The World Gold Council (WGC) has introduced a pioneering methodology and analytic tool, called Qaurum, to provide greater clarity around the drivers of gold’s performance.
Qaurum is a Web-based tool designed to deliver a robust quantitative approach to analysing how gold may react under diverse macroeconomic and geopolitical conditions.
Behind a user-friendly interface, Qaurum is powered by the Gold Valuation Framework (GVF), an academically validated methodology based on the principle that the price of gold and its performance can be explained by the interaction of demand and supply.
GVF and Qaurum were developed in response to research suggesting that institutional investors cite the lack of an established approach to valuing gold as a key barrier to investment, the council said on Wednesday.
“One of the WGC’s key mandates is to reinforce gold as a mainstream investment asset,” chief market strategist John Reade commented, adding that Qaurum is “an important step in that direction” because it provides investors with a framework for evaluating the metal’s performance.
This, Reade noted, empowers more incisive decision-making around strategic and tactical allocation decisions.
Qaurum is accessible from Goldhub.com and empowers investors to assess how gold might react across different economic environments through either selecting a hypothetical macroeconomic scenario provided by Oxford Economics, or through generating forecasts of demand and supply and view the impact of key macro drivers.
Qaurum also allows investors to calculate and visualise implied returns for gold.
The scenarios from Oxford Economics are updated quarterly to reflect timely and relevant considerations.
“Because gold has a unique dual nature as both a consumer good and an investment, some view its performance as unpredictable,” initiative project lead Juan Carlos Artigas said.
He explained that Qaurum “does not forecast the gold price” but rather “helps investors intuitively understand” gold’s drivers and the connection between demand, supply, as well as financial, economic and geopolitical events.