Pou is, A.
A icle
The p ice o gold in he yea 2000: A o ecas
Sou h A ican Jou nal o Business Managemen
P o ided in Coope a ion wi h:
Uni e si y o S ellenbosch Business School (USB), Bell ille, Sou h A ica
Sugges ed Ci a ion: Pou is, A. (1986) : The p ice o gold in he yea 2000: A o ecas , Sou h A ican
Jou nal o Business Managemen , ISSN 2078-5976, A ican Online Scien i ic In o ma ion Sys ems
(AOSIS), Cape Town, Vol. 17, Iss. 1, pp. 43-47,
h ps://doi.o g/10.4102/sajbm. 17i1.1033
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/217920
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The
p ice
o
gold
in
he
yea
2000
- a
o ecas
A.
Pou is
Depa men
o
Mechanical Enginee ing, Uni e si y o Cape Town, Rondebosch
In
his a icle, wo o he mos ecen e o s o o ecas he
p ice o gold
a e
discussed
and
a p edic ion o he yea
2000
is p o ided. The o ecas is based
on
he hypo hesis
ha
in
he long un, commodi y p ices ollow a well-de ined
pa h,
which pe mi s only g adual
and
slow changes.
The
analysis shows ha he cu en p ice
o
gold
(1985)
in
e ms
o
US
dolla s, coincide wi h he long
un
equilib ium p ice
simula ed
by
he model. The o ecas o he yea
2000
sugges s ha he expec ed p ice is
US
$420
pe ine ounce
in
1983
cons an dolla s.
S.
A .
J.
Bus. Mgm . 1986,
17:
43 -48
In
hie die a ikel wo d wee
an
die mees onlangse pogings
om
die p ys
an
goud e oo spel, besp eek
en
'n
oo ui -
ska ing wo d i die jaa
2000
gemaak.
Die
oo ui ska ing
is
gebasee op die hipo ese da die p yse
an
handelswa e
oo die lang e myn 'n goedgede iniee de pa oon olg wa
slegs geleidelike e ande ings oelaa .
Die
analise oon da
die huidige p ys
an
goud
(1985)
in
Ame ikaanse dolla ,
oo eenkom me die lang e mynbalans soos be eken me die
model.
Na
be aming
sal
die e wag e p ys
an
goud
in
die
jaa
2000
$420
pe yn ons wees
in
1983-kons an e dolla s
S.-A .
Tydsk . Bed y sl. 1986,
17:
43-
48
A. Pou is
Depa men
o
Mechanical Enginee ing, Uni e si y
o
Cape Town,
Rondebosch, 7700 Republic
o
Sou h A ica
Accep ed Oc obe J
985
In oduc ion
Fo ecas ing he p ice
o
gold
is
an in eg a ed pa
o
planning
o he Sou h A ican economy as a whole and o he indi id-
ual businesses engaged
in
he p oduc ion and dis ibu ion
o
he me al. In
1982
almos hal a million people we e engaged
in he mining
o
gold and gold expo s o med abou
460Jo
o
he o al Sou h A ican me chandise expo s. (Depa men
o
Fo eign A ai s,
1985).
The p eoccupa ion
o
he Sou h
A ican communi y wi h he o ecas ing
o
he p ice
o
gold
is
he e o e jus i iable.
In his a icle, wo
o
he mos ecen o ecas ing e o s
(Rol e,
1983
and B ock,
1982)
a e e iewed and
an
a emp
is
made o o ecas he p ice
o
gold o he yea 2000. The
o ecas can
be
seen as an empi ical one bu
i
is
a gued ha
i
is
based on he p emise ha commodi y p ices
in
he long
un a e de e mined by a de ia ion-coun e ac ing mechanism.
This mechanism pe mi s only g adual and slow changes o e
ime and suppo s a s able ela ionship among he p ices
o
di e en commodi ies.
The e ec
o
s able ela i e p ices among di e en com-
modi ies in he
Jong
un,
is
used o o e come he una ailabili y
o
use ul his o ical da a o he p ice
o
gold. Gold used o
play a mone a y ole and he e o e
i s
p ice in e ms
o
money
is
dis o ed o mos
o
he las cen u y.
