Reassessing the Time-Varying Safe-Haven Status of Precious Metals Against Economic Uncertainty : Do Bubble Behaviors Really Matter?

This paper provides a new and detailed examination of the time-varying safe-haven status of four main precious metals against economic uncertainty. To this end, we first focus on the time-varying dynamics of the causal effect of economic uncertainty (proxied by the U.S. and Chinese EPU indices) on precious metals prices. We then investigate whether these prices exhibit bubble behaviors and, if so, to what extent economic uncertainty contributes to these bubble behaviors. Results reveal that the safe-haven status of precious metals is more pronounced and persists for longer, especially during the burst of uncertainty brought about by Covid-19 and the Ukraine-Russia war. Moreover, precious metals prices exhibit multiple bubble behaviors throughout the sample period. Unlike gold and silver price bubbles, most of the platinum and palladium price bubbles overlap with periods when these metals function as safe-havens. Therefore, we conclude that not all precious metals are alike against economic uncertainty