GoldSight

The model is based on a simple equation: gold's nominal return is the sum of inflation and a "real premium." While inflation raises the base price each year, the real premium is determined by five measurable factors:

• Money Supply: If injected liquidity outpaces inflation and the natural growth of the gold stock (approx. 1.6% annually), the difference reflects in the price over time.
• Real Interest Rates: Changes in expected rates instantly reprice gold. The impact of rate changes is significantly higher in a low-interest-rate environment.
• Demand and Fear: Crisis-driven panic buying creates rapid price spikes, but this effect is temporary, usually fading within three years.
• Dollar Strength: Since gold is priced in dollars, a strong dollar suppresses the price, while a weak dollar supports it.
• Central Bank Purchases: These provide a limited but persistent and structural directional force on the price.

A "valuation anchor" balances these dynamics. If gold's real price deviates excessively from its historical band, the model dampens rallies or supports the price floor during declines. In extreme scenarios (e.g., massive money printing or war), historical bands lose validity, and this mechanism is disabled.

All model coefficients are strictly based on academic literature and historical data. The model does not generate speculative bubbles and, due to its annual resolution, does not reflect short-term (intra-year) volatility. In 55 years of historical backtesting, roughly one-third of deviations (sentiment, panic, sudden shocks) are deemed "unmodelable" and intentionally excluded.