Forex Gold Strategy Update as of 1/31/2010

OUTSTANDING ORDERS @01/21/2010 settled by 01/31/2010
o/s xauusd 0.02 buy 1090.00 closed on 01/26 +20.30

New Orders since 01/21, already settled – ALL are GOLD BUY orders (XAUUSD)
Date of entry / Lot size / Buy Price / Date of Settlement / Net Profit
None

New Orders Since 01/21, still outstanding as of today – ALL BUY GOLD positions
Date of purchase / Lot size / buy-in price
1/27   0.02   1090.00
1/28   0.02   1080.00

Current Equity Balance: $2,096.28.

Osama bin Laden Jumps on the Climate Change Bandwagon

First, I provide the article, and then I provide a secret conversation that has been lent only to us at Digital Diatribes, as to how this all came about!

CAIRO – Osama bin Laden sought to draw a wider public into his fight against the United States in a new message Friday, dropping his usual talk of religion and holy war and focusing instead on an unexpected topic: global warming.

The al-Qaida leader blamed the United States and other industrialized nations for climate change and said the only way to prevent disaster was to break the American economy, calling on the world to boycott U.S. goods and stop using the dollar.

“The effects of global warming have touched every continent. Drought and deserts are spreading, while from the other floods and hurricanes unseen before the previous decades have now become frequent,” bin Laden said in the audiotape, aired on the Arab TV network Al-Jazeera.

The terror leader noted Washington’s rejection of the Kyoto Protocol aimed at reducing greenhouse gases and painted the United States as in the thrall of major corporations that he said “are the true criminals against the global climate” and are to blame for the global economic crisis, driving “tens of millions into poverty and unemployment.”

Bin Laden and other al-Qaida leaders have mentioned global warming and struck an anti-globalization tone in previous tapes and videos. But the latest was the first message by bin Laden solely dedicated to the topic. It was also nearly entirely empty of the Islamic militant rhetoric that usually fills his declarations.

The change in rhetoric aims to give al-Qaida’s message an appeal beyond hardcore Islamic militants, said Evan Kohlmann, of globalterroralert.com, a private, U.S.-based terrorism analysis group.

“It’s a bridge issue,” Kohlmann said. “They are looking to appeal to people who don’t necessarily love al-Qaida but who are angry at the U.S. and the West, to galvanize them against the West” and make them more receptive to “alternative solutions like adopting violence for the cause.”

And now, the transcript from a secret conversation. Translated, of course:

[Bin Laden to inner circle]We must hit them hard. We must come out with a statement that will make the infidels quake in their overpriced Caterpillar boots.

Person #1: Osama, we have been working on a statement based on intelligence that tells us there is one thing that is striking fear in the hearts of these pagans. We must strike now, when – as they say in the West – the iron is hot.

Bin Laden: Do not give me sayings of the West, you blasphemer! What other phrase can we use to express the urgency of this matter?

Person #2: There is a great Persian saying, my eminence, about shaving the goat while it is eating the roots of the fallen tree.

Bin Laden: Blessings and thanks to you, my friend for bringing us back in proper focus. Now, Mohammed… what is this message for which we shall strike fear and trembling into the hearts of our sworn enemies?

Person #1: We have been following the infidel Albert Gore and the treacherous UN council labeled the IPCC. It seems as if they have already started the job for us. There is this concept of Climate Change for which they are creating all sorts of fantastical ideas about coming catastrophe.

Bin Laden: Indeed? Could it be that we can sit idly by and simply watch the destruction of the Western heathens without lifting a finger ourselves?

Person #2: Allah be praised if that were to happen, my clerical wonder. However, it is more likely that this is simply a ploy of exaggeration to – as they say in Persia – line their robes with peacock feathers.

Bin Laden: (grunt, and wave of hand) You speak to me of greedy unbelievers? Why do we spend our time with this prattle.

Person #1: Osama, they are being quite effective in causing angst and creating a sense of doom among their own people.

Bin Laden: Hmmm.. I think I understand. To what end might this lead?

Person #2: With Allah’s help, to their own destruction, my liege. You see, the infidels are prepared to engage in punitive taxation to supposedly combat the problem. They are to restrict all manner of energy independence with their own fuel resources. The people, it seems, are quite willing to – as they say in Persia – drown their own camels with the water from their own humps.

Person #1: What? I’ve never heard any such saying, Persia or otherwise!

Person #2: Um… I am quite certain…

Person #1: And the hump is a fat store, you fool! Admit it! You made that up!

Bin Laden: Enough! How is it do you suggest we take advantage of this?

