The relationship between silver prices and consumer price index: Evidence on China market
DOI:
https://doi.org/10.61173/0h79ca52Keywords:
Silver price, Gold price, CPI, Regression modelAbstract
This study examines the relationship between Chinese silver prices and inflation to help investors predict inflation in China and hedge risks during inflationary periods. This article constructs a regression model using the least squares method with silver price as the independent variable, consumer price index (CPI) as the dependent variable, and gold price as the control variable. According to the regression model, the research results indicate that in China, inflation risk cannot be predicted by the price of silver, and even investors cannot hedge their risk with silver during inflation periods. On the contrary, as a traditional precious metal, gold can predict inflation and provide hedging during this period. Based on these findings, this article suggests that Chinese investors should pay attention to the hedging differences between precious metals and make correct investment strategies based on the impact of silver and gold prices on inflation to cope with China’s growing inflation risk.
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