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2021 | OriginalPaper | Chapter

Gold and Inflation in Canada: A Time-Varying Perspective

Authors : M. F. Ghazali, N. F. Mohd Ussdek, H. Amin, M. Z. Muhammad

Published in: The Importance of New Technologies and Entrepreneurship in Business Development: In The Context of Economic Diversity in Developing Countries

Publisher: Springer International Publishing

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Abstract

This study purposes of investigating the roles of gold as a hedge or a safe haven against inflation in Canada. We utilize the standard and quantile techniques in the volatility models, with the time-varying conditional variance of the regression residuals based on the TGARCH descriptions. We found that gold only plays a minor role as a hedge and safe haven against inflation since their returns do not evolve with the same rhythm as inflation. The rolling regression analysis, on the other hand, demonstrates that the incidents of refuge against purchasing power loss only occasionally occur at different times and not consistently across holding periods. These findings indicate that gold does not have the ability to secure Canadian investment during high inflationary periods and at all the time. Thus, Canadian investors should hold a well-diversified portfolio to earn sustainable return and protection from purchasing power loss.

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Footnotes
1
Source: Natural Resources Canada.
 
3
The universal agreement believes that the sheer size of gold holdings is vital for gold investors to keep track of the gold reserves of the central banks because they influence gold purchases and sales worldwide.
 
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Metadata
Title
Gold and Inflation in Canada: A Time-Varying Perspective
Authors
M. F. Ghazali
N. F. Mohd Ussdek
H. Amin
M. Z. Muhammad
Copyright Year
2021
Book
The Importance of New Technologies and Entrepreneurship in Business Development: In The Context of Economic Diversity in Developing Countries

Print ISBN: 978-3-030-69220-9

Electronic ISBN: 978-3-030-69221-6

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-3-030-69221-6_84

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