Person #1: A stern statement against the policies of the West, blaming their infidel policies for causing climate change would be most certain to panic these Western swine into self-destruction! Taxes would rain like blood on the land, and carbon credits would starve competition. It would be quite wonderful.

Bin Laden: While I prefer something a bit more… exciting… I can appreciate this as one leg of the stool in our ongoing attack against the West. Please draft a statement, which I will then read and record, and present to the world in my usual dramatic fashion.

Person #2: As you, by Allah, command.

Curve-Fitting the ENSO Index Suggests We Have the Highest El Nino Event since 1998

ENSO Index and Fitted Curves @ 12/31/2009

I’ve continued to work, as I have the time to, on pulling the Oceanic Oscillation data, developing a fitting spreadsheet for each index, to get some idea of what the underlying cyclical nature of the oscillations may be.

I decided to post the above chart on ENSO, since I (a) completed it, (b) we’re currently in the midst of an El Nino, and (c) most amateur climatologists know about it and occasionally like to take a look at it.

The source for the data can be found on the right side of this page. The largest hurdle in the curve-fitting is that good(?) data only goes back to 1950. Even this may be a little questionable, and from what I’ve read, any proxied data prior to that is even less reliable. But, we’ll run with the data we have with the caveat that is always there about analysis only being as good as the accuracy of the data and all that.

I’ve been very interested in trying to understand the tendency of these oscillations to cycle (or not cycle, as the case may be). The ENSO index, in particular, can have the appearance of a random variation with no particular pattern.

At this point, I need to explain what I did here, and then I need to explain what I am saying and what I am not saying regarding the conclusions.

PROCESS

1) I have simultaneouosly fitted a long-period wave and a short-period wave to the ENSO data
2) The following elements have been fitted:

For the long period wave:

1.  Best fit sine wave with a period of at least 30 years
2. A scale factor to determine amplitude of the wave
3. A phase increment amount to determine the length of the wave
4. A starting point on the wave cycle to be fitted at the beginning of the data
5. A vertical shift, to account for bias in the zero-anomaly base assumption
6. A slope of linear trend

For the short wave:

1. Best fit sine wave with a period less than 30 years
2. A scale factor for amplitude
3. A phase increment amount to determine cycle length
4. A start point on the wave at the beginning of the data

There is no shift or trend determined on the short wave determination, since this will follow the path of the long wave.

Through a simultaneous and recursive process, all these elements are simultaneously solved to produce the minimum value of squared differences from the point on the short wave to actual ENSO index readings.   The ultimate solution is not necessarily incorporating the best-fitted long wave taken in isolation.   I initially ran the long-wave fit first, and then separately ran the best fit short wave along that curve.   Moving to running everything simultaneously helped the overall fit and actually reduced the length of the long-wave.    The difference is not huge, but since it is the best fit and the results appear reasonable, I went with that.

RESULTS

The results of this analysis show a 50.5 year ENSO cycle that underlies the shorter-term variations.   I have shown this before, and it is an interesting consideration in evaluating the relative magnitude of certain ENSO events, not so much as it relates to the zero value, but as it relates to the long-term wave.   The current long-term wave is on a decline, and may, in fact, be bottoming out in another four or five years.

The starting point is just past the halfway mark of the cycle, so we see a lower-index period at the beginning of the chart.  The amplitude of the wave is about 0.32 at its peak.   So, from top to bottom (with no linear trend) there is a difference of 0.64 in the magnitude contributed to ENSO events from one period to another, depending on where the long-term cycle is at.

There seems to be, in addition to the cycle, a linear trend in the data for which the long-term cycle moves along, at least since 1950.   It may be that there is a third cycle that is substantially longer that is being mistaken for a linear trend.   This may matter in the long run, but for a 60-year time period the linear approximation should suffice.   However, it may well be that we need a number of additional years of data to better fit this and judge whether or not there is a linear trend, or some other cycle at work.  For now, though, I go with the best fit, and for that the rate of change is 0.7 degrees Celsius per century.

This long wave is being fit simultaneously with a short wave placed on its path.   The period of this short wave is 4.93 years.  Its scale is 0.49.   So, at the top of this wave, plus the top of the long wave, we are adding 0.81 degrees to the ENSO index.   The first wave starts at about the 220 degree mark of a cycle.

Key Assumptions (What I’m doing versus what I’m suggesting)

There are a couple key assumptions here.  The primary assumption is the selection of a sine wave for fitting.  I am not saying this is the best assumption.  All I am saying is, given this assumption, there is a best fit.   As I look at the data, it actually doesn’t do too bad a job in aligning with peaks and valleys.  However, it is far from perfect.   There are other ways to manipulate this, if desired.  One can select a skewing assumption so that the wave peaks earlier or later in the cycle than at 90/270 degrees.   Or, once can assume that there is a factor that compresses or expands length over time (or both in some oscillating pattern over years).   Another thing to look at is to see if the length of sunspot cycles impacts the difference in timing of ENSO peaks/valleys, as I’ve seen suggested.