The p ices
o
pe oleum and sil e , closely connec ed in he
minds
o
in es o s wi h he p ice
o
gold, a e used as in e -
media e s eps o o ecas he p ice
o
gold.
By
in es iga ing
he his o ical ela ionship
o
he p ices
o
hese wo com-
modi ies wi h he p ice
o
gold and by u ilizing long- ange
o ecas s o hei p ices, he p edic ion
o
he p ice
o
gold
becomes possible.
The de elopmen
o
wo o ecas s h ough he ela i e p ices
o
wo di e en commodi ies -sil e and pe oleum -
is
used o e i ica ion and ein o cemen
o
he p edic ion. A
la ge disc epancy be ween he wo o ecas s should weaken
he alue
o
he p edic ion whe eas a coinciden al p edic ion
should ein o ce i s alidi y.
Fi s , he s udies by he Economic Consul ing Se ices Inc
(Rol e,
1983)
and by B ock (1982), a e e iewed and hei
esul s a e p esen ed. Then, he hypo heses on which he
o ecas
is
based a e discussed and he o ecas o he yea
2000
is
de eloped.
The
1981
o ecas s
Two o ecas s we e a emp ed in
1981.
The i s was commis-
sioned by he Chambe
o
Mines
o
Sou h A ica and he
second
by
he Anglo-Ame ican Co po a ion. The Chambe
o
Mines commissioned a Washing on OC i m, he Economic
44
Consul ing
Se ices
Inc.
o unde ake a s udy
o
p ojec ed
de elopmen S
in
he wo ld gold-ma ke o e he p esen
decade.
in
Augus
1981.
The
s udy
in es iga es
he economic en i onmen
in
which
gold
is
p oduced
and
consumed, he u u e
mone a Y
unc-
ions
o
gold, he ading beha iou
o
cen al banks
and
p i a e in es o s, he s uc u al and ins i u ional changes
in
in es men
and
indus ial demand, he supply
o
gold
om
seconda y
sou ces
( ecycling)
and
inally, unde a ious
as-
sump ions,
i
se s ou
i e
di e en o ecas ing scena ios,
co e ing
he pe iod 1983-1990.
The
o ecas
nominal
p ices
o
gold
o
1983
and
1990
and
hei
associa ed
assump ions a e
shown
in
Table
I.
The
lowes
o ecas
p ice
o
1983
is
US
$398
and
he
highes
US
$783
pe
oy
ounce.
The
o ecas
ange
o
1990
is
US
$398-
US
$1975
pe
oy ounce o gold.
In
1983
he ac ual p ice
o
gold
was
30'7•
lowe
han
he
lowes
p edic ed
p ice,
which,
in
addi ion,
was
eponed
as
he 'less
likely
possibili y'.
Table
1
Fo ecas ec
nominal p ices o gold o
1983
and
1990
Assump ions
Wo ld in la ion
O'le
Wo ld GNP g ow h
O'lo
Real
in e es a es
5'7o
Wo ld in la ion
6'7e
Wo ld GNP g ow h 2'l
Real
in e es a es
4'7o
Wo ld in la ion
12'lo
Wo ld
GNP
g ow h
4'7o
Real
in e es a es
20Jo
a Wi h
inc ea<.ing
supply
b Wi h
dec ea<.ing
supply
Fo ecas ed nominal
p ices in
US
dolla s
1983
1990
398,80 398,30
552,05a
914,3oa
570,26
1010,79
588,38b
1106,00b
783,57
1975,15
1be in e es ing poin
is
no ha he ac ual
p ice
was
ou
o
he o ecas ange only wo
yea s
a e he publica ion
o
he s udy, bu ha no scena io including
low
in la ion
accompanied
by
high
g ow h and
high
eal
in e es a es
was
concei ed.
~
second
s udy,
inanced
by
he Anglo-Ame ican Co po-
a11on,
was
undenaken
by
D H. B ock, in o de o p o ide
a o ecas
o
he
pe iod
1986
-
1988.
