Summary of ‘Gold Returns’ by Robert Barro and Sanjay Misra published in the August 2016 issue of the Economic Journal:
Gold Has Never Been a Great Hedge against Bad Economic Times: Evidence from decades of US and global data: Gold has not served very well as a hedge against bad macroeconomic and stock market outcomes. That is the central conclusion of research by Professors Robert Barro and Sanjay Misra, published in the August 2016 issue of the Economic Journal. Their study draws on evidence from long-term US data on gold returns, as well as gold returns during some of the worst macroeconomic disasters experienced across the world.
Gold has historically played a prominent role in transactions among financial institutions even in modern systems that rely on paper money. What’s more, many observers think that gold provides a hedge against major macroeconomic declines. But after assessing long-term US data on gold returns, the new research finds that gold has not served consistently as a hedge against large declines in real GDP or real stock prices. ... [more] ...
[Paper (October 2013 version)]