All these are potential refinements that could improve results.   However, all that said, I still think there are some interesting results here.   The most significant El Nino events do seem to correspond well with peaks in both waves.

The other assumption is that there are two cycles to consider.  A third assumption that can be questioned is the validity of a linear trend in the data.

DEVIATIONS

One may think that the waves represent the anticipated direction of the ENSO index.  That is actually not what the waves imply.  The red wave pattern marks the “starting point” for the current index.  From there, deviations may go up or down.    This may be the most confusing aspect on how to read the chart.   It’s not so much about predicting El Nino or La Nina, it’s about showing how the ultimate magnitude is affected.

Examples:

June 1955 ENSO index = -2.270; Wave value = -0.76.  Negative deviation = -1.51

September 1973 ENSO index = -1.71; Wave value = +0.20.  Negative deviation = -1.91.

One could argue that the 1973 event was substantially more profound than the 1955 event, even though the actual ENSO index reading was lower in 1955.

Likewise:

The most profound El Nino event, in terms of a deviation from the underlying wave, actually occurred in 1983 – not 1998.  The March 1983 reading = 3.11, and the wave value = 0.77, for a differential of 2.34.    The maximum deviation during the “Super El Nino” was actually August 1997 – a difference of 2.03.

In fact, we actually have a fairly significant event occurring right now.   The December 2009 deviation from the wave is +1.54, which is the largest difference since April of 1998!

Random Post (i.e. I meant to put this under “Political Diatribes”): Robot Phil

Phil just wants to be free, so he can be eaten by another animal.

My favorite activist group is PETA.

They are a great source of entertainment and over-the-top extremism that gives normal people like you and me ample opportunity to reflect, pause, and thank God that our brains don’t think the way their collective mind does.

I offer the following as the latest evidence. It would annoy me if it weren’t just flat-out stupid.

I actually feel sorry for those PETA members who take their activism seriously and then have to deal with things like this.

PETA: Use a robot on Groundhog’s day. (a.k.a. don’t even ask us how we came up with this idea)

PUNXSUTAWNEY, Pa. – An animal rights group wants organizers of Pennsylvania’s Groundhog Day festival to replace Punxsutawney Phil with a robotic stand-in.

People for the Ethical Treatment of Animals says it’s unfair to keep the animal in captivity and subject him to the huge crowds and bright lights that accompany tens of thousands of revelers each Feb. 2 in Punxsutawney, a tiny borough about 65 miles northeast of Pittsburgh. PETA is suggesting the use of an animatronic model.

But William Deeley, president of the Inner Circle of the Punxsutawney Groundhog Club, says the animal is “being treated better than the average child in Pennsylvania.” The groundhog is kept in a climate-controlled environment and is inspected annually by the state Department of Agriculture.

No word yet on whether or not PETA will demand that the average Pennsylvania child now be inspected annually by the state Department of Agriculture.

Account Statement #2

See this post for the transactions through November 20, 2009 on Gold trading.

What follows is the transactions since then to bring us current:

OUTSTANDING ORDERS @11/30 settled by today
o/s xauusd 0.01 buy 1180.00 closed on 12/1 +5.00
o/s xauusd 0.01 sell 950.45 closed on 12/1 -235.99

Note on that transaction: it should never have happened. I had accidentally activated an automatic program that used stop loss placements and did not realize it until it had executed this order. I should still have this as an open position. If I did, it would put me in a further negative carried p/l position, but my realized balance would be offset positively. Stupid mistake on my part. Needless to say, I changed my settings to eliminate the possibility of repeating that kind of error.

o/s buy 0.01 xauusd 1190.00 closed 12/1 +2.50
o/s buy 0.01 usdchf 1.0476 closed 12/17 +2.29
o/s sell 0.01 eurusd 1.4474 closed 12/17 +0.80
o/s sell 0.01 eurusd 1.4325 closed 12/18 +0.88
o/s sell 0.02 eurusd 1.4264 closed 12/22 +1.42
o/s buy 0.01 usdjpy 93.05 closed 1/7/2010 +2.89
o/s sell 0.01 eurusd 1.4206 closed 1/20/10 +0.53

