The “Golden” Question Ali Alyabis Andrew Clark David Lee S & P 500 Gold? or

Executive Summary The “Golden” Question Previous Research Our Hypothesis Procedure and Methods Identify Key Models and Relationships Final Model Different Ways to Look at the Data Investment Implication

The “Golden” Question ?????

Previous Research Prior Economic Indicators of Performance Dow/Gold Ratio

Our Hypothesis ECONOMIC EXPECTATIONS

Follow CRISP guidelines Gather monthly data from April 1970-Present: ▫US Bureau of Labor Statistics ▫FRED (Federal Reserve Economic Database) ▫Misery Index ▫S&P (Yahoo Finance) ▫Gold Prices (Goldnews.com) Clean data Procedure and Methods

Output: Binary: If %Δ Gold Price > % Δ S&P, then “GOLD.” Else, S&P Partition Data Build and Evaluate Discuss Implications Procedure and Methods

Key Models and Relationships Original Findings + Strong Clusters + NOT Time Sensitive - Limited Range v v

Final Model Validation Set Performance

Other Nuggets – Today (April 2009) (March 2009)

Other Nuggets - Clusters ClusterNameTime PeriodMajor Event 1“Panned Out” Stagflation 2“Prospectors” Ali Born 5“The Golden Era” Berlin Wall Falls 4“Mine Kamph” dot Com Bubble and Y2K 3 “Gold Digs, to Brokety Broke” Crisis from Authority

Other Nuggets – Gold September Buy Gold?

Implications – Investment Strategy Given: $1,000 in June 2009 Assumption – Economic Growth and Inflation will be Low IF inflation is expected to be low, but not negative then invest in Gold IF inflation is negative, invest in S&P

What We’d Do Different Variables ▫Output – ETFs, Portfolios ▫Inflation Expectations – TIPS More

Bibliography Web Articles “Consumer Expenditure Surveys.” US Bureau of Labor Statistics (BLS) Homepage. Accessed 2 April “Economic Data--(FRED)®” Economic Research: Federal Reserve Bank of St. Louis. Accessed 2 April “Historic Data for S&P 500 Stocks” Accessed 9 April Ritter, John R. “Founding dates for 8,823 IPOs from ” IPO Data. October Accessed 9 April