Did Precious Metals Serve as Hedge and Safe-Haven Alternatives to Equity during the COVID-19 Pandemic: New Insights Using a Copula-Based Approach

We examine the hedging and safe-haven characteristics between four major precious metals (gold, silver, platinum, and palladium) and three major US stock market indices. The metal markets are known for hedging and safety characteristics during financial distress. The paper sheds new insights into the hedging and safe-haven ability of the precious metals under extreme stock market volatility conditions caused by the COVID-19 by drawing empirical estimates using two different copula approaches. The results show that gold outperforms all other precious metals such as silver, platinum, and palladium in hedging abilities under extreme stock market conditions. Likewise, gold remains a safe-haven asset both in calm and turbulent periods, and silver possibly remains the next best alternative, albeit as a weak safe-haven asset.