, Marcin, 2022. "Diamond investments – Is the market free from multiple price bubbles?," International Review of Financial Analysis, Elsevier, vol. 83(C).
    5. Aktham Maghyereh & Hussein Abdoh, 2022. "Can news-based economic sentiment predict bubbles in precious metal markets?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-29, December.
    6. Talbi, Marwa & Bedoui, Rihab & de Peretti, Christian & Belkacem, Lotfi, 2021. "Is the role of precious metals as precious as they are? A vine copula and BiVaR approaches," Resources Policy, Elsevier, vol. 73(C).

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