Mind the Gap: Psychological Barriers in Gold and Silver Prices

13 Pages Posted: 17 Feb 2016

See all articles by Michael E. Lucey

Michael E. Lucey

Durham Business School

Fergal A. O'Connor

University College Cork; University of York - The York Management School; University of Dublin - Business School and Institute for International Integration Studies

Date Written: February 17, 2016

Abstract

This study tests the popular claim that psychological barriers exist around key reference points in prices for gold and silver, namely around numbers ending in 0 (e.g. $450) and 00 (e.g. $200). Initial observations and tests show that the price of gold fixes less frequently on values ending in 0 and 00, suggesting the existence of barriers at these levels which manifest as gaps or fewer observations in the frequency distributions at these points. Subsequent statistical tests find support for the existence of barriers at numbers ending in 0 and 00 in the price of gold. Conversely, while initial observations and tests suggest that the silver price is not perfectly uniformly distributed, there is no statistically significant evidence to support that barriers exist at either 0 or 00 for this metal.

Keywords: Gold, Silver, Psychological Barriers, Behavioural

JEL Classification: C12, C22, G12, G14, G15

Suggested Citation

Lucey, Michael Edward and O'Connor, Fergal A., Mind the Gap: Psychological Barriers in Gold and Silver Prices (February 17, 2016). Available at SSRN: https://ssrn.com/abstract=2733605 or http://dx.doi.org/10.2139/ssrn.2733605

Michael Edward Lucey (Contact Author)

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Fergal A. O'Connor

University College Cork ( email )

College Road
Cork
Ireland

University of York - The York Management School ( email )

Sally Baldwin Buildings
Heslington
York, North Yorkshire YO10 5DD
United Kingdom

University of Dublin - Business School and Institute for International Integration Studies ( email )

2-3 College Green
Dublin, Leinster
Ireland

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