The warriors then and now

There has been a spate of editorials in the local papers recently decrying the lack of mental health care for our vets returning home from Afghanistan. The suicide rate among Canadian war veterans is about 50% higher than among civilians.

Most of the commentary has found fault with the military's treatment (or lack thereof) for returning soldiers. I think the problem is deeper than that--it is in the assumptions the military has made in training these soldiers. Military command has not really evolved since WWII. We, as a society, are very different.

In the 1940's, very few North Americans knew much about people in other countries. Consequently, it was relatively easy to desensitize them to the notion that they would be killing other human beings. All you had to do was tell them that the enemy du jour was killing babies and drinking their blood, or something similar, and the majority of your recruits would accept it.

Nowadays, most people have internet friends in other countries, and most of us have grown accustomed to the idea that people who live in other countries are real honest-to-goodness people, with goofy, lovable children, cute pets, eccentric hobbies, and goals and aspirations which, while different from our own, are nevertheless worthwhile. Nearly everybody sees this, and once it has been seen, it cannot be unseen. Our military, with its 1940s mindset, assumes that all they have to do is tell the raw recruits that the Taliban are evil incarnate, and these recruits will cheerfully rain death on an Afghan (or Iraqi) village as ordered. Even though they may not have any Afghan facebook friends, once you have accepted that others are human, I submit that you can no longer rain death on hapless villagers with the enthusiasm that your forebearers in the '40s might have.

Yes, there are animals out there, and you will always find some of these amongst your recruits: those who kill (and worse) joyfully. But the majority of us are fundamentally different than the people in the 1940s,

A clear example . . .

. . . of the extremely rare "high-heeled-shoe" formation.

Data sourced from van de Wal (2011). The inferred data are accessible from the supplementary material (instructions to retrieve are in the paper, which can be found here).

The heel is a transient signal which is almost certainly an artifact of the method of approximation used by the authors. Even that spike transient, on the scale of our investigation, implies it takes the natural system at least 2000 years to reduce atmospheric CO2 from 400 ppm (roughly today's value) to 380 ppm.

Be

Sometimes it's all you can do.

Possible future scenarios for gold x USDX index

Last time I suggested that the completion of an inverted head-and-shoulders pattern in the goldxUSDX index plot pointed to a target near 1300. What could this mean for the gold price? Or the US dollar for that matter?

The current value of this index is $1295 x 0.799, which is about 1035. So we are really talking about nearly a 30% gain. However, the pattern has so far taken a year to trace out, and is just (hopefully) tracing out the bottom of the right shoulder. So this gain is not going to happen in a week (sorry!)

The easiest approach is for both gold and the US dollar to rise in tandem. Unpossible, you say? That's what we had during the first five months of 2010 (yellow arrow below), which I recall were pretty good times for gold miners.

The blue hyperbolae in the figure above are the isoquants I introduced here. Isoquants are lines in which the product of the gold price and the USDX index are a constant. If we are to reach the 1300 level, what are some possible scenarios?

If the US dollar rises to 90 on the index, a gold price of over $1400 per oz is needed to bring the product to 1300. If the dollar only rises to 85, then the gold price would have to rise to $1529 per ounce. If the dollar were to fall to 70, then gold would have to exceed $1800. I actually view the last scenario as being unfavourable to gold miners, as history shows that rising gold prices are likely to be met by windfall taxes.

I think that the economic situation that would favour both increasing gold price and increasing dollar price would involve a meltdown in stock markets, causing another rush to safety, as in 2008. Unlike 2008, however, there is not a lot of speculative froth in gold, so I think in the event that we have another financial crisis, gold will do a better job as a disaster hedge.

Speaking of disaster hedging, I am still running with the thesis that when our gold-silver ratio in phase space plot reaches point D, we will enter the next crisis which will lead to another sharp run-up in the gold-silver ratio. We are pretty close to it now. 

Is that . . .

. . . an inverse head-and-shoulders forming on the chart below? We may just be finishing the extreme low of the right shoulder.

If the neckline is regained, the pattern points to a measured move to close to the 1300 level, which will be close to where we were before the meltdown in gold last spring.

I have used Gold x USDX index as a parameter in the past. My thinking is that this product reflects the value of the product of gold mines to companies which are not operating in the US.

For context, some of our happiest times investing in gold miners occur when this index rises.

I've also marked what looks to me to be an increasingly important line in the sand at the 1000 level. I'd hate to see this line get broken.

May Day 1984

For a world tip-toeing around a potential war in the Ukraine, this song, in which Konstantin Chernenko challenges Ronald Reagan to World War III, seems appropriate.



"Third world, second world, first world, wiggle world
I'm sorry dear, I got some heavy water in your Ovaltine,
And last night Susie brought a Shi'ite rebel
To the curling club BBQ . . ."

Busy lately

Writing up a formal treatment for publication of an earlier posting. The emphasis is to be on extraction of hierarchical structure from geological (primarily geochemical) time series. I've managed to find a 20 My long (inferred) record, which should be long enough to separate the climatic and biochemical hierarchical info from the tectonic info.

Just lately I have been getting lost in the details of the role that the development of hierarchy plays in distinguishing systems that are truly complex from the merely complicated. Remember that time the Tortoise and Achilles got into a bind and they escaped into a story. And in that story they got into another bind, and escaped into another story? And then in that story they got in trouble and escaped into a painting, where they once again found themselves in peril, and escaped into another story--and towards the end they stepped out of the various stories and paintings in succession, but ended up one level short of reality? Well that's where I am now.