On the relation between Pandemic Disease Outbreak News and Crude oil, Gold, Gold mining, Silver and Energy Markets

• Published in: Resources policy 2021-08, Vol.72, p.102025-102025, Article 102025
• Main Author: Shaikh, Imlak
• Format: Article
• Language: English
• Subjects: Commodities; Commodity markets; Coronaviruses; COVID-19; Crude oil; Economic crisis; Energy; Energy industry; Epidemics; Fear; Fear & phobias; Gold; Gold mines & mining; Implied volatility index; Indexes; International finance; Investors; Markets; Mining; Mining industry; News; Outbreaks; Pandemics; Petroleum; Silver; Silver mines; Stocks; Uncertainty; Volatility
• ISSN: 0301-4207; 1873-7641; 1873-7641
• DOI: 10.1016/j.resourpol.2021.102025

Fear of the disease outbreak news (DONs) has shocked commodity markets and raised the likelihood of economic uncertainty and recession globally. This article examines the unprecedented overreaction of investors sentiments in the commodities such as Crude oil, Gold, Gold Mining, Silver, and the Energy sector. The deadly effects of DONs-COVID-19 in the commodities market have been the worst in history; it appeared the first time higher than the common stock's volatility. Covid-19 induced economic uncertainty has impacted severely through all commodities except the safe-haven Gold (GVZ). Importantly, ETF Options based Implied Volatility Index of Crude (OVX), Silver (VXSLV), and Energy (VXXLE) stocks have crossed the peak level what it was prevailing during the global financial crisis 2008. The unparalleled upsurge of the implied volatility index across all commodities indicates higher demand for the hedge funds to protects the commodity portfolio. ETF options on the commodity act as the best hedge against market uncertainty. Overburden on the put option results in an increased risk premium, henceforth higher expected volatility. ETF options truly measure the investor's fear of predominant in the commodity market. •This article examines the unprecedented overreaction of investors’ sentiment amid COVID-19 in the commodities market.•TThe deadly effects of DONs-COVID-19 in the commodities market have been the worst in history.•Covid-19 induced economic uncertainty has impacted severely through all commodities except the safe-haven Gold (GVZ).•Options-based volatility indexes (OVX, VXSLV, VXXLE) crossed the peak level that it was prevailing during the GFC-2008.•The remarkable upsurge of the implied volatility indexes across all commodities indicates higher demand for hedge funds.