Not all gold shines in crisis times — Gold firms, gold bullion and the COVID-19 shock

This paper analyses the impact of the coronavirus pandemic on the share prices of three different types of gold firms — explorers, developers and producers. Despite the fundamental link of these companies to gold price movements and gold’s relative strength during the COVID outbreak, we find a COVID-induced decoupling of gold companies from the price of gold illustrating that gold shares are exposed to market risk and not a safe haven. The equity market and gold exposures differ systematically between explorers, developers and producers in normal times but are higher and more similar in crisis times. Our findings demonstrate that investors treat gold companies differently in normal times and more equally in crisis times implying temporary mispricing and profit opportunities.