Economists’ Analysis Finds That Precious Metals Boost Investment Portfolio Performance

Many investors view precious metals as financial assets that help alleviate the security investment portfolio risks associated with investment portfolio position diversification. This is because precious metals have the potential to diversify and hedge financial portfolio positions. Despite this already-established relationship, no researchers had conducted an analysis of the portfolio risk spillovers and characteristics of equity markets and precious metals commodities across various continents — until now.

A group of economists including Dr. Seong-Min Yoon, Dr. Sang Hoon Kang and Dr. Jose Arreola Hernandez recently carried out an analysis during their new study, in an effort to determine the effectiveness of equity markets and precious metals in investment portfolio protection. Kang and Yoon are both from the Pusan National University while Hernandez hails from the Rennes School of Business. Their findings were published in “Applied Economics.”

Yoon, who was the study’s lead, explained that his objective was to find the precious metals that were most desired for investment, the precious metals that added the least or most risk to an investment portfolio, and the precious metal commodities that most largely spill over on the equity indices.

For their study, the economists conducted an analysis of the link between the returns of the following precious and other metals, including silver, gold, platinum, palladium, lead, nickel, copper, zinc and aluminum. They also analyzed the spill-over index between global and regional equity markets and these metals, then used a differential evaluation method to optimize portfolios.

They discovered that the biggest spillovers globally on the Asia Pacific, Europe, and North and South America equity indices were on copper and palladium, while the biggest spillovers among precious metals on the equity indices occurred between silver and gold and lead and zinc.

The metals that exhibited large spillover on the global equity indices and the Americas were zinc and copper. On the Asia Pacific’s equity indices were silver and copper, and on Europe’s equity indices, the metals were lead and copper. In addition, the group discovered that aluminum, platinum and gold added the least risk to commodity portfolios while lead and nickel added the highest risk to total portfolio risk. The economists also found that the precious metals most desired for investment were aluminum and gold.

Yoon explained in the report that understanding the role of precious metals in financial investment as well as the relationship between equity markets and precious metals globally was important for investors who sought to protect their portfolios during market downturns and financial turmoil.

For investors looking to benefit from the portfolio boost brought by precious metals, acquiring stocks in mining companies such as StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) could be one of the options available.

NOTE TO INVESTORS: The latest news and updates relating to StraightUp Resources Inc. (CSE: ST) (OTCQB: STUPF) are available in the company’s newsroom at https://ibn.fm/STUPF

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