New Orders since 11/30, already settled – ALL are GOLD BUY orders (XAUUSD)
Date of entry / Lot size / Buy Price / Date of Settlement / Net Profit
12/1 0.01 1198.86 12/2 3.64
12/2 0.01 1210.00 12/2 2.50
12/2 0.01 1210.00 12/2 2.50
12/2 0.01 1208.81 12/2 3.69
12/3 0.01 1210.00 12/3 5.00
12/3 0.01 1210.00 12/3 5.00
12/4 0.01 1150.00 11/11 10.15
12/7 0.01 1140.00 12/7 22.50
12/8 0.01 1140 1/11 16.20
12/8 0.01 1130 1/11 24.95
12/9 0.01 1120.00 12/10 12.15
12/11 0.01 1110.00 12/16 20.15
12/11 0.01 1120.00 12/16 17.70
12/17 0.01 1100.00 1/4 22.23
12/17 0.01 1110.00 1/6 20.88
12/17 0.01 1120.00 1/6 15.38
12/22 0.02 1080.00 12/24 46.29
12/22 0.02 1090.00 12/28 44.89
12/30 0.02 1090.00 1/4 64.19
1/12 0.02 1130.00 1/14 30.18
1/13 0.02 1120.00 1/14 48.98

New Orders Since 11/30, still outstanding as of today – ALL BUY GOLD positions
Date of purchase / Lot size / buy-in price
12/3 0.01 1220.00
12/3 0.01 1210.00
12/4 0.01 1200.00
12/4 0.01 1190.00
12/4 0.01 1180.00
12/4 0.01 1170.00
12/4 0.01 1160.00
1/11 0.01 1150.00
1/12 0.01 1140.00
1/15 0.01 1130.00
1/20 0.02 1120.00
1/20 0.02 1110.00
1/21 0.02 1100.00
1/21 0.02 1090.00

Current Equity Balance: $2,216.07.

Good progress from the last statement, though still actually down from the beginning, accounting for the $1000 cash infusion discussed on the last statement.

This is expected. This strategy almost requires an initial dip in equity as you accumulate positions, You actually want the market to move against you at times to accumulate positions, assuming at some point it turns back and allows you to take profits. ideally, the market settles into a somewhat volatile market, but within a particular range. But trending markets are nice occasionally to load up or cash in, depending on the direction of the move. The key is to maintain funds to accommodate the moves against you, and there may be times you have a major move against your equity position, but all in the name of future profits. You can only use this strategy if you do not need your funds available, as you need to count on them being tied up for some time, and your profit goals are long-term, not short-term.

We’re all caught up now. I’ll update you once or twice a month.

A Quick Recognition of Fine Work

I have added Bob Tisdale to my blogroll, and I want to take this opportunity to encourage visitors to take advantage of some of the superb information that is out there from people smarter and more capable than I am.

I have had only limited opportunity to review Bob’s work, but from going to his blog directly and from readong guest posts elsewhere, it is clear that he’s a smart guy who puts a lot of effort into his work. Please check his site out. A link is now to the right.

While I’m at it, ALL the blogs under my blogroll have been placed there for a reason. Some used to be more active than they are now, but I keep them there as a source of some interesting older information if that is the case.

In particluar, I’d like to highlight a couple of them. Most of you who keep up to date on climate blogs will no doubt already be well aware – and probably frequent – these sites. But for newbies, I’d like to highlight some sites that have been particularly fruitful for my own expansion of knowledge in this arena:

1) Climate Audit does a fantastic job at the menial task of ripping apart data, auditing reports and papers and results. It is valuable work that I have no desire to perform myself, but to whom I applaud those who do. Steve is tops in his field at this, and if you really want to understand the nitty gritty behind what the details are about within the community of skeptics, this is a great resource. If you’re not technically or analytically minded, it will be boring as hell. Just being honest.

2) Lucia’s Blackboard does a great job with many of the statistical issues in analyzing trend and data.

3) The Air Vent may be my personal favorite. Similar to Steve at Climate Audit, Jeff will practically kill himself trying to recreate the process of how some author of some paper came to a particular conclusion. Unlike Steve, Jeff doesn’t give much of a hoot about being politically correct or balanced in his opinion. So, he also puts a lot of entertaining stories and rants on his site.

4) Watts Up With That is the Kingpin of climate sites. Anthony doesn’t necessarily do much hard analysis on his own, but he took a site, put a lot of work into it, brought his own expertise as a meteorologist into the mix, and really provided an initial push that fed a crowd that was looking for the type of information he was willing to provide. He offers many guest posts across the spectrum of climate related subject matter, so his site really represents a great cross-section of news on the solar front, the ocean front, the temperature front, and the political front. Sometimes just a video or a news story, sometimes opinionated, sometimes quite analytical, if there’s only one site to go to on a daily basis, this is probably the one.

