Thursday, February 13, 2014

2014.02.13 Gold Cycle Model Chart

2014.02.13 Gold Cycle Chart

The gold cycle model suggests gold prices are still heading towards a low in the March/April 2014 time frame. If the model continues to perform as it has in the past, the latest spike in prices should fall back down into the low, before resuming what should be a nice rise into the end of the year. Inquiring minds may want to ponder the discordant gold/silver cycle models for prices going forwards. Other than the obvious theory - that one of the models is wrong, I don't have a lot more to say about it. The results of the previous gold cycle model run are shown below.

2014.01.29 Gold Cycle Chart


Joao said...


You don not see something not right, that Silver and Gold normal are correlation.. abd your forecast not.
Of course you can be right, but it is strange.

Thanks fot this post.
You can suugest some books for that are base for this forecast? Or oher suggestions some methods you use?

Paolo said...

Hi Joao,

Yes, that's exactly my point - the short version of which is that one of the models, either gold or silver, is probably wrong. Though it is amusing that both models have worked reasonably up to "the break point" ie when the future divergence is beyond reasonable expectations. However, once I set up the structure, the models are "on their own" and have no user input. So, like with all data points in this business, I would interpret them cautiously.


Paolo said...

Joao, I forgot to answer your last point - look here.

Anonymous said...

Unless you specify the sample data used to set the parameters of the "model" and whether the model has been since "updated", all you have here is a best fit model... so it looks good, but it is never correct as its always updated to take into account the latest errors.. which were perhaps yesterday.
The best model is one in which the sample data used to set It were a long long time ago AND that has not been updated to account for any errors, AND that is correct in timing price and time.
I have never seen one... because it doesn't exist. Modelling I am sad to say is a hardcore mathematical; approach to TA. Its only truly taken off with the advent of computers.
Having said that I admire peoples hardwork in TA, including this model.
Passion is always important in Analysis.

Paolo said...

Very wise words from Peter, with good knowledge of the art of structural modeling. You could consider these cycle models to be hybrids - developed on a sample set, tested on an out of sample set, and if accepted, run on both sets and continuously updated. The important point is that while the structure does not change once the model is accepted, the parameters associated with the coupled functions do change as new data points are "digested."