Methamphetamine prices and purity and the correlation to markets
The US Justice Department (DoJ) and the Drug Enforcement Agency’s (DEA) latest report on the trends of methamphetamine prices and purity on the samples they buy from dealers shows some strong correlation. In the last 20 years, methamphetamine prices (US$/gram) have shown a 91% R-squared correlation (i.e. very high) to purity.
Looking at Fig.1 we can see that the tech bubble collapse in 2000 and 2008 saw purity levels rise consistently several years before the crisis set in and the trend continues for a further 5-6 years. The latest data would suggest that the purity is heading back up, usually a sign that the economy is about to take a 'hit'.
While illicit drugs are no laughing matter there is a silver lining. Medicinova (4875 JP) is well advanced on a cure for drug addiction and is currently being funded by the US National Institute of Health to accelerate the commercialisation. The FDA is also fast tracking its approval.