If memory serves, this is exactly how it looked.
Friday, February 28, 2014
Saturday, February 22, 2014
A professional regret
I was asked to send a copy of the 2001 Paleoceanography paper to somebody recently and I noticed this one figure that I wish I could do over again.
The dashed curve in the upper graph should really have been reproduced in the lower one. Unfortunately I was hidebound by my recent discovery that insolation (that is the amount of sunlight received at certain latitudes on earth) drove the rate of change of global ice volume, rather than the ice volume itself, as was commonly supposed. So I likewise compared insolation to the rate of change of temperature in Antarctica, as deduced from the Vostok ice core temperature series.
Here is what it would have looked like had I compared insolation to Antarctic temperatures
It looks like a reasonable comparison, in that geological arm-waving way. It is a bit curious that the Antarctic temperature responds to northern-hemisphere insolation, but that's part of the wonder of the world.
As an aside--just before publication, the journal editor questioned me very closely about the title. He presumably thought it was some kind of joke, and this was a serious journal that published serious science, and titles were definitely no joking matter. I managed to convince him that it was not a joke. But it was!
The dashed curve in the upper graph should really have been reproduced in the lower one. Unfortunately I was hidebound by my recent discovery that insolation (that is the amount of sunlight received at certain latitudes on earth) drove the rate of change of global ice volume, rather than the ice volume itself, as was commonly supposed. So I likewise compared insolation to the rate of change of temperature in Antarctica, as deduced from the Vostok ice core temperature series.
Here is what it would have looked like had I compared insolation to Antarctic temperatures
It looks like a reasonable comparison, in that geological arm-waving way. It is a bit curious that the Antarctic temperature responds to northern-hemisphere insolation, but that's part of the wonder of the world.
As an aside--just before publication, the journal editor questioned me very closely about the title. He presumably thought it was some kind of joke, and this was a serious journal that published serious science, and titles were definitely no joking matter. I managed to convince him that it was not a joke. But it was!
Tuesday, February 18, 2014
A nugget of info
. . . from the World Gold Council report (Gold Demand Trends for 2013) issued early this morning.
Hidden away in the middle of the report was an interesting observation--that Germany was the only European country in which investment demand for gold increased over 2012. I suppose all the other Europeans are happy with their euros.
I wonder if it is coincidental that the Bundesbank is the only European central bank to ask for its gold back from the US?
Hidden away in the middle of the report was an interesting observation--that Germany was the only European country in which investment demand for gold increased over 2012. I suppose all the other Europeans are happy with their euros.
I wonder if it is coincidental that the Bundesbank is the only European central bank to ask for its gold back from the US?
Monday, February 17, 2014
The village hammer
In response to the higher than usual amount of spam being sent to the World Complex, here's a little story. (BTW, thank you for your story about trying to get a loan from a god-fearing man, Mrs. Monica Roland. But the last time I was in Singapore, the unit of currency was not the pound).
We were about to run a small survey from a fishing vessel out of a small village in the western region. The geophysical gear had to be towed from the side, so I prepared to nail a beam to the boat, so we could tow the gear from a fixed point about 2 m off the side of the vessel. Unfortunately, my hammer had gone missing sometime during the trip--but one of our local employees told me he had one in his house just around the corner, so off he goes to get the hammer.
So we wait. And wait. And wait. A few hours pass, and then he returns with the hammer. I asked him what took so long. "Someone else was using it." Two minutes of hammering and we were done. Out to sea.
Not sure how clear this is to you, but this is a bit of raw seafloor acoustic imagery, with no navigational corrections (we wobble a bit and our speed changes due to wave action). The width of the image is about 90 m, and the length is a little over 500 m. The prominent light coloured bodies with the ripple marks are sand bodies with dunes; the darker material is soft sediment (silt), and the light blotches are bedrock outcrop.
Update: The image upload isn't that good. Bloody google.
We were about to run a small survey from a fishing vessel out of a small village in the western region. The geophysical gear had to be towed from the side, so I prepared to nail a beam to the boat, so we could tow the gear from a fixed point about 2 m off the side of the vessel. Unfortunately, my hammer had gone missing sometime during the trip--but one of our local employees told me he had one in his house just around the corner, so off he goes to get the hammer.
