This modelusesrationalexpectationstheorytoforecast
mineral commoditypricesinthefuture.Thetheorydefines
expectations asbeingidenticaltothebestguessofthefuture
from allavailableinformation.Thistheoryassumesthatoutcomes
being forecasteddonotdiffersystematicallyorpredictablyfrom
the equilibriumresults.Forexample,miningprojectevaluators
assume topredictthegoldpricebylookingatgoldpricesin
previous years.Iftheeconomysuffersfromconstantlyrising
inflation ratesoroilpricepressure,theassumptionsusedtomake
a predictionaredifferentfromthattimewhentheeconomy
follows asmoothgrowth.commodities
have three terms to demonstrate fluctuation of prices: a long-term trend reversion component,
a diffusion component and a jump or dip component. The model calculates each term individually to
estimate future prices of mineral commodities. The study validates the model and estimates the gold
price for the next 10 years, based on monthly historical data of nominal gold price