The simple Hotelling model's rising-price prediction is frequently rejected by empirical tests of real commodity data

Slade and Thille report that "casual inspection of price data reveals that, for many commodities, prices have fallen over long periods, and the models that we have derived thus far cannot explain falling prices" under the simple Hotelling model. Reviewing structural empirical tests of the theory — Farrow (1985), Halvorsen and Smith (1984, 1991), Young (1992), Chermak and Patrick (2001), all cited in the source but not independently read this session — they report: "The results of the these [sic] structural tests are quite mixed, with researchers finding falling shadow prices and/or negative interest rates. Most interpret these findings as unsupportive of the Hotelling model."

They temper this in their own conclusion, cautioning against treating rejection as final: "The often cited fact that the Hotelling model is frequently rejected by the data (see, e.g., Krautkraemer 1998) must be interpreted with caution. Indeed, rejection usually means failure of a simple variant, and incorporating real–world detail can considerably improve performance." So Hotelling's core prediction is not a settled empirical description of commodity prices generally — it is a theoretical benchmark that real markets frequently deviate from in its simplest form, which keeps it one candidate model in the space rather than a proven alternative law to the vault's cost-of-production cluster (see claim-hotellings-rule-predicts-shape-distinct-from-cost-of-production-cluster).