So we wait. And wait. And wait. A few hours pass, and then he returns with the hammer. I asked him what took so long. "Someone else was using it." Two minutes of hammering and we were done. Out to sea.
Not sure how clear this is to you, but this is a bit of raw seafloor acoustic imagery, with no navigational corrections (we wobble a bit and our speed changes due to wave action). The width of the image is about 90 m, and the length is a little over 500 m. The prominent light coloured bodies with the ripple marks are sand bodies with dunes; the darker material is soft sediment (silt), and the light blotches are bedrock outcrop.
Update: The image upload isn't that good. Bloody google.
Friday, February 14, 2014
The "Garlic Ballads" award goes to . . .
. . . the government of Thailand. Congratulations on your rice-purchasing scheme, which threatens to conjure a famine out of plenty.
The Garlic Ballads, a semi-fictional novel by Mo Yan is about just the same topic--the peasants of a Paradise County are encouraged to focus all their efforts on growing garlic, as the government offered to pay a good price for every stalk they could produce. Things went swimmingly until one year, the region produces the bumper crop to end all bumper crops. The farmers see they are going to produce more garlic than ever before; excitedly calculate their forthcoming profits; and plan their spending. Their excitement is piqued as the first farmers to market sell their entire crop, reaping more money than they've ever seen. But before long the warehouses are full, and the government simply announces they won't be purchasing any more garlic, precipitating a riot.
Horrors follow. The county only grew garlic, so those who were unable to sell theirs are forced to try to survive on nothing but their crop of garlic--and the grass, and the bark from the trees--surrounded by the overpowering stench of garlic rotting in the fields and from every room in every house. Famine in the midst of plenty.
There's no misfortune quite like centrally planned misfortune.
The Garlic Ballads, a semi-fictional novel by Mo Yan is about just the same topic--the peasants of a Paradise County are encouraged to focus all their efforts on growing garlic, as the government offered to pay a good price for every stalk they could produce. Things went swimmingly until one year, the region produces the bumper crop to end all bumper crops. The farmers see they are going to produce more garlic than ever before; excitedly calculate their forthcoming profits; and plan their spending. Their excitement is piqued as the first farmers to market sell their entire crop, reaping more money than they've ever seen. But before long the warehouses are full, and the government simply announces they won't be purchasing any more garlic, precipitating a riot.
Horrors follow. The county only grew garlic, so those who were unable to sell theirs are forced to try to survive on nothing but their crop of garlic--and the grass, and the bark from the trees--surrounded by the overpowering stench of garlic rotting in the fields and from every room in every house. Famine in the midst of plenty.
There's no misfortune quite like centrally planned misfortune.
Setting up a people for hyperinflation--the Canadian example
The World Complex is not a fan of Stephen Harper and His Government (see here, for instance). But I am forced to conclude that he may be a cannier economist than I originally gave him credit for.
When a country destroys its debts by inflation, it ruins its creditors. The proper progressive approach is to ruin them all equally--thus it is imperative that there be no avenue by which creditors might protect themselves. At the same time, the government wishes no doubt to have its citizens continue to honour its currency, worthless though it might be.
During the Wiemar hyperinflation, despite the frenzied printing, the sum total of foreign currency that could be purchased by all the marks in circulation fell precipitously. There is a Keynesian argument to be made that the Germans didn't print quickly enough! Of course, having Germans individually destroying the currency in great amounts by putting it to such uses as cigarette rolling papers and firewood didn't help either.
And consider this--using the currency in lieu of hard-to-locate toilet paper may clog pipes.
Canada recently unveiled polymer bills. Just the perfect cross between plastic and paper money. And the brilliant part is, they are perfect in a hyperinflationary environment.
Plastic. Not really suitable for use as cigarette wrappers or firewood. You wouldn't want to be burning it indoors, anyway.
And as far as toilet paper--although it is a little uncomfortable, the microtexture on the bills does seem to be helpful for cleaning up the really tough spots. And although the bills have not been field-tested for flushability, the beauty of the polymer bills is that you can just wash them and reuse! Or spend, if you prefer.
The only problem the beta testers have reported is that the bills are a little small to be used comfortably.
When a country destroys its debts by inflation, it ruins its creditors. The proper progressive approach is to ruin them all equally--thus it is imperative that there be no avenue by which creditors might protect themselves. At the same time, the government wishes no doubt to have its citizens continue to honour its currency, worthless though it might be.