The others that I did not list are not unworthy. I consider the above list the Cadillacs. These are the ones I check out very consistently. The others are worthy of your time and review, as well.

And thanks, as well, for those who check out Digital Diatribes. I can only hope you find the site worthy of whatever time you spend here.

Account Statements from Gold Trading

In a post last week I laid out my gold trading strategy. In all fairness, if I’m going to do such a thing, I should provide real-life results from the strategy.

I am going to start with the October 31, 2009 statement. It should be noted that at the time I was carrying positions in items other than gold, and had been dabbling in other strategies. In fact, I still carry some of those positions, so this isn’t entirely the gold strategy, but all new positions have been only placed using the new strategy.

As I mentioned, this is a long-term strategy, and it is the very nature of the strategy to have carried positions at negative profit. That’s because profits are taken fairly quickly and banked, leaving only those positions yet to achieve profit.

As of the statement ending October 31, 2009, I had the following balance sheet:

Balance = $2,309.57
Carried positions: -$949.11
Equity: $1,360.46

The balance is the amount from realized positions, and the equity is the amount you have to work with today including unrealized positions. Both numbers are important, since you don’t actually lose your money until you close the position, but on the otehr hand you need to maintain positive equity or your broker will close you out at a loss.

As of 10/31/2009 I carried the following positions:
BUY USDCHF LOT SIZE 0.01 @ 1.0802, 1.0700, 1.0750, 1.0632, 1.0476 (5 positions)
BUY USDJPY LOT SIZE 0.01 @ 95.00, 94.50, 93.87, 93.05 (4 positions)
SELL XAUUSD (Gold) LOT SIZE 0.01 @ 950.45, 956.55, 963.90, 972.00 (4 positions)
SELL EURUSD LOT SIZE 0.01 @ 1.4206, 1.4264, 1.4264, 1.4325, 1.4474 (5 positions)
BUY XAUUSD LOT SIZE 0.01 @ 1040.00, 1050.00, 1060.00 (3 positions)

OK, this will be tedious, but it’s an establishment of history… NOVEMBER transactions:
o/s XAUUSD BUY @ 1040 closed on 11/2, +$9.99 profit
o/s XAUUSD BUY @ 1050 closed on 11/2, +7.49
o/s XAUUSD BUY @ 1060 closed on 11/3, +4.99
11/3 buy 0.01 xauusd @ 1060.00 closed 11/3 +5.00
11/3 buy 0.01 xauusd @ 1070.1 closed 11/3 +2.40
11/4 buy 0.01 xauusd @ 1090.1 closed 11/4 +2.40
11/4 buy 0.01 xauusd @ 1090.00 closed 11/4 +2.50
11/4 buy 0.01 xauusd @ 1089.76 closed 11/4 +2.74
11/5 buy 0.01 xauusd @ 1090.00 closed 11/5 +2.50
11/5 buy 0.01 xauusd @ 1090.00 closed 11/5 +2.50
11/5 buy 0.01 xauusd @ 1090.00 closed 11/5 +2.50
11/5 buy 0.01 xauusd @ 1090.00 closed 11/6 +2.50
11/6 buy 0.01 xauusd @ 1090.00 closed 11/6 +2.50
11/6 buy 0.01 xauusd @ 1100.80 closed 11/9 +1.70
11/10 buy 0.01 xauusd @ 1100.00 closed 11/10 +5.00
11/10 buy 0.01 xauusd @ 1100.00 closed 11/10 +4.25
11/9 buy 0.01 xauusd @ 1110.42 closed 11/11 +2.08
11/12 buy 0.01 xauusd @ 1120.00 closed 11/12 +2.50
11/12 buy 0.01 xauusd @ 1113.66 closed 11/12 +2.50
11/13 buy 0.01 xauusd @ 1106.06 closed 11/13 +2.60
11/12 buy 0.01 xauusd @ 1110.00 closed 11/13 +5.00
11/13 buy 0.01 xauusd @ 1114.26 closed 11/13 +2.50
11/16 buy 0.01 xauusd @ 1125.15 closed 11/16 +1.58
11/16 buy 0.01 xauusd @ 1130.05 closed 11/16 +2.45
11/16 buy 0.01 xauusd @ 1129.46 closed 11/16 +3.04
11/16 buy 0.01 xauusd @ 1130.00 closed 11/16 +2.50
11/16 buy 0.01 xauusd @ 1140.05 closed 11/16 +2.45
11/17 buy 0.01 xauusd @ 1130.00 closed 11/17 +5.00
11/16 buy 0.01 xauusd @ 1140.00 closed 11/18 +2.50
11/18 buy 0.01 xauusd @ 1140.00 closed 11/18 +2.50
11/18 buy 0.01 xauusd @ 1150.05 closed 11/18 +2.45
11/19 buy 0.01 xauusd @ 1140.00 closed 11/19 +5.00
11/20 buy 0.01 xauusd @ 1140.00 closed 11/20 +5.00
11/18 buy 0.01 xauusd @ 1144.11 closed 11/20 +6.68
11/24 buy 0.01 xauusd @ 1160.00 closed 11/24 +5.00
11/23 buy 0.01 xauusd @ 1170.00 closed 11/25 +2.50
11/25 buy 0.01 xauusd @ 1179.34 closed 11/25 +3.16
11/25 WIRE TRANSFER +1000.00
11/26 buy 0.01 xauusd @ 1190.00 closed 11/26 +2.50
11/27 buy 0.01 xauusd @ 1140.00 closed 11/27 +15.00
11/27 buy 0.01 xauusd @ 1150.00 closed 11/27 +12.50
11/27 buy 0.01 xauusd @ 1160.00 closed 11/27 +10.00
11/27 buy 0.01 xauusd @ 1170.00 closed 11/27 +7.50
11/30 buy 0.01 xauusd @ 1170.00 closed 11/30 +7.50
11/30 buy 0.01 xauusd @ 1170.00 closed 11/30 +5.45
11/27 buy 0.01 xauusd @ 1180.00 open as of 11/30
11/26 buy 0.01 xauusd @ 1190.00 open as of 11/30

