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The Inflation Hedging Ability of Domestic Gold in Malaysia

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Causal Inference in Econometrics

Part of the book series: Studies in Computational Intelligence ((SCI,volume 622))

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Abstract

Among the investment assets, gold is historically been thought as a powerful inflation hedge to many households in Malaysia. This paper examines and compares the hedging properties of gold against both consumer and energy inflation risks in Malaysia. Using the monthly domestic gold price, we test the long-run and short-run relationships between gold return and consumer inflation as well as energy inflation. We find that gold investment in Malaysia is a good hedge against consumer inflation and energy inflation in the long run but not for the short run. We also could not find any evidence of short-run causality between gold return and both consumer and energy inflations.

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Notes

  1. 1.

    Bonds provide coupon payments and principal upon the maturity date. Stocks provide dividend that could offer inflation protection to the investors.

  2. 2.

    Breitenfellner et al. [11] on energy price and house price is the only study found.

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Acknowledgments

The authors would like to acknowledge the Fundamental Research Grant Scheme 203/PSOSIAL/6711417 by Ministry of Education Malaysia and Universiti Sains Malaysia.

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Authors and Affiliations

  1. Economics Program, School of Social Sciences, Universiti Sains Malaysia, Penang, Malaysia

    Hooi Hooi Lean & Geok Peng Yeap

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  1. Hooi Hooi Lean
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Correspondence to Hooi Hooi Lean .

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Editors and Affiliations

  1. School of Knowledge Science, Japan Advanced Ins. of Sci. & Tech, Ishikawa, Japan

    Van-Nam Huynh

  2. Department of Computer Science, University of Texas at El Paso, El Paso, Texas, USA

    Vladik Kreinovich

  3. Faculty of Economics, Chiang Mai University, Chiangmai, Thailand

    Songsak Sriboonchitta

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Lean, H.H., Yeap, G.P. (2016). The Inflation Hedging Ability of Domestic Gold in Malaysia. In: Huynh, VN., Kreinovich, V., Sriboonchitta, S. (eds) Causal Inference in Econometrics. Studies in Computational Intelligence, vol 622. Springer, Cham. https://doi.org/10.1007/978-3-319-27284-9_14

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  • DOI: https://doi.org/10.1007/978-3-319-27284-9_14

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  • Publisher Name: Springer, Cham

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  • Online ISBN: 978-3-319-27284-9

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