This
s ~dy,
dis inguished
by
i s
app oach,
is
a combina ion
o
a modi ied
Delphi
echnique and he
classical
supply and
demand me hodology.
ln e i~s.
wi h
cen al banke s, inance minis e s, bullion
deal~,
poli ical
analys s, economis s,
mining
execu i es,
and
ashion
~eale s
in
No h Ame ica, Eu ope, Japan, Hong
Ko~g,
Singapo e, Aus alia, he Middle Eas , and Sou h
A~nca
we e
used
o ob ain p obabilis ic da a on he de e -
nunan s
o
he u u e
p ice
o
gold.
The demand
o
gold
was
b oken down in o en di e en
?Wke
~n s
(p i a e in es men s, la ge cen al bank
m~es men s,
indus ial demand,
jewelle y,
e c.), and
six
de e -
~ s
o
~e
demand
we e
de ined (in e es a es,
le el
o
poli ical ension, e c.).
The supply o
g~ld
was
ega ded
as
coming om h ee
sou ces, he
Republic
o Sou h A ica, he communis block
and o he
Wes e n
coun ies. The ac o s a ec ing he suppl;
om Sou h A ica,
_we e
assumed o
be
p ice, quan i y p o-
duced, he
sales
policy
o
he Sou h A ican
Rese e
Bank
•
S.-A .
Tyd k .
Bed y ,I.
1986,
17(1)
and mining wages.
The Russian sales we e assumed o be dependen
on
he
o eign
exchange
equi emen s and he p oduc ion
le els.
The
supply om
all
o he non-communis na ions
was
assumed
o
be
de e minis ically de ined because
o
he long-lead
imes
equi ed o
new
disco e ies o come in o s eam.
The p edic ed p ices
o
gold o
1986
-
1988
we e
de i ed
by
he in e sec ion
o
six
agg ega e demand cu es and
ou
supply cu es. To each
o
he
24
in e sec ions, a
p obabili y
was
a ached which was es ima ed as he p oduc o
he
p obabili ies
o
he supply and he demand cu es.
The
24
p obabilis ic p ice equilib ia and hei
p obabili ies
a e shown
in
Table
2.
The p obabili y ha he
p ice
in
1986
-
1988
will
be
less
han
US
$518
pe
0W1ce
in
1981
'
cons an dolla s
was
es ima ed o be
less
han
I%.
Al hough
i
is
s ill
ea ly o judge he conclusions
o
his s udy,
i
smm
ha a doubling
o
he p ice
o
gold du ing he
nex
wo
yea s
,
will
be
a g ea su p ise o mos analys s. E iden ly, he
expec-
·
aiions
o
he in e iewed expens i l
1981
we e biased
owa ds
high p ices.
Apa om expec a ions, wo o he ac o s seem o
impai
he e o s o
o ecas
he p ice
o
gold. The
i s
is
wha
B ock
calls
he ca ea
o
'money illusion'. People do no
buy
an
in es men ha hey pe cei e o be o e -p iced. The
ela i e
p ice
o
an in es men o o he in es men s
is
mo e
impo an
han
i s
absolu e
alue.
Nei he
o
he abo e-men ioned
s udies
ook he ac o
o
money illusion in o conside a ion.
The o he di icul y
is
he una ailabili y
o
use ul
his o ical
.
da a
as
a
as
he beha iou
o
he gold p ice
is
conce ned,
unde di e en en i onmen al condi ions. The p ice
o
gold
:
was
linked o he dolla o mos
o
he las cen u y
and
i
he e o e
i s
de la ed p ice
is
p oponional o he
ecip ocal
:
o
he de la ing index and
i
is
no indica i e
o
he
en i on-
men al condi ions.
Nex
a me hodology, which o e comes hese wo
impai ing
ac o s,
is
de eloped and a o ecas o he p ice
o
gold
in
he yea
2<XXl
is
p o ided.