OK, now it gets a little confusing… new regulations went into play during November where positions must be settled on a First-In-First-Out basis within the same currency, and hedged positions are actually settled against each other. However, the trading platform allows you to engage in business as usual to enable you to maintain your strategy and continue trading your strategy as desired. The implications of this is that the actual settlement in your account reduces your actual balance significantly from where it would otherwise be, but it also reduces your outstanding profit/loss position. Reconciliation is tricky at this point between the trading platform and the account, but I’ve gone through the exercise and it all works out. So, the actual settlement as shown above is not actually the way it’s settled in reality. But the math works out the same, as if I really am settling according to that strategy. It’s all fairly confusing if you’re not working with this, but I point this out because the cash balance dropped significantly even with the $1000 cash infusion and I wanted to explain why that is. The equity is really the more important measure, anyway, but I like to track the cash balance, too.

The account at the end of November, then, after all the above, looks like:

Ending Cash on Deposit: $2,070.65
Unrealized Profit/Loss: -$482.49
Ending Account Equity: $1,588.16.

Equity increased by $228, but there was a cash infusion of $1000, so I actually had a loss. But all those numbers are positive? How could this be? The answer is because I have all these short, hedged positions and the market went the otehr way. So, while I took profit on my primary strategy, my unrealized losses grew significantly during November on the short positions. The plan is to hold those until I can eventually dump them at (hopefully) a small profit. This action is expected. It will take some time to build up the account to absorb completely market swings against your positions. Eventually I will get rid of these, and then the only time I will see hits to equity are in market downturns on Gold.

It’s pretty late right now, so I’ll tack on December and January when I have a chance. I’ll try to keep you updated as I go along.

It’s a Warm January – What Gives?

It’s kind of humorous watching the blogosphere play “It’s cold / it’s hot” tennis when these things happen. When it gets cold, the AGW-proponents grumble to themselves in silence as the skeptics/deniers/ throw out anecdote after anecdote of cold weather. Then when it gets hot, Gore’s fan club, no doubt emboldened and perturbed at the previous volley, come out swinging to once again announce the science is settled and Watts and Cavuto and others are nitwits with their collective heads in the sand.

Of course, we all try to adhere by a few rules, and few of us really adhere to them as completely as we should. The first is that “weather is not climate.” The second is that “the earth is complex, and variation happens on a day to day or month to month basis.”

But what fun is that?

And so, we delve into the question that has the pro-AGW crowd giddy with all sorts of excitement: Why did we just recently have the warmest January day in history (history meaning, since 1999), according to UAH? You can link to the site that tells us that here. You may need to recreate the chart, which is easy enough. Just hit “draw” and then select all the years and hit “redraw.” Make sure you’re on the “near surface” option.

As an official member of the community of skeptics, should I hide from this? Should I explain it away?

Nope. And the reason is simple: it is what it is. More important than any agenda-driven concerns, I’d rather give puzzling news that’s true, rather than a bunch of mumbo-jumbo that isn’t.

The truth is, I don’t know why we saw that sudden jump in temperature, just after a period where many places in the globe were seemingly getting hammered by cold and severe winter weather. And the real truth is that nobody else can possibly know why one or two days is suddenly so high. And let’s be honest – it was an impressive temperature reading. It’s not like it just barely nipped the 11-year record. It left no doubt. Further, the entire month of January promises to show a warm reading. Don’t fret about it. Accept it as the truth it is.