During the Wiemar hyperinflation, despite the frenzied printing, the sum total of foreign currency that could be purchased by all the marks in circulation fell precipitously. There is a Keynesian argument to be made that the Germans didn't print quickly enough! Of course, having Germans individually destroying the currency in great amounts by putting it to such uses as cigarette rolling papers and firewood didn't help either.
It's not always nice to have money to burn.
And consider this--using the currency in lieu of hard-to-locate toilet paper may clog pipes.
Canada recently unveiled polymer bills. Just the perfect cross between plastic and paper money. And the brilliant part is, they are perfect in a hyperinflationary environment.
Plastic. Not really suitable for use as cigarette wrappers or firewood. You wouldn't want to be burning it indoors, anyway.
And as far as toilet paper--although it is a little uncomfortable, the microtexture on the bills does seem to be helpful for cleaning up the really tough spots. And although the bills have not been field-tested for flushability, the beauty of the polymer bills is that you can just wash them and reuse! Or spend, if you prefer.
The only problem the beta testers have reported is that the bills are a little small to be used comfortably.
Sunday, February 9, 2014
Vindictus
I've been hearing stories lately from contacts in different junior explorecos about regulators questioning certain types of promotional literature.
In one company's case, the questions are driven by its inclusion of previously reported grades and tonnages of surrounding deposits in the same structural province. Now it is not clear to me whether the regulators are objecting because they are afraid that the casual reader will think that the neighbouring deposits belong to the company in question (it is clear they do not--the company has identified the owners/operators of the surrounding mines) or that they feel it is too promotional. I'm guessing the latter, in which case the fact that the grades/tonnages are already a matter of public record seems to render the problem moot.
How does excluding such information from the presentation help the retail investor? It doesn't. It is information which is potentially useful to the investor. In its absence, the retail investor will have less of an understanding of the area's potential than other, more sophisticated investors, who are capable of looking up such information themselves.
But perhaps that is the point. It is not yet time for the retail investor to enter the picture. Now is the time for institutions to get positioned. By excluding information from the eyes of the retail investor, the institutions can get safely positioned at a lower price. After the big move, it will be time for the retail investor to enter the picture, so that institutions can exit their positions safely. But don't worry--they'll leave the last few percent of the major move for you.
In one company's case, the questions are driven by its inclusion of previously reported grades and tonnages of surrounding deposits in the same structural province. Now it is not clear to me whether the regulators are objecting because they are afraid that the casual reader will think that the neighbouring deposits belong to the company in question (it is clear they do not--the company has identified the owners/operators of the surrounding mines) or that they feel it is too promotional. I'm guessing the latter, in which case the fact that the grades/tonnages are already a matter of public record seems to render the problem moot.
How does excluding such information from the presentation help the retail investor? It doesn't. It is information which is potentially useful to the investor. In its absence, the retail investor will have less of an understanding of the area's potential than other, more sophisticated investors, who are capable of looking up such information themselves.
But perhaps that is the point. It is not yet time for the retail investor to enter the picture. Now is the time for institutions to get positioned. By excluding information from the eyes of the retail investor, the institutions can get safely positioned at a lower price. After the big move, it will be time for the retail investor to enter the picture, so that institutions can exit their positions safely. But don't worry--they'll leave the last few percent of the major move for you.
Friday, February 7, 2014
Gold x USDX in phase space
From time to time I drag out a geologic or economic time series and unfold it into a two-dimensional phase space to try to get some idea of the underlying dynamics of the function. In particular, these plots can allow us to define flows and attractors in our system of study.
Recently I started looking at the product of the gold price and the US dollar index, finding that in 2011 it shot to a high of over $1400, and fell last year to about $1000, bouncing off it twice, penetrating it briefly in December, but presently rests just above the $1000 level (or isoquant).
The two-dimensional phase space of the gold-USDX system appears below.
Regions of phase space with a high concentration of observations are interpreted as basins of attraction. In the above figure we see three such areas - at about the $650 area, last visited in late 2008, the $1050 area, and about the $1350 area. The system evolution is difficult to distinguish from a random-walk while in the areas of attraction, but evolves more-or-less in one direction while in the flows from basin of attraction to another.
