Economic policy uncertainty, COVID-19 and corporate investment: Evidence from the gold mining industry

Mining is a capital-intensive sector that requires substantial upfront investments and continuous capital expenditure to sustain and improve production. This study investigates the impact of Economic Policy Uncertainty (EPU) on the investment decisions of the top 5 gold mining countries, namely Australia, China, Russia, the USA, and Canada, with a focus on the COVID-19 Pandemic. Using a two-step generalized method of moments, we analyze data from 333 gold mining companies from 2006 to 2021. Our results demonstrate that the EPU index has a negative effect on the investment decisions of gold mining companies during the COVID-19 Pandemic. We also utilize quantile regression analysis, which shows that the estimated coefficients for the low and high quantiles are significant. Our study reveals that during periods of uncertainty, gold mining companies tend to be risk-averse, which subsequently dampens investment projects. Furthermore, the capital-intensive nature of the gold mining sector renders companies to be more vulnerable to economic conditions. These findings have significant policy implications for investors, portfolio managers, and policymakers, which will be discussed in the conclusion section.