As I’ve said many times, we skeptics are somewhat in a corner. Most of us actually prefer warming – I know I do. But we don’t accept the AGW premise, and we see other evidence suggesting that we’re not warming – at least not catastrophically – and we have a desire to see these alarmists get their come-uppance that we, in a way, want to see it cool. But as perverse as that may be, it doesn’t hold a candle to the AGW crowd. You see, they get themselves so worked up over warming that they start seeing nice, warm, weather as a threat to existence rather than a nice, warm day. Instead of enjoying it, they lose sleep over their children’s futures and wonder why we can’t go back to the “good old days” where we had freezing rain throughout the month of April.

So, given all that introspection, let’s at least take a look at some obvious contributors to the warm beginning of 2010.

Exhibit One: El Nino.

There’s an El Nino that is impacting temperatures right now. Whenever there’s cooling during a La Nina, the pro-AGW crowd trips over themselves to point it out, but when there’s an El Nino up and about, they somehow fail to mention it when talking about -for example – how warm this January is shaping up to be.

The last 7 readings have exceeded 0.500, the traditional benchmark for El Nino. 3 readings in a row makes it official, so were well into a good old El Nino, which we know affects temps in an upward manner. And this may well make 2010 a nice, cozy year, since the December reading is the largest of the seven.

We know there’s a 4-6 month lag effect of El Nino (if I remember my facts as related to me from Bob Tisdale), so the first half of the year should reflect that, and if the El Nino persists we could see warmer temps throughout the year. This is a good thing, because my garden has had major issues the last couple years. Cool, damp weather really sucks for raising a garden.

It’s probably a stretch to suggest, as some do, that 2010 will be the warmest year ever, though. While we’ve gone up over 1.0 on the El Nino reading, it is by no means an unusually high value, and it pales in comparison to the consistently super-high values from 1997-98, which almost hit 3 at the highest point. There is nothing to indicate that we can expect such high values from this El Nino. I suppose anything can happen, though.

Exhibit Two: The AMO cycle.

The AMO had taken a dip below zero preceding last year’s ridiculously unpleasant summer, but the values jumped back up to levels above 0.2 a couple months ago, which is likely contributing to the January temps. But the AMO cycle overall has peaked, and while it will probably remain around these current levels, it won’t continue to rise any more, at least not on a prolonged basis. But current levels will contribute to a warmer 2010 than last year, but the contribution is really no more than the couple years before that and is very unlikely to reach levels from 2005-06.

Exhibit Three: Even the PDO is joining in the fun.

The PDO has gone into its long-term cold cycle, but variations about that wave still occur for short-term periods. We can see that it was quite negative over the last couple years. Over the last five months it has increased, even above zero in four of the five months. No doubt the lack of a negative PDO influence has also contributed to our nice January, and will start off 2010 with more pleasant temps than the previous couple years. There is little likelihood, though, that this will soar to levels that push 2010 to record temps, though temps are certainly likely to be higher than the last couple years.

Now, as for the spiking temperatures of a single day, you’re just going to have ask God about that when you see Him next. Even these shorter-term variations in these indices don’t explain day-to-day variations, but they can certainly help explain our elevated temperatures in January on a general basis. I’m sure there are numerous other contributors to climate and temperature that play a part, and sometimes these things happen to align themselves in such a way that a spike or dip occurs.

Quite honestly, it’s really a silly proposition to constantly be arguing about how climate change is about long-term trends, and then trumpet a daily temperature reading, but we’re all probably guilty as charged to one extent or another.

Waitaminnit… Cold Weather can Kill Stuff?

Warming is bad. Warming comes with a catastrophic cost. Warming does this, warming does that. If something bad has happened, it’s because of warming.

Oh, sure… the drivers of the debate have cleverly tried to re-coin the mantra to “climate change,” because that pretty much covers everything. And some have really taken license with this to move from the “Carbon causes warming” thought process to a more universal “Carbon causes everything, as long as it’s something bad” approach.

Most reasonable people have seen through that, though, and at the end of the day the debate still centers around warming. Is it warming? If so, how much is it warming? If it is warming, is it because of man? More specifically, is it because of Carbon Dioxide? Are cycles involved? All reasonable questions, and subject to much debate. But underlying the entire debate is an assumption that often gets lost in the overall debate: If it is warming, is that a bad thing?

