Random walk simulation on the silver price for the first 20 years in the 21st Century

Inhalt:
Simulation is one of most powerful tools in computational era. It not only gives us full pictures on the issues of interest but also allows us to predict what will become the issue of interest in the future. The big data collected in financial markets with modern digital technologies provide unlimited opportunities to simulate the performance of any stock and commodity under different circumstances. Simulation is actually based upon its underlined models, and thus different models generate different simulations against their targeted behaviour. Silver is an important commodity, and its price is closely followed by investment banks, hedge funds, investors and research institutes and is subject to various simulations based upon different models. The random walk model can simulate the natural phenomena with a few model parameters to account for unexplainable influencing factors. In this study, we apply the random walk model to simulate the silver price for the first 20 years in the 21st century. The results show that the random walk simulation can simulate the silver price for five different segments of time. Thus, the current study provides the further evidence to support the efficient market hypothesis.