The Role of White Precious Metals in the Allocation of General Asset

White precious metals have often been regarded as industrial raw materials in the past. With the introduction of the Silver ETF in 2006 and Platinum as well as Palladium ETFs in 2010, their role in asset allocation has become more and more important. This paper selects five countries with rapid econ...

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Bibliographic Details
Published inJournal of systems science and complexity Vol. 34; no. 4; pp. 1522 - 1537
Main Authors Shen, Caisheng, Zhang, Tiancheng, Chen, Ying
Format Journal Article
LanguageEnglish
Published Beijing Academy of Mathematics and Systems Science, Chinese Academy of Sciences 01.08.2021
Springer Nature B.V
Subjects
Complex Systems
Control
Economic development
Mathematics
Mathematics and Statistics
Mathematics of Computing
Noble metals
Operations Research/Decision Theory
Palladium
Platinum
Raw materials
Silver
Statistics
Systems Theory
Allocation
white precious metals
BRICS
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Summary:White precious metals have often been regarded as industrial raw materials in the past. With the introduction of the Silver ETF in 2006 and Platinum as well as Palladium ETFs in 2010, their role in asset allocation has become more and more important. This paper selects five countries with rapid economic development (BRICS) as the research scope. The authors select silver, platinum and palladium to test whether these three kinds of white precious metals have the effect of hedging risk in general asset (stocks, bonds and foreign exchange). The authors find that, first of all, the three white precious metals have no stable effect on the BRICS stock market. Second, silver can better hedge the bond market of the BRICS, the authors suspect that this phenomenon is related to the fact that silver is a traditional financial asset and its trading volume is large. Third, white precious metals are good hedge assets for foreign exchange investment. Finally, the authors find that platinum can reduce the yield variance of all portfolios, indicating that platinum is an investment target that can effectively reduce the variance of portfolio returns within the BRICS.
ISSN:1009-6124
1559-7067
DOI:10.1007/s11424-021-0044-1