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Is It Worth It

Submitted by sunnybond01 on January 27, 2008

Category: Miscellaneous
Words: 2138 | Pages: 9
Views: 96
Popularity Rank: 88,279
Average Member Grade: N/A (Add a Comment / Grade this Paper)


Executive Summary


This project aims to analyze various factors that affect the gold pricing, and that gold price does not only depend on supply and demand, as most commonly thought. Based on the results achieved, this project will develop a model to predict gold prices and infer if gold is a good investment. For the analysis, we took the monthly values of various macroeconomic factors like gold prices, oil prices, inflation, Dollar VS Euro exchange rate and production of world gold. We started with linear regression and changed it to non-linear model based on significance levels of the independent variables, and came up with an equation that can predict gold price. Based on the historical and ongoing trends, we concluded with the suggestion that Gold is still a good investment choice.





















Introduction


Gold, one of the most precious metals known to man, was used by many economies as the currency standard due to its rarity, durability, easy divisibility, and the general ease of identification, often in conjunction with silver. Even after silver was no longer basis of currency, gold remained a base global currency until the collapse of the Bretton Woods System in 1971. gold has continued to play an important role in the global economy, and in the recent times, gold prices have been correlated with key factors impacting the economy like oil prices, inflation and exchange rates.
Through this study, we plan to analyse the influence of various factors on the price of gold, and try to answer questions like:
Does gold prices depend on the factors like oil, currency exchange rates, inflation or it only depends on supply and demand? Based on the model develop, we would try to predict gold prices, which in turn will interpret if gold...

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