Econometric analysis of the historical growth and volatility trends of various metals

Abstract

Post Malthusian economics, there is growing recognition of the impact technological change and advance has on market activity. By studying historical production and price trends, boundaries of feasible growth can be determined and, dependent on a firm's goals, materials that may require added recyclability, substitution, or engineering efficiency identified. Therefore, a contextual understanding of growth and volatility can mitigate negative economic impacts. This study involved the econometric analysis of a 16-metal survey. Various analysis techniques were used to determine historical growth and volatility trends of both industrial and precious metals. For this data set, a typical sustained annualized growth rate of production was between 0.0% and 5.0% based on 20-year CAGR data. Price growth tended to range between -2.5% and 2.5% for 20-year time frames but was much more volatile in the short-term. From 1979 to 2009, 56% of all annual value growth rates were greater than +10.0% or less than -10.0%. Additionally, several metals had coefficients of variation greater than unity thereby being classified as hyper-variant. While the premise of a commodities exchange is to heighten the predictability of value, little difference of price volatility was found between metals on (0.28) and off (0.31) open exchanges. Aside from the survey, case studies of tantalum and niobium were completed. These co-mined materials appeared to have a strong correlation with their price growth as well as their production trends.