Table
2 P obabilis ic p ice equi-
lib ia
o
gold in
1986-1988
Equilib ium p ices
in cons an
1981
dolla s
518
529
542
559
570
573
S84
589
599
613
614
616
626
641
643
646
656
669
671
680
689
698
704
730
P obabili ies
0,01
0,04
0,04
0,015
0,06
0,01
0,06
o,oi5
0,10
0,10
0,015
o,oi5
0,10
0,10
0,025
0,015
0,06
o,o25
0,06
0,01
0,04
0,015
0,04
0,01
s.
A . J. Bus. Mgm . 1986, 17(1)
Hypo heses
The
o ecas p o ided by his a icle
is
based
on
wo a p io i
hypo heses. The i s
is
ha
in
he long- e m commodi y
p ices
ollow a well-de ined pa h which pe mi s only g adual
changes. The second hypo hesis
is
ha he p ice
o
a commo-
di y,
in
e ms
o
o he commodi ies,
is
cons an
o
changes
e y
slowly
in
he long un.
Commodi y p ices
in
he long un ollow a pa h de e mined
by
he condi ions
o
physical a ailabili y, he ins i u ional
domain
in
which hey a e aded and he echnological change
ela i e o hei p oduc ion and consump ion.
In
he case
o
mine als, he mos impo an a ailabili y
cha ac e is ics de e mining he change
in
hei p ices a e he
change
in
he g ade
o
o e mined and he disco e y
o
new
o es.
As
ich o es a e exhaus ed poo o es ha e o
be
used
and
ce e is
pa ibus,
he cos and hence he p ice, has o ise.
Some elie can be p o ided by new disco e ies bu
in
he
long
un, he numbe
o
new disco e ies
will
be limi ed and
will
e en ually
be
exhaus ed.
The ins i u ional con ex e e s o he s uc u e
o
he
ma ke
in
which he commodi y
is
aded, o changes
in
he
legisla ion a ec ing he p oduc ion
o
dis ibu ion
o
he
commodi y, and o changes in he owne ship
o
esou ces.
P ice
is
expec ed o be highe in a monopolized ma ke han
in
a compe i i e one. Simila ly, legisla ion can a ec he
ma ke s uc u e
o
he g ade
o
o e mined. Changes
in
he
owne ship
o
esou ces a ec hei p ices as di e en owne s
ha e
di e en needs, discoun a es and pe cep ions, and
he e o e, exhibi di e en pa e ns
o
supply.
Technological change a ec s he p oduc ion and consump-
ion unc ions and he e o e a ec s he supply and demand
o
he commodi y. I can be mani es ed ei he
as
imp o emen
in
p oduc ion
and/o
consump ion,
o
some o m
o
subs i u-
ion
o
one inpu o ano he . A classic example
o
he o me
is
he ad en
o
la ge ea h-mo ing equipmen
in
he ea ly
pa
o
he 19 h cen u y. Imp o ed machine y made he s ip
mining
o
low-g ade o e bodies possible, and hus a ec ed
he p ice
o
me als.
Technological change
is
usually uelled and di ec ed
by
p ice
and hence ends o coun e balance inc eases
in
cos due, o
example, o he exploi a ion
o
poo o es
o
o changes
in
he ins i u ional con ex . When he p ice
o
a commodi y
ises,
explo a ion o new o es in ensi ies, esea ch o subs i u es
inc eases, and new me hods
o
p oduc ion a e examined and
conside ed.
The ade-o be ween echnological change and he ac o s
pushing he p oduc ion cos highe
is
no aken o mean ha
eal p ices
will
be s able and
will
always emain a he same
le el.
In he sho - un, de ia ions om he long- e m equili-
b ium pa h a e he ule a he han he excep ion bu
in
he long un he de ia ion-coun e ac ing mechanism, i.e.
echnology e sus declining o e g ade, impose and pe mi only
a g adual change in he p ice. Technology akes ime and
e o o be de eloped and adop ed, and once in place,
i
is
igid.
Planne s a e no easily con inced ha a hike
in
he p ice
o
a commodi y
is
a pe manen e en and e use o di e
esou ces om o he p ojec s. E en a e he de elopmen
o
a
new
echnique, ime
is
equi ed o i s di usion and
adop ion. Businessmen a e always scep ical
o
new
de elop-
men s
and accep hem only when hey a e pe suaded o hei
alue.
