Sparky
10th July 2012, 06:54 PM
Time to look ahead for the next year. As described in a thread a couple of years ago (http://gold-silver.us/forum/showthread.php?30917-Gold-prices-in-2010-2011), I have a method for trying to anticipate what the price range of gold for the upcoming year. To summarize, I look at these statistics annually:
1) How did the current year low compare to the previous year low?
2) How did the current year high compare to the previous year high?
3) How did the current year low compare to the previous year high?
4) How did the current year high compare to the previous year low?
5) What was the spread between the low and high of the current year?
These historical year-to-year changes provide insight about an expected range in price for the upcoming year. I use a year that runs from July through June to capture the natural seasonal price cycle. Note: I use the London daily fix price that is available historically, which excludes the actual intraday extremes.
Two years ago (2010-2011), the best estimate range yielded from this system was $1026-$1485. The actual range ended up being $1157-$1558.
Last year (2011-2012), the best estimate range was $1367-$1873. The actual range was $1483-$1895.
So both years did pretty well, with a bit of a low bias.
In predicting the upcoming low for 2012-2013, the range of estimates for the low value was $1334-1806. The "best estimate" was $1722. Well, the low already this July was $1564, so the "best estimate" for a low is problematic. This was the result of soaring prices that occurred during summer/fall 2011, which approached the acceleration pace of a bubble.
Best estimate for a high? That comes in at $2341. So the range is $1722-$2341. Now if we want to adjust this range knowing that we've already had a low of $1564, we could shave a couple of hundred bucks of this range and settle at $1522-$2141. I think that looks like a pretty good range. As I've said in another thread, I really think the rock bottom technical low still sits down at $1460.
Here's the complete chart for those who want to see all the details:
Low Date
Low
High Date
High
Low-Low from previous year
High-High from previous year
Previous year High to current year Low
Previous year Low to current year High
Low-High within current year
2001-02
7/6/2001
$265
5/29/2002
$327
23.4%
2002-03
8/1/2002
$302
2/5/2003
$382
14.0%
16.8%
-7.6%
44.2%
26.5%
2003-04
7/17/2003
$343
4/1/2004
$427
13.6%
11.8%
-10.2%
41.4%
24.5%
2004-05
7/29/2004
$387
12/2/2004
$454
12.8%
6.3%
-9.4%
32.4%
17.3%
2005-06
7/15/2005
$418
5/12/2006
$725
8.0%
59.7%
-7.9%
87.3%
73.4%
2006-07
10/6/2006
$561
4/20/2007
$691
34.2%
-4.7%
-22.6%
65.3%
23.2%
2007-08
7/6/2007
$649
3/18/2008
$1,011
15.7%
46.3%
-6.1%
80.2%
55.8%
2008-09
10/24/2008
$712
2/20/2009
$989
9.7%
-2.2%
-29.6%
52.4%
38.9%
2009-10
7/13/2009
$908
6/28/2010
$1,261
27.5%
27.5%
-8.2%
77.1%
38.9%
2010-2011
7/28/2010
$1,157
5/2/2011
$1,558
27.4%
23.6%
-8.2%
71.6%
34.7%
2011-2012
7/1/2011
$1,483
9/6/2011
$1,895
28.2%
21.6%
-4.8%
63.8%
27.8%
2012-2013
Average
19.1%
20.7%
-11.5%
61.6%
36.1%
Very interesting that the low occurred between July 1 and August 1 in 9 of the 11 years. You can see that the high date is far more erratic.
1) How did the current year low compare to the previous year low?
2) How did the current year high compare to the previous year high?
3) How did the current year low compare to the previous year high?
4) How did the current year high compare to the previous year low?
5) What was the spread between the low and high of the current year?
These historical year-to-year changes provide insight about an expected range in price for the upcoming year. I use a year that runs from July through June to capture the natural seasonal price cycle. Note: I use the London daily fix price that is available historically, which excludes the actual intraday extremes.
Two years ago (2010-2011), the best estimate range yielded from this system was $1026-$1485. The actual range ended up being $1157-$1558.
Last year (2011-2012), the best estimate range was $1367-$1873. The actual range was $1483-$1895.
So both years did pretty well, with a bit of a low bias.
In predicting the upcoming low for 2012-2013, the range of estimates for the low value was $1334-1806. The "best estimate" was $1722. Well, the low already this July was $1564, so the "best estimate" for a low is problematic. This was the result of soaring prices that occurred during summer/fall 2011, which approached the acceleration pace of a bubble.
Best estimate for a high? That comes in at $2341. So the range is $1722-$2341. Now if we want to adjust this range knowing that we've already had a low of $1564, we could shave a couple of hundred bucks of this range and settle at $1522-$2141. I think that looks like a pretty good range. As I've said in another thread, I really think the rock bottom technical low still sits down at $1460.
Here's the complete chart for those who want to see all the details:
Low Date
Low
High Date
High
Low-Low from previous year
High-High from previous year
Previous year High to current year Low
Previous year Low to current year High
Low-High within current year
2001-02
7/6/2001
$265
5/29/2002
$327
23.4%
2002-03
8/1/2002
$302
2/5/2003
$382
14.0%
16.8%
-7.6%
44.2%
26.5%
2003-04
7/17/2003
$343
4/1/2004
$427
13.6%
11.8%
-10.2%
41.4%
24.5%
2004-05
7/29/2004
$387
12/2/2004
$454
12.8%
6.3%
-9.4%
32.4%
17.3%
2005-06
7/15/2005
$418
5/12/2006
$725
8.0%
59.7%
-7.9%
87.3%
73.4%
2006-07
10/6/2006
$561
4/20/2007
$691
34.2%
-4.7%
-22.6%
65.3%
23.2%
2007-08
7/6/2007
$649
3/18/2008
$1,011
15.7%
46.3%
-6.1%
80.2%
55.8%
2008-09
10/24/2008
$712
2/20/2009
$989
9.7%
-2.2%
-29.6%
52.4%
38.9%
2009-10
7/13/2009
$908
6/28/2010
$1,261
27.5%
27.5%
-8.2%
77.1%
38.9%
2010-2011
7/28/2010
$1,157
5/2/2011
$1,558
27.4%
23.6%
-8.2%
71.6%
34.7%
2011-2012
7/1/2011
$1,483
9/6/2011
$1,895
28.2%
21.6%
-4.8%
63.8%
27.8%
2012-2013
Average
19.1%
20.7%
-11.5%
61.6%
36.1%
Very interesting that the low occurred between July 1 and August 1 in 9 of the 11 years. You can see that the high date is far more erratic.