Journal
JOURNAL OF BEHAVIORAL AND EXPERIMENTAL FINANCE
Volume 10, Issue -, Pages 63-71Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jbef.2016.03.002
Keywords
Safe haven; Safe assets; Gold; Flight to gold; Decision-making under stress; Local thinking
Categories
Ask authors/readers for more resources
Gold is a prominent safe haven asset but risky compared to other safe haven assets such as US government bonds. We identify unique features of gold that explain why investors under stress buy the riskier alternative gold. We argue that the decision to buy gold is rooted in behavioral biases associated with gold's history as a currency, a store of value and a safe haven. The empirical analysis shows that gold was a particularly strong safe haven in the aftermath of September 11, 2001 and the Lehman bankruptcy in September 2008. The Global Financial Crisis also exemplifies the role of the US dollar as a safe haven currency and how it can mask the safe haven effect of gold. Finally, we find that safe haven assets do not exacerbate crises via a negative feedback effect. (C) 2016 Elsevier B.V. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available