Once
in
place, howe e , new echnologies can d i e
he p ice o he o he ex eme. Imp o emen s in p oduc ion
echnology, o example, can gene a e an o e -supply which
can d i e he p ice lowe han i s his o ical equilib ium. Low
P ice
will e en uall unde sco e demand and new
uses
o he
45
commodi y and p ice
will
s a inc easing again. This p ocess,
howe e , equi es ime and
in
he mean ime he commodi y
would
be
unde p iced.
The long- e m p ice-pa h can
be
inc easing o dec easing,
depending
on
he powe
o
he ac o s consis ing he de ia-
ions-coun e ac ing mechanism. Exploi a ion
o
poo e o es,
o example, can
be
assumed o lead a p io i o highe p ices.
Technological imp o emen on he p oduc ion line,
on
he
o he hand, mani es ed as one well-de ined accomplishmen
- a e olu iona y echnique -
o
as
is
usually he case, as
a composi e
o
many small accomplishmen s, leads o lowe
p ices. The e olu iona y echnique, by de ini ion,
will
a es
he inc ease
in
he p ice due o he use
o
poo e o es and
will
gene a e a dec easing p ice-pa h. As he
new
echnique
is
di used, he p ice
alls
un ill he
new
echnique
is
uni e sally
adop ed. A e ha , he di ec ion
o
he long- e m p ice-pa h
depends on he ade-o be ween he e ec s
o
he use
o
poo e o es and ha
o
small echnological accomplishmen s.
The second hypo hesis
is
jus i ied on he same g ounds as
he
i s
one. The de ia ions-coun e ac ing mechanism s abiliz-
es
no only he p ice
o
a commodi y o e ime, bu i also
akes ca e o s abilize he ela i e p ice
o
one commodi y in
e ms
o
ano he .
When he ela i e p ice
o
a commodi y ises, echnology
in ensi ies
in
he supply and demand lines
o
ha commodi y
un il he imp o ed condi ions push he p ice back o le els
ha a e jus i ied by he his o ical ela ion
o
i s p ice wi h
he p ices
o
he o he commodi ies.
In es o s
belie e
ha ela i e p ice s abili y should
exis
e en
in he sho un and in es
o
specula e
in
he disc epancies
ha exis
in
he ma ke . The a ios
o
p ices
o
he p ecious
me als -gold-sil e , and gold-pla inum -a e he mos o en
used media o his so
o
in es men . I
is
belie ed, o
example, ha he p ice
o
pla inum should be abo e he p ice
o
gold and when he p ice
o
gold
is
highe han ha
o
pla inum, in es o s buy pla inum and
sell
an
equal amoun
o
gold.
Based on he abo e hypo heses, he p oblems
o
una ail-
abili y
o
his o ical da a, as a as he beha iou
o
he p ice
o
gold unde di e en economic condi ions
is
conce ned, can
be bypassed and a o ecas
o
he p ice
o
gold o he yea
2000
can
be
de eloped.
The
o ecas
The o ecas
o
he p ice
o
gold
in
he yea
2000
is
a second-
o de o ecas
in
he sense ha i
is
based
on
he o ecas
o
he p ice
o
ano he commodi y and
on
a s able ela ionship
be ween he p ice
o
gold and he p ice
o
he e e ence
commodi y.
Sil e and pe oleum a e chosen as he e e ence commo-
di ies. Sil e
is
one
o
he p ecious me als used o in es men
and indus ial pu poses simila o hose
o
gold. Pe oleum,
al hough a non- ecyclable commodi y,
is
also closely linked
o gold
in
he minds
o
in es o s, p obably because
o
he
in e es aken
in
he me al by he Middle Eas in es o s.
1
~
1
°!
0
!~~~~~~~~
~~
I
:&
1849
1899
194~
1•82
YEAR
46
S.-A . Tydsk . Bed y sl.
