Predicting Gold and Silver Price Direction Using Tree-Based Classifiers

Gold is often used by investors as a hedge against inflation or adverse economic times. Consequently, it is important for investors to have accurate forecasts of gold prices. This paper uses several machine learning tree-based classifiers (bagging, stochastic gradient boosting, random forests) to predict the price direction of gold and silver exchange traded funds. Decision tree bagging, stochastic gradient boosting, and random forests predictions of gold and silver price direction are much more accurate than those obtained from logit models. For a 20-day forecast horizon, tree bagging, stochastic gradient boosting, and random forests produce accuracy rates of between 85% and 90% while logit models produce accuracy rates of between 55% and 60%. Stochastic gradient boosting accuracy is a few percentage points less than that of random forests for forecast horizons over 10 days. For those looking to forecast the direction of gold and silver prices, tree bagging and random forests offer an attractive combination of accuracy and ease of estimation. For each of gold and silver, a portfolio based on the random forests price direction forecasts outperformed a buy and hold portfolio.

New technologies will support steady demand for silver

Subject Global silver market dynamics. Significance The price of most commodities has risen since 2015 but not that of silver. Indeed, the price has barely changed in two years and has fallen nearly 3% this year. Investor interest in exchange traded products (ETPs) in 2016 was not sustained in 2017 but while low volatility discouraged investors, manufacturing demand rose. Strong demand from the solar panel industry is surprising sceptics. Impacts After two years of unusually strong zinc prices, large projects will come online, increasing the amount of silver mined as a by-product. US tariffs on imported solar cells will boost demand for alternative energy sources, eventually hurting silver consumption. The largest silver exchange, the Chicago Mercantile Exchange, will offer option trading in smaller amounts, matching traders’ preferences. Increased silver use in light karat gold jewellery in India and China will support demand for the metal.

The ‘Galleon System’ and Chinese Trade in Manila at the Turn of the 16th Century

When the mission of the Basque adelantado Miguel López de Legazpi reached Luzon – the northernmost isle of the Philippine archipelago – in 1570, the ambitious Spanish conquistadores met the ‘Sangley’ merchants for the first time. During the 1570s many Chinese junks started to connect Manila with the ports of Fujian province and transformed the Philippine capital in a crossroads of the silk to silver exchange between China, Japan and the two Americas. Following the establishment of the Manila-Acapulco-Callao triangular trade line and with the influx of the precious ‘reals of eight’ from Mexico, the so-called ‘Naos de China’ started to enrich both the Spaniards and the ‘Sangleys’, triggering an irreversible process that led to the establishment of a ‘Galleon System’ in just two decades. This paper will discuss the role of Chinese trade in the Philippines at the close of the 16th century from the founding of Manila in 1571 to the establishment of the ‘Galleon System’ by the early 1590s.