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Strategies & Market Trends : Winter in the Great White North -- Ignore unavailable to you. Want to Upgrade?

To: Elizabeth Andrews who wrote (3903)	1/6/2003 9:18:40 PM
From: E. Charters	Read Replies (1) \| Respond to of 8273

I will illustrate the difficulty in establishing the flux of gold's price by comparing some prices to year 2000 and showing the discrepancy with the regard to the inflation rate. year true $1997 inflation 1997 price price price factor [459] in (no. of to 1997 row-year $ 1997$ to by CPI (price rise/fall = true) factor in brackets) 1968 43.50 221.42 5.09 90.18 (2.07) 1980 594.90 1279.03 2.150 213.48 (0.358) 2000 272.65 247.05 -1.1036 506.55 (0.538) In the 6th column in brackets we see the relative decline or rise factor in the price of gold from that year's true price (second column) to the price it would be if the 1997 true price(459 dollars) was deflated or inflated by the CPI to that year. The factor "reverses" from 1997 to year 2000 because the direction towards 1997 is reversed. In effect we are asking what the ratio of true gold price is to the inflation normalized 1997 price. In the 4th column is the comparative inflation rate expressed as a total factor for all the intervening years to 1997 by the consumer price index. From 1968 prices increased by 5.09 times to 1997, but gold only increased 2.07 times in 1968 dollars. From 1980, general consumer prices increased 2.15 times to 1997, but gold fell in price by 64.2 per cent or 2.79 times in that 1980's dollars. By the year 2000 prices had risen 10.36 per cent from 1997, but gold fell from "506.55" ($459 in year 2000 dollars) to 272.65. If we project ahead, we must do it by projection of the established constant dollar curve, which takes the true price in that year and rationalizes it to the inflation rate. Then we subtract the inflation rate factor estimate, to get the true increase or decrease. This increase or decrease is what must be due from all other factors. EC<:-}