Relationship Between Changes In Investor Concern About The Price Of Gold

With the advent of the information explosion era, attention scarcity is increasingly becoming an important factor affecting the price, but also makes investors concerned becoming a more and more important field of behavioral economics. Development of the Internet, especially the emergence of Google trends and Baidu Index, provides us with a direct and precise measure to scale attention of investors. At the same time, we found that the fluctuated price of gold are also concerned with Investor attention in2013. Investor attention can portrayed the change of the gold price to a certain degree.Firstly, through the standardized analysis of investor attention and the price of gold, we deem that investors attention’s affect on the price of gold is mainly through dispersion and accumulation to carry out, and the price impact on investor attention is mainly by the action of "Herd Effect" occur, based on the basic theory of investor attention and the price of gold. Subsequently, Google trends as a proxy for investor attention, using VAR model, made empirical study of the attention of investors and the price of gold, find further evidence of the causal relationship between the two.In this paper, we established the two lagged VAR model of Google trends and gold price, and using the impulse response function (IRF) to analyze the dynamic impact on the system when the model is affected by some kind of shock. After conducting regression we found that the coefficient of investor attention to gold prices is significantly higher than that of gold price to investor attention. In the dynamic impact studies, we found that investor attention’s impact on the price of gold has long-lasting effects, and the price’s impact on investor attention does not have this effect. These studies played a guiding role of understanding the fluctuation of the gold price and investor investment strategies.