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.