COMPARING NUMERICAL METHODS OF THE EVANS PRICE ADJUSTMENT MODEL FOR GLOBAL SILVER PRICE
DOI:
https://doi.org/10.46754/umtjur.v5i1.348Keywords:
EPAM, Euler method, Numerical solution, predictive modelAbstract
Abstract. This research paper centred on how the global silver price can be estimated and predicted by implementing the Evans Price Adjustment model (EPA). Firstly, we derived the equation that can represent and capture data involving price, demand, and supply of global silver price 2013-2021. We deployed two different numerical methods of solving ordinary differential equation (ODE). The first method is 4th order Adam Bashforth-Moulton method and the second is Euler numerical method. Same problem were solved using the two numerical methods, an attempt to check the effectiveness of the deployed methods. From there, we were able to affirm more suitable technique for this problem. Evans Price Adjustment model which is based on the fundamental principle of economics was chosen because it established a relationship between the price, demand and supply. The data used in this research work were collected from World Bank, a public open-source and trustable website that arbour data regarding the price of commodities. From our findings, this research work can be proclaimed to be successful, since the results obtained using Adam Bashforth-Moulton and Euler numerical methods follow the trend in the real data. Although, ABM4 model predictive model outperformed its counterpart in predicting the price of silver more accurately, but both approaches were able to capture the trend in real price of silver within the time frame. Hopefully, this research work would be a useful reference materials for investors and other shareholder in silver business.
Keyword: EPAM, Euler method, Numerical solution, predictive model
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