We recently completed some interesting research related to one of our newest Custom Indexes – the Commodities to Smart Cash Index (C2SC Heat Index) – weighted by the US Dollar and VIX. We’ve been reviewing this new index for months watching it to see how it reacts to various trends in Lumber, Gold, Treasury Yields, the Smart Cash Index, and other weighted values. Recently, we added the Fed Funds Rate to this chart and suddenly things took on a different perspective.
We had drawn horizontal lines on the Commodities to Smart Cash index highlighting historical high, low, and confluence price levels. Historically, when we see a chart that channels in a sideways range, one can often identify high and low price thresholds while also trying to find a confluence level (where a continued rise or decline in price is likely to continue). We can see how the US Fed reacted to rising inflationary concerns almost immediately as the C2SC Index rose near or abov
Humans running Wetware 1.0 (which is all of us) love to gamble, and we are entranced by
the thrill of victory and
the agony of defeat. When there’s a market for speculation, these wild swings of emotion manifest as euphoria (I’m winning!) and fear (I’m losing).
Thus the soaring price of goats due to speculation in 1740 B.C. Babylon so vexed Hammurabi that he ordered the execution of those he deemed responsible for profiteering off their clever speculative manipulation.
Speaking of goats, let’s ask a GOAT (greatest of all time) question: what’s the greatest bubble of all time (GBOAT)? The easiest way to measure speculative bubbles is the starting price and the peak price, but that may not do justice to the question. Perhaps