In 2011, the system embarked on a significant excursion, which remained in the $1300 area from late 2011 until early 2013. I think this reflected a battle between the market, which needed to fall, and some people with money who were convinced that gold would only rise further. Like most such battles, it lasted until the money ran out, and the system returned to the $1050 basin of attraction, where it has remained since.
If there is to be a sustained rise in the gold price going forward, this system will break out of its current area of attraction, and likely return to the $1300 area, which would correspond to gold prices of $1700-$1900, depending on the strength of the US dollar. No signs of such a breakout have occurred yet.
Recently I started looking at the product of the gold price and the US dollar index, finding that in 2011 it shot to a high of over $1400, and fell last year to about $1000, bouncing off it twice, penetrating it briefly in December, but presently rests just above the $1000 level (or isoquant).
The two-dimensional phase space of the gold-USDX system appears below.
Regions of phase space with a high concentration of observations are interpreted as basins of attraction. In the above figure we see three such areas - at about the $650 area, last visited in late 2008, the $1050 area, and about the $1350 area. The system evolution is difficult to distinguish from a random-walk while in the areas of attraction, but evolves more-or-less in one direction while in the flows from basin of attraction to another.
In 2011, the system embarked on a significant excursion, which remained in the $1300 area from late 2011 until early 2013. I think this reflected a battle between the market, which needed to fall, and some people with money who were convinced that gold would only rise further. Like most such battles, it lasted until the money ran out, and the system returned to the $1050 basin of attraction, where it has remained since.
If there is to be a sustained rise in the gold price going forward, this system will break out of its current area of attraction, and likely return to the $1300 area, which would correspond to gold prices of $1700-$1900, depending on the strength of the US dollar. No signs of such a breakout have occurred yet.
Saturday, February 1, 2014
Gold silver ratio heading a little higher
One approach to complex systems is to consider that the behaviour of the system can be considered to be a vector field in a phase space composed of differing variables. The task of understanding the complex system, then, is trying to deduce the map of vectors.
For instance, a phase space of global climate might be obtained by creating a scatter-plot of atmospheric CO2, global ice volume, and a mean deep ocean temperature. Each observed set of variables plots as a single point on the graph, and is called a state. The trajectory traced out by the observed succession of states follows the vector field locally, and gives us some insight into the nature of the vectors in that limited region of phase space.
Similarly, we might try to study the unemployment/interest-rate system. Here, too, the observed succession of states gives us a partial picture of the vector field that comprises the system.
For those times when you only have a single time series, Packard et al. (1980) (pdf) prescribe means of reconstructing phase space portraits so that you can still investigate the vector field that defines your system. The method used most commonly on this blog has been the time-delay method.
Below we see the reconstructed phase space by the time-delay method for ten years of the gold/silver ratio (based on month-end prices).
The loops we see extending beyond the position of the letters represents some kind of overshoot.
The vector field that we infer from this diagram is a clockwise closed loop. Like when water goes down a drain.
For instance, a phase space of global climate might be obtained by creating a scatter-plot of atmospheric CO2, global ice volume, and a mean deep ocean temperature. Each observed set of variables plots as a single point on the graph, and is called a state. The trajectory traced out by the observed succession of states follows the vector field locally, and gives us some insight into the nature of the vectors in that limited region of phase space.
Similarly, we might try to study the unemployment/interest-rate system. Here, too, the observed succession of states gives us a partial picture of the vector field that comprises the system.
For those times when you only have a single time series, Packard et al. (1980) (pdf) prescribe means of reconstructing phase space portraits so that you can still investigate the vector field that defines your system. The method used most commonly on this blog has been the time-delay method.
Below we see the reconstructed phase space by the time-delay method for ten years of the gold/silver ratio (based on month-end prices).
The four-step dance in the reconstructed phase space of the gold-silver ratio continues apace (note that I hae switched the axes in an ongoing attempt to make all my plots consistent, so the above image is the mirror image of the figure in the last article, but the mirror plane is the diagonal). So in the above plot, we start at A, move to B, then C, then D, back to A, and so on. Presently, we are marching on our way to D, which we should reach within the next two months. I don't know if this means anything, but the last time we were at point D, we were in the middle of a full-blown financial crisis.
The vector field that we infer from this diagram is a clockwise closed loop. Like when water goes down a drain.