1986,
17(1)
~~~
a:
20 .
lO
6.7.73
23.7.76
16.6.78 9 5.80 2 4
82
WEEKS
Figu e
2 Ra io
o
he week-end ixings
o
gold and sil e
In es o s belie e ha an ounce
o
gold should be wo h abou
30-
35
ounces
o
sil e
o
20 ba els
o
pe oleum.
Fi s , he his o ical ela i e p ice
o
gold
in
e ms
o
sil-
e and pe oleum
is
examined and hen he p ice
o
gold
is
de i ed om p edic ions o he p ice
o
he e e ence
commodi es.
The gold/sil e a io
is
examined by conside ing wo ime
inc emen s, yea s and
weeks.
The a io
o
he a e age annual
p ice
o
gold o ha
o
sil e o he pe iod 1849-1982
is
shown in Figu e l. O e a pe iod
o
132
yea s he a io has
been as high as 90 du ing Wo ld Wa II, and as low as
15
in he second hal
o
he 19 h cen u y. The a e age alue
o
he a io o e his 132-yea pe iod
is
33.
Rela i e p ices du ing his in e al we e dis o ed by bi-
me allism, wa s, and economic dep essions, bu he a e age
p ice seems
o
be wi hin he in es o s' expec a ions.
In Figu e 2, he a ios
o
he weekend ixings
o
gold and
sil e o 500 weeks, om
1973
o
1982
a e plo ed. The a io
had a high
o
app oxima ely
61
and a low
o
app oxima ely
18.
The
500 weeks' a e age
is
35,8. Du ing ha pe iod he
a io was dis o ed by excessi e specula ion. Again, howe e ,
he a e age igu e
is
in he expec ed a ea.
In sum, sho - e m and long- e m ime-se ies indica e ha
a e e ence
le el
o he a io gold/sil e
is
be ween
33
and
36. The a io exhibi s a high a iabili y bu e en ually
i
e u ns
o
he e e ence le el.
Pe oleum
is
he o he commodi y whose p ice
is
usually
linked wi h he p ice
o
gold. In Table 3, he a e age p ice
o
gold, he p ice
o
he ba el
o
pe oleum and hei a ios
a e shown o he pe iod 1963-1983. The a io has been as
high as 36
and
as low as 10,84, i s a e age alue being 21,87.
Table
3 A e age p ices
o
gold and
pe oleum, and hei a ios
Gold Pe oleum Gold/pe oleum
Yea
$/ounce $/ba el a io
1963
35,09
1,40
25,06
1964
35,00
1,33
26,03
1965
35,00
1,33
26,31
1966
35,00
1,33
26,03
1967
35,00
1,33
26,31
1968
38,63
1,30
29,71
1969
41,09
1,28
32,10
1970
35,94
1,30
27,64
1971
40,81
1,65
24,73
1972
58,16
1,90
30,61
1973
97,33
2,70
36,04
1974
159,25
9,76
16,31
1975
161,03
10,72
15,02
1976
124,82
11,51
10,84
1977
147,72
12,40
11,91
1978
193,24
12,70
15,21
1979
306/17
17,26
17,76
1980
(l.)7
,87
28,67
21,20
1981
459,75 32,50
14,41
1982
375,80
33,47
11,22
1983
422,47
29,31
14,41
The nex equi emen
is
a long- e m o ecas o
sil e
and
pe oleum. Slade (1982), in
an
e o
o
econcile he
heo-
e ical p edic ions
o
inc easing p ices
o
non- enewable
com-
modi ies o e ime wi h he empi ical indings
o
alling
eal
p ices, de eloped a model o he long un p ice
mo emen
o
he non- enewable na u al esou ce commodi ies.
This
a icle exploi s some
o
he indings o p edic ion
pu poses.
The model inco po a es exogenous echnical changes
and
endogenous change in he g ade
o
o es mined and
sugges s
a U-shaped ime-pa h o p ices.
The
model, al hough
i
sugges s a U-shaped ime-pa h
o
he p ices, did no speci y a speci ic unc ional o m and
he e-
o e a quad a ic unc ion was assumed.
Fo
compa ison a
linea unc ion was i ed as well. Twel e commodi ies
we e
es ed o empi ical suppo
o
he model, among hem
sil e
and pe oleum.
