Is Gold as an Alternative Investment a Good Solution During Pandemic?

Alicja Juras

doi:10.18778/2391-6478.3.31.05

Authors

Alicja Juras University of Economics in Katowice https://orcid.org/0000-0002-8684-5738

DOI:

https://doi.org/10.18778/2391-6478.3.31.05

Keywords:

alternative investments, gold, pandemic, safe havens

Abstract

The aim of the article: The crisis, both in the economic and financial markets, can lead to a sudden downturn and a loss of savings. For this reason, during a crisis, safe investments are essential to reduce risks and avoid losses. This year’s coronavirus pandemic has caused a lot of confusion in the financial and investment world as well.The pandemic led to turbulence in the financial market and made investors look for the so-called safe havens. In the literature, these havens often include alternative investments with a high demand for gold. This article aims to check the validity of using gold as an investment during a pandemic.

Methodology: In the paper, in order to achieve the formulated aim, the following stages were carried out: critical analysis of the literature regarding the factors influencing investment decisions and the characteristics alternatives instruments. The last stage was based on statistical analysis using the Pearson correlation method. Gold prices were compared with quotations of two price indexes: WIG20 and S&P500.

Results of the research: The conducted analysis shows that gold as an alternative investment is a good hedge in times of crisis, therefore, it is also the case during ongoing pandemic. Alternative assets fulfill a hedging function, minimizing the risk of losses. Moreover, thanks to a negative correlation with the market, they give a possibility to increase investors’ capital in times of crisis.

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