Problem Statement
Fact that the price of gold in 2011 is around USD 1430 per troy ounce would be interesting if we compare to 25 years ago when its price being no more than USD 400 per troy ounce. How significant is the increase of the gold price? What is prediction for the future gold price? How we can predict the future project value with the gold price increase?
Development of alternatives
To figure out the pattern of gold price and forecast to the future, we need to plot the data of gold price from previous years, and analyze the regression.
Analysis of Alternatives
Using the gold price data from http://www.nma.org/pdf/gold/his_gold_prices.pdf, we can obtain:
Year 
USD per oz 
1985 
317 
1986 
368 
1987 
447 
1988 
437 
1989 
381 
1990 
383.51 
1991 
362.11 
1992 
343.82 
1993 
359.77 
1994 
384 
1995 
383.79 
1996 
387.81 
1997 
331.02 
1998 
294.24 
1999 
278.98 
2000 
279.11 
2001 
271.04 
2002 
309.73 
2003 
363.38 
2004 
409.72 
2005 
444.74 
2006 
603.46 
2007 
695.39 
2008 
871.96 
2009 
972.35 
2010 
1224.53 
Then plot it to the graph, and add a best fitting trendline.
Seems that the Polynomial Order 3 Trendline is quite fit Since the R value is 0.979 close enough to 1.
Using the equation of polynomial order 3 we can extrapolate the data to forecast the gold price to year 2020.
The following are extrapolated data( from the equation: y = 0.303561217254617x^{3} – 1,816.111149038100000x^{2} + 3,621,718.306134750000000x – 2,407,481,471.199230000000000):
Year 
USD per oz 
2011 
1,414.48 
2012 
1,664.20 
2013 
1,946.29 
2014 
2,262.57 
2015 
2,614.86 
2016 
3,004.99 
2017 
3,434.77 
2018 
3,906.02 
2019 
4,420.58 
2020 
4,980.25 
From http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx, we obtain the 2011 average yearly gold price until May is USD 1427.55 per oz. The deviation between real data with the extrapolated data 2011 (1,414.48 ) is about 0.92%. So we can confident with the validity of forecasted data.
Implementation to Real Life Project Value
Gold Price of a Constant Value “CPI Basket” using data from year 1970
Ounce per USD 1000  
series 1 
series 2 
series 3 
series 4 
series 5 

1.42 
2.08 
0.62 
2.98 
0.69 


Statistic Parameters 
Value 
Best Case 
1.75 

Mean 
1.56 
Most Likely 
1.56 

Baseline 
1.75 
Worst Case 
4.54 

Difference 
0.19 
Mean 
1.56 

Std Dev 
0.99 
Sigma 
0.99 

Difference/ Std Dev 
0.19 
p50 factor 
0.00 

p50 
1.56 
The recently approved 13 Km 6” gas Pipeline Project at East Kalimantan Gas Production facility in 2011 is cost USD 7,550,000.
Converting USD to oz of Gold:
1.56 oz per USD 1000,means that the pipeline project at 2011 is worth of 1.56 x 7550 = 11,778 oz of gold.
Then the predicted value of 13 Km 6” gas Pipeline Project at East Kalimantan Gas Production facility at 2020 is worth: 11,778 x USD 4,980.25 = USD 58,657,384.50
Performance Monitoring & Post Evaluation of Result
The forecast model is based on assumption of donothing scenario, means there is no intervention by government on gold price, and its driven by market value and inflation only. Otherwise it will be need more adjustment to obtain a valid model and value.
References
Brassard, Michael & Ritter, Diane (2010), The Memory Jogger 2nd edition, Tools for Continuous Improvement and effective planning, Canada:GOAL/QPC.Sullivan, William
G., Wicks, Elin M. & Koelling, C. Patrick (1942), Engineering Economy15^{th} Edition, Singapore: Prentice Hall, Inc.
http://seekingalpha.com/article/262560usinghistorytodeterminegoldsintrinsicvalue
http://www.eia.doe.gov/dnav/pet/PET_PRI_WCO_K_W.htm
http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx
http://www.nma.org/pdf/gold/his_gold_prices.pdf