Annual da a om he pe iod 1870 -
1978
we e i ed o
he
wo unc ions and he quad a ic unc ion ga e s a is ically
signi ican esul s.
The quad a ic unc ion was
o
he o m:
P;,
=
bo;
+ b,; +
bi;
+
U;,
whe e
P;,
is
he de la ed, in
1967
cons an dolla s, p ice
o
commodi y i a ime
;
is
he ime measu ed
in
yea s
(1800=0); and
U;,
is
a andom e o e m
o
allow o
sho
un luc ua ions abou he long un end.
In Table 4 he end coe icien s o sil e and pe oleum
a e shown. Unde he co esponding coe icien s
s a is ics
o
he es ima ed coe icien s a e shown in pa en heses.
The coe icien s o sil e a e signi ican a he 99%
con-
idence
le el
and o pe oleum
a
he
950Jo
con idence
le el.
The i ed cu es
and
he de la ed p ices a e also shown
in
Figu es 3 and 4.
Using he speci ied quad a ic unc ion
and
he coe icien s
om Table 4, o ecas s o he p ice
o
sil e and pe oleum
o he yea 2000 a e possible.
Fo
compa ison, he
o ecas s
o 1984 a e also p o ided.
Se ing
in
he quad a ic unc ion he app op ia e alues o
(
= 200 o he yea 2000
and
=
184
o 1984), he
o ecas
p ices
o
sil e
in
1967
cons an dolla s a e 412 c/ounce
o
he yea 2000 and 2,70
c/ounce
o 1984. In
1983
cons an
dolla s he p ices a e US $12,27 pe ounce
and
US $8,04
pe
ounce o he yea 2000 and 1984 espec i ely.
Simila ly, he p ice
o
a ba el
o
pe oleum
in
1967
con-
s an dolla s
is
US $6,4 pe ba el o he yea 2000 and
US
Table
4 Fi ed quad a ic ends
Commodi y
bo
bi
bi
R2
F Pi
Sil e
1692
-23•
0,083a 0,96
1157
0,82
( - 7,6) (7,1)
0,68
Pe oleum
10
-0,12b
0,00051b
0,60
78
( -
1,7)
(1,8)
• Deno es signi icance a he
990Jo
con idence
le el
h Deno es signi icance a he
950Jo
con idence
le el
Pi au oco ela ion coe icien
o
he e o e m

s.
A . J.
Bus.
Mgm .
1986,
17(1)
350
"'
<.)
~
300
0
0:
:::
250
"'
...
z
"'
<.)
200
150
100
835
1890
1900
1910
1920
19)0
1940
1950
1960
1970 1980 1990
YEAR
Figu e
3 De la ed p ices
o
sil e and end
10
~
0:
0:
7
~
0:
:::
6
"'
"'
:l
5
..,
0
"
1890 1900 1910
1920
19)0
1940 1950 1960 1970
1980
1990
YEAR
Figu e
4 De la ed p ices
o
pe oleum and end
$5,18
pe ba el o he yea 1984. In
1983
cons an dolla s,
he p ices a e US $19,07 pe ba el and US $15,46 pe ba el
espec i ely.
The o ecas o he p ice
o
pe oleum in he yea
2000
is
in
acco dance wi h he p ice p edic ed by No dhaus (
1979).
No dhaus summa ized he esul s
o
11
s udies which o ecas
he op imal
o
limi p ices o
OPEC
and concluded ha he
ange
o
p ices o he yea 2000
is
om
15
o
30
US dolla s
pe ba el,
in
cons an
1983
dolla s.
Ha ing he long un equilib ium p ices o
sil e
and pe ol-
eum o he yea s 1984 and 2000,
and
he his o ical a ios
o
hei p ices wi h he p ice
o
gold, he es ima ion
o
he
p ice
o
gold
is
possible.
Fo he yea
1984
(in cons an
1983
p ices), he es ima ed
equilib ium p ice
o
gold, ecei ed h ough he p ice
o
pe oleum,
is
US $338 pe ounce. The p edic ion h ough he
p ice
o
sil e gi es a ange be ween US
$265
and US $290
pe ounce, depending
on
he a~sumed a ios
(33
-
36).
