Last time I looked at the significance of rising gold price and dollar index and their impact on profitability of gold mining companies. One way to study this is to calculate the product of the gold price (in US dollars per ounce) and the US dollar index, divided by 100 to make the numbers easier to use.
As described here, I have been using reconstructed phase space portraits as an aid to describing dynamical behaviour of complex systems. The simplest way of reconstructing these is through the use of time-delay method, in which the value of a parameter is plotted against a lagged copy of itself. These plots show the evolution of the system illustrated by the succession of states through time. Typically, systems will remain locked in relative equilibria for substantial periods of time, punctuated by bursts of rapid evolution to a new area of stability.
Eighteen months ago, for instance, the reconstructed state space for the gold price x USDX over the preceding seven years was easily described by a rising phase, followed by a multi-year cycle that carried it from the middle of the plot to the circled area at the upper right, until in mid-2013 when it broke down and returned to the middle equilibrium.
The system has been locked in the middle equilibrium until what looks to be a breakout, immediately after the Brexit vote.
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It has pushed the boundaries of that equilibrium in the last three years, but the action of the past few weeks is looking decisive. I expect to see gold x USD ascend and reach a stability in the 1400 range, which puts the told price near $1450/oz, given the current strength in the US dollar.
As described here, I have been using reconstructed phase space portraits as an aid to describing dynamical behaviour of complex systems. The simplest way of reconstructing these is through the use of time-delay method, in which the value of a parameter is plotted against a lagged copy of itself. These plots show the evolution of the system illustrated by the succession of states through time. Typically, systems will remain locked in relative equilibria for substantial periods of time, punctuated by bursts of rapid evolution to a new area of stability.
Eighteen months ago, for instance, the reconstructed state space for the gold price x USDX over the preceding seven years was easily described by a rising phase, followed by a multi-year cycle that carried it from the middle of the plot to the circled area at the upper right, until in mid-2013 when it broke down and returned to the middle equilibrium.
The system has been locked in the middle equilibrium until what looks to be a breakout, immediately after the Brexit vote.
It has pushed the boundaries of that equilibrium in the last three years, but the action of the past few weeks is looking decisive. I expect to see gold x USD ascend and reach a stability in the 1400 range, which puts the told price near $1450/oz, given the current strength in the US dollar.
log log Pound and Euro currencies measured in dollars
ReplyDeletehttps://fred.stlouisfed.org/graph/?g=6NI9
Soros, said the pound could loose 15% in the Brexit.
ReplyDeleteI calculated that it lost from near the vote to the low was about 14%. That looks like he is better at macroeconomics than most.