Predicting timing of commodities prices booms and busts – a scientific approach

Speaker: Noll Moriaty

ASEG Queensland Branch meeting for September 2015.

Please RSVP to Megan Nightingale by 5:00 pm, Monday 21st September if you wish to attend this meeting.

Talk Synopsis:

Accurate prediction several years in advance of commodity price busts would help resources industry better position itself. The large falls in commodity prices during 2014 came as a surprise to many people. Yet my econophysical analysis published in 2011 predicted a high probability for much lower commodity prices by 2014-15 (eg oil $50-60 BBL). Unlike most forecasts that extrapolate the current trend (which works fine until a major turning point occurs), my prediction had a scientific basis.

I showed that demand/supply and economic health have little influence on the underlying trend of commodity prices; instead the direction for commodity prices is inversely related to US Dollar valuation changes. In 2010, my probabilistic approach predicted the 5-year valuation range for the US Dollar, the inverse of which gave the trend for commodity prices. In 2010 when commodity prices were high and rising, a high probability was predicted for a significant fall in commodity prices by 2014-15. This was presented to Brisbane PESA meeting in September 2011 – on a poll of the audience, the vast majority did not agree that oil would be $50-60 BBL by 2014-15. This has now come to pass.

The same econophysical modelling approach is now applied to the outlook for US Dollar valuation and hence commodity prices for 2015-20. The statistical prediction indicates a high probability that USD valuation will remain strong for 2-3 years; is not likely to fall markedly until 2018-20 at which time commodity prices are expected to start rising significantly. This scientific modelling approach allows a rational prediction, several years in advance, of commodity price booms and busts. Astute resources industry management and investors should position their commodities exposure accordingly to benefit from those who blindly extrapolate the current trend.

About the Speaker:

Noll Moriarty’s M.Sc. (Hons) qualifications are in geophysics; during 1982–99 he was employed in petroleum exploration and development projects for Delhi Petroleum and Origin Energy. In 2000 he founded Archimedes Financial Planning, which now provides personal financial advice with a scientific basis to resources industry personnel around the world.

Venue: 

Cinema (upstairs – behind the restaurant/bar), XXXX Brewery, Corner of Black Street and Paten Street Milton.  There is street parking and an undercover carpark at XXXX Brewery available for meeting attendees to use.