The o ecas o he yea
2000
is
US $417 pe ounce (in
47
1983
cons an dolla s) when he p ice
is
es ima ed h ough
he p edic ion
o
he p ice
o
pe oleum and
US
$405
-US
$442 pe ounce when
i
is
es ima ed h ough i s ela ion wi h
he p ice
o
sil e .
I
should be no ed ha he wo o ecas s ( h ough sil e
and pe oleum)
o
he p ice
o
gold
in
he yea 2000 con e ge
owa ds a p ice
o
app oxima ely
US
$420 pe ounce. The
o ecas h ough he p ice
o
pe oleum alls exac ly
in
he
middle
o
he ange indica ed by he o ecas s h ough he
p ice
o
sil e .
This con e gence
is
in e p e ed
as
a e i ica ion
o
he hypo hesis ad anced in his a icle ha
in
he long un
commodi y p ices a e de e mined by a de ia ion-coun e ac ing
mechanism.
Conclusion
This a icle p o ides a e iew
o
he mos ecen e o s,
inanced by Sou h A ican Ins i u ions, o o ecas he p ice
o
gold, and a emp s o p edic he
Jong
un equilib ium p ice
o
gold o he yea 2000.
The o ecas
is
based
on
he hypo heses ha
in
he Jong
un commodi y p ices a e de e mined by a de ia ion-coun e -
ac ing mechanism which pe mi s only slow
and
g adual
changes, and ha he ela i e p ices
o
he commodi ies a e
s able
in
he long un.
The me hodology ollowed has he ad an age ha
i
o e -
comes he obs acle
o
una ailabili y
o
use ul da a on he p ice
and he de e minan s
o
gold du ing he las cen u y.
The his o ical p ice a ios gold/sil e and gold/pe oleum
a e es ima ed om ime-se ies and ange om
33
o 36
and
om
21
o
22
espec i ely. Long- ange o ecas s o sil e and
pe oleum a e a emp ed u ilizing s udies which examine he
long un equilib ium p ices
o
hese commodi ies. The p ice
o
gold
in
he yea 2000
is
p edic ed o be US $420 pe ounce
in
1983
p ices.
Fo compa ison, he
1984
long- un equilib ium p ice
o
gold
is
es ima ed o
lie
in
he ange
o
US
$265
-US
$338
pe ounce
in
1983
p ices.
I
seems ha he p ice
o
gold, a e
an
o e shoo ing
eac ion o he US a emp s o p e en ma ke p ices ising
abo e he o icial p ices
in
he l 960's has e u ned
o
wi hin
i s Jong- un pa h.
Acknowledgemen s
The au ho wishes o hank
M
K.
E angelidis, M T.
Hugge , M s A. Pou is,
and
an
anonymous e e ee o hei
help
in
he p oduc ion
o
his a icle. Any e o s and omissions
a e he au ho 's alone.
Re e ences
Depa men
o
Fo eign A ai s.
1985.
Sou h A ica
1985.
O icial
Yea book
o
he Republic
o
Sou h A ica. I I h Edi ion.
Depa men
o
Fo eign A ai s.
Rol e,
R.
1983.
The Wo ld Gold Ma ke
in
he 1980's. Mining
Su ey, no.1/2. Chambe
o
Mines, Sou h A ica.
B ock, H.W.
1982.
The Fu u e
o
Wo ld-P ice
o
Gold -
supplemen o Op ima, ol.30, no.2. Anglo-Ame ican
Co po a ion and
De
Bee s
G oup o Companies.
Slade, M.E.
1982.
T ends
in
Na u al- Resou ce Commodi y P ices:
An
Analysis
o
he Time Domain.
J.
En i onm. Econ. Mgm .
ol.9, no.2,
122-
137.
No dhaus, W.D.
1979.
The
E icien
Use
o
Ene gy Resou ces.
Cowle Founda ion o Resea ch
in
Economics a
Yale
Uni e si y. Monog aph
26,
Yale
Uni e si y P ess.