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[Most Recent Quotes from www.kitco.com]

THE GOLD VOLATILITY MODEL: Latest Updates

Ed Breen, November 23, 2008 (© 2008)

This posting contains the most recent predictions made by the model. It is clear that the model has diverged sharply from the actuals over the past six months. What is notable is that the model has been predicting a steep and sudden decline in inflation which is clear in the graph below. It apprears further that the actual PCE may finally reverse and mirror the trend of the model prediction over the next six months. Such a reversal to the 'mean' portends a dramatic and unprecidented drop in the PCE index over the next six months. Those of you who have been following the discussion about the GVM model should not be surprised by the current reversal in inflation expectations.

  Date   CORE PCE Prediction (1)   CORE PCE Actual   Variance From Prediction
  November-05   1.8   2.1   13.0%
  December-05   1.9   2.2   14.5%
  January-06   2.0   2.0   0.5%
  February-06   1.9   2.0   5.5%
  March-06   2.0   2.1   4.8%
  April-06   2.1   2.2   4.5%
  May-06   2.1   2.2   4.5%
  June-06   2.0   2.4   16.7%
  July-06   2.0   2.4   16.7%
  August-06   2.0   2.5   20.0%
  September-06   2.1   2.5   16.0%
  October-06   2.1   2.4   12.5%
  November-06   2.1   2.2   4.5%
  December-06   2.1   2.2   4.5%
  January-07   2.0   2.4   16.7%
  February-07   1.9   2.4   19.0%
  March-07   1.9   2.2   13.6%
  April-07   1.9   2.1   11.8%
  May-07   1.8   2.1   15.4%
  June-07   1.8   2.0   7.8%
  July-07   1.9   2.0   5.1%
  August-07   1.7   2.0   13.4%
  September-07   1.7   2.0   13.6%
  October-07   1.7   2.1   19.4%
  November-07   1.8   2.2   19.4%
  December-07   1.8   2.3   21.8%
  January-08   1.8   2.2   19.3%
  February-08   1.6   2.1   25.9%
  March-08   1.5   2.2   32.2%
  April-08   1.4   2.2   37.6%
  May-08   1.2   2.2   47.1%
  June-08   1.1   2.3   51.9%
  July-08   0.9   2.5   65.5%
  August-08   0.7   2.6   73.9%
  September-08   0.7       N/A
  October-08   0.8       N/A
  November-08   0.8       N/A
  December-08   0.8       N/A
  January-09   0.7       N/A
  February-09   0.6       N/A
  March-09   0.6       N/A
  April-09           N/A
  May-09           N/A
  June-09           N/A
  July-09           N/A
               
               
  Notes: Current Predictions are Shaded box.            
  (1) All predictions were made 6-months prior to the stated date.    

Graph of GVM Predicitons: Recent

Graph of GVM Predicitions: Detailed

Please visit the forum for further commentary.

*****
EDWARD BREEN was a long-time friend and confidant of Jude Wanniski. He served as a director of Mr. Wanniski's consulting enterprise, Polyconomics, Inc. Mr. Breen is an attorney licensed to practice law in the state of New Jersey and he currently serves as an active director of a private manufacturing business. In his career, he has served as the President of a real estate development company, as the founder and director of a publicly listed regional bank and he has been involved in a number of entrepreneurial investment ventures. Mr. Breen can be reached by e-mail here.
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