1.Gold has been an important metal to humans at least since 3000BC when Egyptians used it in mythology and temple decorations.To this day, gold is used as a store of value, a currency, jewelry, a monetary base, and as a speculative investment.The current price of an ounce of gold is $1,306.30.Here is a chart showing the market price of an ounce of gold between 1990 and the present (inflation adjusted).Note that the relative stability of the price until 1970 was caused by the U.S. being on the gold standard (essentially the Federal Reserved domestic monetary policy to peg the price of gold).

People have made, and lost fortunes searching and investing in the gold.If you could reliably predict future gold prices you could obviously make a fortune.Based on the material taught in this class, what reliable mechanism could you use to predict the long run price inflation adjusted price of gold?