Interweaving threads from science, politics, economics, and history.
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).
So let's give him (her?) something to read about, shall we?
Over the past few years I have use reconstructed phase space portraits to try to gain some insight into dynamic systems. Key features that we can identify in these diagrams are areas of stability, where some parameter is trapped into a fairly narrow range for a period of time. It appears to be nearly universal in interesting systems that there are multiple metastable equilibria, meaning more than one area where the system is stable--such systems are characterized by long periods of quiescence punctuated by rapid bursts of activity (volatility).
Since the plot shows the trajectory of the system through time, an area of stability is an area of phase space in which the system remains trapped for a long period of time relative to the shorter periods of time in which the system shifts from one region of the graph to another.
In the above phase space plot of gold x USDX, there are three regions of stability--one centered at about the 650 level, one at about the 1050 level, and one at about the 1350 level. The system has been locked into the area of stability at the 1050 level since about July 2013.
These areas of stability actually have nothing to do with gold or the US dollar. They exist because of mass psychology; and the sudden changes from one region of stability to another is a function of a rapid change in the perception of value.
What I usually look for in these plots is a sign of a breakout from an area of attraction. For instance, last week's print appears just outside the middle region of attraction. It isn't far enough outside the border (which has been placed in completely arbitrary fashion), but if the system trajectory continues to extend in its current direction for a couple more weeks, I would conclude the system is heading towards the area of attraction at the 1350 level.
Complicating this simple picture is the phase space portrait just for gold, seen below.
This graph looks remarkably like the phase space diagram for gold x USDX: there are three areas of attraction, and the system has been mired in the middle one for about a year-and-a-half. But there is a major difference--the present gold price is nowhere near to breaking out of its current area of attraction. It is currently somewhere in the middle of it, having spent most of the past year near the bottom of it.
So one chart suggests an imminent breakout, and one does not. Can they both be true?
The target for gold x USDX (assuming we do get a breakout) would be in the 1350 range, and it would be reached in about 18 weeks. Given the rate of rise of the US dollar, it would not be surprising if it reaches the 100 level in this time. The 1350 level, in this case, would be reached with a gold price of $1350 per oz, which would still be within the current area of attraction for the gold price.
It doesn't seem reasonable for both gold and the US dollar to rise so far together, unless we either accept Richard Russel's suggestion that debt represents a short position against the US dollar, or we are seeing the beginnings of a move in money down Exter's Pyramid.
Driving around over the Great Loess Plain of China, you eventually come to Luo Yang, home of the peony festival. Not too many peonies around this time of year, but the city is famous for other reasons, including the Longmen Grottoes, a UNESCO World heritage site.
The grottoes are small caves that have carved out of a limestone cliff. They are decorated with sculptures representing buddha, boddhisatvas, guardians, and pagodas. The sculptures were all created between the late fifth century (C.E.) and the early 12th century.
View from Xiangshan temple
There are about 1400 caves and over 100,000 carvings (including some very small ones).
Progressive details in Leigutaizhongdong Cave.
Large sculptures of Feng Xian Si (the large grotto in the top two images).
A small reflection of the grottoes is found in the loess cliffs along the highway near Luo Yang. I call these hobbit holes, even though they aren't dwellings. Some of them are brick-lined, but most appear to be for manufacture.
Loess is quite cohesive, and there are regions in China where people live in the stuff. It is pretty stable until there is an earthquake, at which point the casualties can be horrific.
My approach is slightly different, although the implications are the same. Instead of looking at just the gold price, I have been looking at the product of the gold price in US dollars and the US dollar index. For most gold mining companies (outside the USA), this product has a strong impact on the economics of their mining operations.
If the gold price remains constant while the US dollar index rises, a mining company in Ghana may get the same number of dollars per ounce, but the purchasing power of those dollars rises. The result is higher profit. In fact, rising US dollar (with near constant gold price) is politically more favourable for producing miners--I have never seen a government slap a 'windfall tax' on a mine because of the rising dollar. Such things tend to only occur when the gold price rises.
On a scatterplot of gold vs US dollar index, the loci of constant gold x USDX values were hyperbolae called isoquants.
A couple of months ago, I was looking for a breakout of gold x USDX. We certainly have one now. The size of the current breakout is revealed on the chart of the gold x USDX below.
Gold x USDX has leaped up towards the 1200 level. The last time this product was higher than its present value was on May 10, 2013, when gold was $1426/oz and the US dollar index was a little over 84.
The current move we are looking at does look out of place in comparison to the last 20 months or so. The chart above suggests that there is a long way to go to get back to the good times of 2011. At some point, however, the rate of ascent has to decline or we'll face another collapse.
There are only a few galleries, dealing with Neolithic artifacts (bone and stone tools), pottery from early dynastic times, bronze from slightly more recent dynastic times, and carved stone (generally of boddhisatvas).
A lot of my interest is in magic, money, mysticism, and music, so we'll start with those.
It wouldn't be music in China without bronze bells.
The museum mainly focused on artifacts found in the vicinity of Zhengzhou, which is an area that was settled in very early times. The exhibits are quite limited in comparison with the Henan museum--no gold, no jade--but on the other hand, there are no crowds.