The Second Wave of the Global Crisis? A Log-Periodic Oscillation Analysis of Commodity Price Series
This article continues our analysis of the gold price dynamics that was published in December 2010 (abs/1012.4118) and forecasted the possibility of the "burst of the gold bubble" in April - June 2011. Our recent analysis suggests the possibility of one more substantial fluctuation before the final collapse in July 2011. On the other hand, in early 2011 we detected a number of other commodity bubbles and forecasted the start of their collapse in May - June 2011. We demonstrate that this collapse has actually begun, which in conjunction with the forthcoming burst of the gold bubble suggests that the World System is entering a bifurcation zone bearing rather high risks of the second wave of the global financial-economic crisis. Indeed, on the one hand, it is obvious that such a collapse may lead to huge losses or even bankruptcies of many of the major participants of exchange games and their dependent firms and banks. Therefore, the immediate market reaction is likely to be entirely negative. Negative impact on the market could well be amplified by numerous publications in the media and business press, drawing analogies with the events of the early 1980s and earlier similar events, as well as by losses of shareholders of bankrupt companies. On the other hand, investments in gold also lead to the diversion of funds from stock market investments and to the reduction in the production of goods and services. If at the time of the collapse some promising areas of investment appear in the developed and / or developing countries, the investment can move to those markets, which, on the contrary, could contribute to the production of new goods and services and accelerate the way out of the crisis. It is also obvious that the decline of the oil (and other energy/mineral resources) prices may contribute to acceleration of world economic growth rates and world economic recovery.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anders Johansen & Didier Sornette, 1999. "Critical Crashes," Papers cond-mat/9901035, arXiv.org.
- D. Sornette & A. Johansen, 2001. "Significance of log-periodic precursors to financial crashes," Papers cond-mat/0106520, arXiv.org.
- Sornette, Didier & Johansen, Anders, 1997. "Large financial crashes," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 245(3), pages 411-422.
- D. Sornette & A. Johansen, 2001. "Significance of log-periodic precursors to financial crashes," Quantitative Finance, Taylor & Francis Journals, vol. 1(4), pages 452-471.
- Sornette, Didier & Johansen, Anders, 1998. "A hierarchical model of financial crashes," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 261(3), pages 581-598.
When requesting a correction, please mention this item's handle: RePEc:arx:papers:1107.0480. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.