Yearly price of gold. The price of gold is used by some financial analysts as a barometer of investors’ expectations of inflation, with the price of gold tending to increase as concerns about inflation increase. The table below shows the average annual price of gold (in dollars per ounce) from 1994 through 2019. Year Price Year Price 1994 384 2007 695 1995 384 2008 872 1996 388 2009 972 1997 331 2010 1,225 1998 294 2011 1,572 1999 279 2012 1,669 2000 279 2013 1,411 2001 271 2014 1,267 2002 310 2015 1,160 2003 363 2016 1251 2004 410 2017 1257 2005 445 2018 1268 2006 603 2019 1378 Source: Data from the London Bullion Market Association (LMBA). Copyright © 2020 by the World Gold Council (www.kitco.com). Used by permission of World Gold Council.

a. Compute an exponentially smoothed series for the gold price time series for the period from 1994 to 2019, using a smoothing coefficient of w = .8.

b. Plot the original series and the exponentially smoothed series on the same graph. Comment on the trend observed.