Do precious metals hedge against global supply chain uncertainty?

• DOI: 10.1016/j.bir.2023.05.004
• Publication Date: 2023-05-27T15:33:08Z
• Authors: Chi Wei Su; Yajun Wang; Meng Qin; Oana-Ramona Lobonţ
• Keywords: Hedge; Investment; Quantile; Precious metal; Quantile regression

In this paper, we investigate the extent to which precious metals can be used as a hedge from perspective of global supply chain uncertainty (GSCU), is significant for obtaining higher investment returns. This exploration uses wavelet-based quantile-on-quantile regression (QQR) technique identify complex connection between GSCU and price (PMP). We find that has both positive negative effects on PMP, indicates do not always against uncertainty, in contrast predictions theoretical model. analysis considers multiple time scales, showing severe lead bull market metals, but moderate may cause PMP decline short term. However, extremely low might result bear whereas could also decrease medium run. positively affected by it turns long term due GSCU. A test these results using QQR reveals they are robust. Because strained faces potential crisis, our have important implications individual investors, firms, countries, regions.