Do bubbles lurk in metals?

Sugar bubble has burst. Analysis posted earlier on this blog was correct but... it was not accurate enough to make money out of it.

Now again I’m turning my attention to commodities but this time to metals as my intuition tells me that the bubble may lurks in there. My intuition is driven by increasing cross correlation of base and precious metals. This time on top of estimating LPPL I also plan to implement Minimum Spanning Tree (MST) to get more insight in to the metal markets topology. This project is partially inspired by Paweł Sieczka and Janusz Hołys research paper (link here).

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Organic mechanics – complex networks in finance. FT article

In today’s FT you can find a very interesting article about implementation of complex networks in finance. The article is also an indication that more and more economists became aware that “Efficient Market Hypothesis” does not explain market behavior and that there are better models (i.e George Soros reflexivity or Andrew Lo Adaptive Markets Hypothesis). Full article you can find here

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Two interesting papers worth reading

Complex Systems: From Nuclear Physics to Financial Markets

Multifractal analysis and instability index of prior-to-crash market situations

Enjoy!

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