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, October 19, 2014

Silver falls to a lower state

The recent pummeling in price undergone by the precious metals is tied largely to the strength of the US dollar. Said strength appears to have passed its peak. While gold has not suffered any significant technical damage, the same cannot be said for silver.

I have been reconstructing phase space portraits to try to understand the dynamics of complex climatic and financial systems. The phase space portrait summarizes the differential dynamics in a way that illustrates multistability in these systems; meaning that for a given set of inputs and boundary conditions, the system possesses more than one equilibrium. Which equilibrium comes into play depends on the entire history of the system--hence such systems are also described as having long memory (pdf).

When silver collapsed in price last year, it appeared that it was headed for a previously established equilibrium in the $17 range. Instead, it stopped short and began filling in a new area of stability (S3 in this post).

The last six weeks have not been kind (figure below is on a linear scale).

The phase space has slipped out of S3 and has moved into the S2 area of stability. Is this a brief excursion or a long-term event? The past history of the moves in silver have had real consequences if the phase space enters a previously defined area of stability, commonly remaining in the area of stability for about a year. This suggests silver will remain in this area for some time.

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