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Cpi Projections Help Please


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Hi there!

I'm currently compiling a theoretical portfolio for a charity as part of my degree. Inorder to score higher marks I am trying to suggest alternative investments with justification, other than applying modern portfolio theory or technical analysis to blue chip equities and selecting a few Gilts as I know my peers will mostly be doing.

I believe that Quantative Easing will lead to much higher inflation than Mervin is suggesting in the the BOE's latest report; going on the fact that energy prices are on the rise and the RPI is at -0.4 Consequentially I intend to suggest that some of the charities capital is allocated to the natural resources sector; primarily the gold industry as investors should turn to gold as the sterling destabilises.

I'm not directly a student of Economics, so I would appreciate your help in understanding what I am trying to get at. Furthermore, If anyone could suggest any sources of information which I could cross reference my theory of higher inflation to; and add validity to my claims I would be very thankful.

Thank You!

Nick

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Leeds Stockbroker,

I've never heard of anyone advising a charity to invest in gold. Are you on the level?

That question aside. You say you don't study economics directly, then go into your library pick up works by Marx, Smith and Ricardo, turn to the index and start with gold and money. Find out what you can down that route.

Then you will have to look at the ways to invest in gold. Physical, "paper gold", miners etc.

You will have an interesting learning curve.

Good luck with your research.

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Leeds Stockbroker;

I agree with Digger that its a bit odd using Gold as an investment. Also as for other indicators of inflation have a look at this lot. Bed time reading???

M4 and Inflation

Usually there is an acceptance that M4 leads inflation by around 6 to 9 months, but only if M4 supply goes up by above 10%.

http://ideas.repec.org/a/oup/oxecpp/v61y2009i1p168-182.html

However the problem is that its above 10% now and has been since late 2008.

http://angloaustria.blogspot.com/2009/01/u...ses-to-166.html

You will get an idea of the types of indicators to be used from this paper that I wrote some time ago. I might add that the data will have to be updated fro your use, but you should be able to get it from the same sources that we did. You may not have to use the Kalman filter. Its just a useful way of determining how useful a mixed set of indicators were for the inflation rate.

You will also note that we are fans of a Divisia M4 rather than the simple sum M4 that most people use.

http://www.inderscience.com/search/index.p...;ps=10&m=or

To support you as a prospective gold bug:-

http://www.gold.org/assets/file/pr_archive...n_pr_041105.pdf

All the best

Bonner

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