One topic that has been making the headlines over the past couple of years is the central banks’ next step: helicopter money. As the effectiveness of monetary policy has decreased drastically since 2008, a new response to stimulate the developed nations’ economy and generate some inflation in order to deflate their debt would be to transfer money directly to the nation’s citizens. This money, as a contrary to Quantitative Easing or the central banks’ refinancing operations, will never be reimbursed. Therefore, an asset that reacted to more easing last year was Gold, which many academics and practitioners have called the ‘currency of the last resort’.
This study investigates the long-run relationship between gold and a complex of financial variables based on daily data from January 1990 to June 2016, then use this relationship as a fair value and see what sort of interpretation we can do with the results.
Link ==> cointegration-gold