Dust flux, Vostok ice core

Dust flux, Vostok ice core
Two dimensional phase space reconstruction of dust flux from the Vostok core over the period 186-4 ka using the time derivative method. Dust flux on the x-axis, rate of change is on the y-axis. From Gipp (2001).

Sunday, May 31, 2020

A global pandemic is too dangerous to leave the experts in charge, part 1

As I write I have been in some form of lockdown for about two months, having resisted it for the first couple of weeks. I kept commuting into the office until the very end of March, before retreating to Newmarket and hanging out there for the past couple of months.

I still have had to use public transit to commute to my dialysis centre. The lengthy commute increases my risk level, but I am fortunate to still be well. 

Today's comment is about pandemic control. I haven't seen a lot of it, apart from the shutdowns. Unfortunately, we have almost no information allowing us to see the effects the lockdown has had on the spread of the virus, because there has been no organized process of random sampling. 

Random sampling is the only way for us to get a handle on the true number of viral cases. For instance, in Ontario, the government is reporting on sample results that are now beginning to reach about 20,000 per day. At the same time, the number of new cases verified through testing is generally between 300 and 400 each day. Given that the sampling numbers are typically around 16-17,000 per day, we may be looking at an infection rate of a little over 2%, which if reflective of the population at large would suggest about 350,000 cases in Ontario--far more than the number of cases that has been identified by testing.

However, we can't extrapolate reliably, because none of the samples are random--they are self-selected for either being at high risk, or because they may have symptoms. It would be useful for us to know the true incidence among the population, because if the number of cases is indeed around 350,000, and the hospital load and death rate have been as we have observed, then this virus is a lot less dangerous than supposed. 

We also have no idea of the true trend in the general infection rate--information that would help us assess the effectiveness of the lockdown. In the absence of random sampling, such information will not be forthcoming. What the Ontario Ministry of Health needs are mobile sampling teams that can carry out a randomized sampling program, possibly by going to pre-selected addresses, or possibly some other scheme (a lot of thought has already gone in to taking random samples of Ontario's population--but not by the government).

This is one of the first things that anyone would learn when becoming involved in setting public policy (or marketing public policy). The experts do not appear to have proposed such a program. One has to wonder why. 

Saturday, May 16, 2020

The gold-copper ratio and the real economy

A couple of months ago when the turmoil began, I had one of these articles in Zerohedge, and I referred to the how the gold-copper ratio reflected what was going on in the real economy. Of course, commenters rose to the bait, asking what I meant by the real economy.

So today's post is an annotated graph of the weekly gold-copper ratio plotted against its smoothed rate of change, over the past three years (actually, about 34 months). The recent excitement is noted on the right side of the graph.

I normally view a high gold-copper ratio (say, over 450) as a bad sign for the economy. The current values are not quite unprecedented, but you have to go back to the early 1980s (not a great time, economically) to see something similar.

When I think of the real economy, the example in my mind is a factory making refrigerators. The annotations above are the thoughts and actions of the factory owner.

Tuesday, March 24, 2020

Violence! Death! Blood! Gold! Copper!

Let's check on the chaos in the market.

The chaos is proceeding splendidly. It will be some time before order can be restored.

First of all. I have to rescind my predictions of this post. As I stated in the post, it was early to make a prognostication, but the violence of the earlier move convinced me to make one anyway. That move has reversed sharply, blasting out of the deflationary channel in a disinflationary direction.

The graph of the gold-copper ratio shows the rapid deterioration of the real economy--by which I mean the part that buys copper and builds refrigerators. Typically the gold-copper ratio increases when the economy goes bad, which in our second graph would appear as a move to the right--something still underway.

In fact, the current situation is even worse than it appears, because in order to calculate the rate of change, I have to subtract the two calculated gold-copper ratios, and I avoid using trailing averages. So the above chart is one week behind reality, where the current ratio is closing in on 700. This is higher than any weekly closing GCR in the past ten years. Looking at monthly closing ratios, only twice since 1977 has the ratio been higher: in September 1980 (717); and in September 1986 (711).

What I think we may see going forward is more chaos. I think we are in a bear market, and the work of a bear market is to make the biggest downward move dragging the most money down with it. Money on the sidelines needs to be drawn in bit by bit until it is all destroyed.

In the long term, The World Complex is a fan of gold. It's always worth buying, but it's important to avoid leverage and keep cash available, because the cash calls always happen at the most inopportune moment.

Friday, March 20, 2020

New charts - northern hemisphere Arctic sea ice maxima

A recent publication has highlighted the importance of the maximum extent of seasonal ice cover in the Arctic Ocean to the stability of the over all sea-ice system. So I have acquired data from NOAA of the daily sea ice extent since 1979, which I have used to find the maximum annual extent and the date (expressed as a Julian Day - so March 1, 2019 would be day 60, but March 1, 2020 would be day 61). These data sets will be studied in the usual manner, if appropriate. (I used the five-day trailing average, by the way).

The maximum sea-ice coverage has declined since 1979

The graph suggests that the maximum extent of ice coverage has declined more or less constantly over the observation period. There are a few ups and downs. In fact, something popped out at me. In the graph above, what do 1998, 2001, 2008, 2012, and 2020 have in common? They all represent years where sea ice extent increased - presumably due to cooling. They were also years with somewhat trying economic circumstances, at least for some people. Coincidence? Probably--but maybe it means there was an agricultural trigger to some of the economic crises of the past few decades.

There has been an idea that as global warming proceeds, the timing of certain important events will change, becoming either earlier or later. Investigating the above graph for a trend in the timing of the ice extent maximum each year tells me . . . nothing. If there is a trend, it is very weak.

Below we have the 2-d reconstructed state space portrait of the annual maxima sea ice extent, using the time-delay method with a 2-year lag. 

The state space reconstruction shows three regions of stability. The S1 and S2 correspond roughly to the major area of stability in the sea-ice minima phase space, which may actually be two separate such regions, one larger than the other. S3 corresponds with the most recent low-area sea-ice minima.

As with the sea-ice minima plots, there is not enough data to determine the long-term future of this system. It is possible we are in a declining phase of a century-scale cyclical system. Alternatively, we could be on a decline to zero. We may even be in a biased cycle, where the natural cycle is being influenced by global warming. The problem is that the data are not sufficient to tell us which is the correct interpretation.