It has been presented to us that cataclysmic events will occur if there is continued global warming in our future. These suppositions range from things that are fairly reasonable assumptions to things that are wild leaps of logic. It seems to be a reasonable argument that runaway warming could cause ice to melt and sea levels to rise. The question is to what extent, and whether or not it could be dealt with reasonably well. Other claims of worldwide disasters are borderline goofy. Idiots like Danny Glover start claiming that Carbon emissions lead to earthquakes, for example. I remember similar claims after the 2005 Christmas tsunami. Claims that certain things like hurricane frequency and intensity make a little more sense, though there are very divergent thoughts on whether or not warming will actually increase or whether it would mitigate the effects of hurricanes.

Often lost in the debate is what has actually happened from a broad perspective. It’s easy to look at a devastating hurricane and just assume it was really bad because of warming, and then conclude that we’re all gonna die. But throughout the 1900s, world grain production per capita has generally increased. Disease has generally decreased. Certainly, technology and advances play a huge part in this, but the warmth has not hurt matters. And even if you dismiss the benefits of warmth, we certainly have shown that we can adapt well to the gradual temperature increase we have supposedly “suffered” through.

What is often NOT discussed is the ramifications of a move in the other direction. Clearly, if we induce global cooling through whatever means we do that, then we can reasonably anticipate more periods of cold weather in traditionally warm places. So, what are the ramifications of cold weather hitting a warm climate?

Exhibit One: Fish die.

From Ponce de Leon Bay on the Southwest Coast down across Florida Bay to Lower Matecumbe in the Florida Keys — day after day, dead fish. Floating in the marina at Flamingo in Everglades National Park alone he counted more than 400 snook and 400 tarpon.

“I was so shook up, I couldn’t sleep,” said Frezza, an ecologist for Audubon of Florida and an expert flats fisherman. “Millions and millions of pilchards, threadfin herring, mullet. Ladyfish took it really bad. Whitewater Bay is just a graveyard.”

Fish in every part of the state were hammered by this month’s record-setting cold snap. The toll in South Florida, a haven for warm-water species, was particularly extensive, too large to even venture a guess at numbers. And despite the subsequent warm-up, scientists warn that the big bad chill of 2010 will continue to claim victims for weeks.

Exhibit Two: Orange crop in Florida expected to be down 20%.

Smaller oranges and fewer per tree mean this season’s crop could reap nearly 20 percent less than last season’s, mainly because of spotty rainfall and cold weather early this year.

The U.S. Department of Agriculture’s December estimate puts the state’s orange yield at 135 million boxes, a drop of 17 percent from 162.4 million harvested in the 2008-09 citrus season.

The USDA estimate for Valencia oranges fell by 1 million boxes to 66 million compared with the November forecast.

There is one lesson to be learned in all this, though. Football saves lives.

Alabama issued a warning to drivers Thursday night, urging them to stay off icy roads as driving conditions were “becoming dangerous” with numerous accidents reported. Trooper Curtis Summerville with the Alabama State Patrol said the biggest problem on the roads was black ice on overpasses and bridges.

But, he said football was helping keep people at home as University of Alabama fans cheered on their team in the National Championship Game against the University of Texas.

In the big scheme of things, are we just too thick-headed to realize that we may actually be blessed by a warmer climate? If, in fact, that’s even the case?

We Have One More Minute to Live than we did Yesterday

There are many doomsday scenarios projecting our untimely demise, and based on the current state of affairs, a bunch of scientists with nothing better to do have been determining for some time now how close we are to annihilating ourselves. This is represented by a “Doomsday Clock.”

Politics, of course, permeates just about everything these days, and this is no different. It’s predictable stuff: Obama’s our savior, so simply electing him makes us better human beings. Then there’s supposed improvements in the nuclear weapons area. But fear not, readers… we are now able to push the clock back one minute at least in part due to – you guessed it – “collaboration on climate stabilization.”

Thank God that He sent people to do this difficult work for Him. It was too complex for Him to handle by Himself.

Anyway, here’s the article that tells us how lucky we are to have progressives passing laws and raising our taxes.

Scientists pushed back the hands on the symbolic Doomsday Clock by one minute citing hopeful developments in nuclear weapons and climate change.

The symbolic clock that shows how close mankind is to self-annihilation was moved back to six minutes before midnight from five minutes on Thursday.

The Bulletin of Atomic Scientists, which maintains the clock and puts an illustration of it on its cover, attributed the move to efforts by world leaders to reduce their countries’ nuclear arsenals and collaborate on climate stabilization.

The group, which includes 19 Nobel laureates, said a key to the “new era of cooperation is a change in the U.S. government’s orientation toward international affairs brought about in part by the election of (U.S. President Barack) Obama.”

…

BAS board member Lowell Sachnoff added, “Global warming is more of a threat than nuclear war.”