Author(s)

Yanran Wang

Corresponding Author

Yanran Wang

ABSTRACT

Inflation has always been an investors’ major concern. Increased financialization of financial markets has gradually changed platinum into an investment asset. Platinum, sharing similar characteristics with gold, could be a good inflation hedge too. Motivated by a lack of detailed research, this study investigates the hedging efficiency of platinum against actual, expected, and unexpected inflation by regression analysis using monthly data. Platinum is examined both as an individual asset and in a well-diversified portfolio selected by the mean-variance approach. The study reveals the inadequacy of the hedging ability of platinum against actual and unexpected inflation. Furthermore, there is not enough evidence to conclude that platinum improves the portfolio’s effectiveness in inflation hedging.

KEYWORDS

Platinum, Hedge, Expected inflation, unexpected inflation, Actual inflation