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).

Friday, October 18, 2019

The church-sale indicator tells me that silver is at a significant low

Every spring and fall the neighbourhood church has a rummage sale. Parishioners donate used goods, which are sold to benefit the church (although this year, the beneficiary seems to be a separate charity). In past years I have bought books and games for the kids, books for me, and once some jigsaw puzzles when my wife's aunt came for a long visit from Singapore.

About twenty years ago, I had started to buy silver. At that time, there was a lot of silver jewellery available at the church sale. Nobody was interested in it. I bought a really fascinating piece from the opium era in China for probably about $5. I remember getting a pair of art deco silver earrings for $2, that my wife wore a lot and said were her favourite pair (at that time). And lots of other things--generally jewellery and utensils.

The price of silver rose, and the clientele abruptly changed. Gangs of young men would show up, line up early, and buy up all the silver within minutes of the doors opening. It was very difficult to get anything unless you too were willing to line up for a few hours in advance. As a result, I stopped looking for silver there, choosing to shop for books and music instead.

This year I arrived at the sale quite late, and the crowd was already thinning out. After picking up some books, I thought of taking a look at the jewellery, since that section wasn't jammed with people. Surprisingly, there was quite a bit of silver jewellery available, and numerous sterling spoons (more plate, too, of course). I bought a few sterling silver teaspoons for my collection.

This points to a lack of interest in silver among not only the general public, but among the type that research the topic and buy accordingly. This suggests to me that the silver price is at an important low.

Sunday, October 6, 2019

Abstract accepted to Chapman conference on the Evolution of the Monsoon


So I'll be going to Washington in the New Year.

No word yet on the format of the presentation.

I've never taken part in a Chapman conference before, but I gather they are rather more collaborative than typical conferences

Friday, September 27, 2019

We have passed this year's Arctic sea ice minimum

and what do we see?

This site informs us that we have tied with 2007 and 2016 for the second lowest sea ice extent in the satellite era--4.15 million sq km.

This gives us the wherewithal to update our phase space reconstruction of the sea ice extent.

We are near the middle of the same area of metastability we have been in since 2007. There is no way to tell how long we shall continue in this region of metastability; nor do we know if we will return to the higher region of stability occupied prior to 2004, or drop to another lower region of stability or fall to zero (as many disaster models predict).

All we can do is keep watch.

Friday, August 9, 2019

Human ingenuity and gold

I saw the figure below on this website, and felt compelled to comment.

No attribution was given, so I will assume it was put together by the site operator.

At first glance, it tells a simple (if somewhat horrifying) story of currency destruction. But I think there is another story it tells, which is a little more hopeful.

The picture as presented is a little misleading because it shows what an ounce of gold will buy now. (Gold was $20/oz in 1932, but there was a little less than an ounce of gold in the double eagle. But let's pretend it is an ounce of gold and look at what that $20 coin would buy you in 1932.

According to this site, a gallon of gas cost $0.18 in 1932. Accordingly, your $20 coin would buy you 111 gallons of gas.

According to this site, a gallon of milk cost $0.26 in 1930 and $0.47 in 1935. The reason for the price rise was due to the government introducing programs to help farmers during the Depression. Not knowing when exactly the program started, it's a little difficult to be sure what the price was in 1932. So let's go with $0.33, meaning $20 would get you 60 gallons.

According to this site, a dozen eggs cost $0.36 in 1937. I'll estimate $0.33 for the price in 1932, netting us 60 dozen eggs for $20.

This old New York Times article tells us that a first-class postage stamp in the US cost $0.03 in 1932. Your $20 coin would allow you to mail 666 letters and have 2 cents left to put in them.

All of which is a lot more than $20 buys you now. But notably, it is much less than an ounce of gold will buy you now.

Gas: 111 gallons vs 482 gallons
Milk: 60 gallons vs 427 gallons
Eggs: 60 dozen vs 675 dozen
Stamps: 666 vs 2700

These increases are the result of capital investment and human ingenuity, and are a reflection of real increases in productivity.

So let's not overlook the happy side of the story. A big hand for human ingenuity!

Monday, July 22, 2019

The changing face of deflation

As noted previously, the shared global economic system has been dominated by deflation for the past eleven years. Evidence for this can be seen in the chart of US dollar index vs gold price since 2008 (below).

Since 2008, the US dollar has risen about 35%, whereas the gold price (in US dollars) has risen over 50%. At the current level, where goldxUSDX approaches the 1400 isoquant, non-US gold mining companies are getting more for their gold than they were in August 2011, when the gold price was $1848/oz. This speaks of deflation. But if you look at shorter timescales, you mostly see the expected inverse relationship between gold and the dollar.

Do you hear of deflation? Most people worry about inflation--it's the banks that worry about deflation. And it's not hard to see why. In a deflation, people seek to hold real money--which for most people nowadays means cash. But the graph shows that two things are viewed--nearly equally--as cash: gold and the US dollar. They have been rising for ten years because of an undercurrent of urgent purchases. Banks don't like people removing cash from the system because it impedes their ability to lend. Removing cash from the banking system and hoarding it (or using it to buy gold) short circuits the "wealth-creating engine" of the past few decades, which has been responsible for the growing wealth inequality since the 1980s.

But if we look at the relationship between the US dollar index and the gold price over the last year, we see a change--perhaps an important one--in the style of deflation we are experiencing.

In the past year, gold has risen about 20% in price (in US dollars), whereas the US dollar has only increased about 2% over the same timeframe. My interpretation is that this suggests a shift in deflation protection from purchasing a mix of gold and US dollars to just gold. After all, President Trump is signalling he wants to drive the US dollar down in price, and we all know that governments have many tools they can use to destroy their own currency!