Eventually Right

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  1. Very true-I have some qqq (nasdaq etf) put options expiring in Jan 2020 that I bought last autumn. I was extremely happy with how things were going just before Christmas, but have been very surprised with the strength of the bounce, and am wary of a melt up, even if, with all the economic data going downhill, and earnings likely to be weakening, I can’t see the rationale for prices extending even further (beyond people thinking “the fed will save us whatever happens”)
  2. After Powell capitulated on rate rises last month, looks like the Fed are going to stop reducing their balance sheet as well: https://www.channelnewsasia.com/news/business/fed-to-finalize-plans-to-end-balance-sheet-runoff--at-coming-meetings---mester-11236886 To do a complete 180 in such a short period of time, you get the feeling they can see what's coming in the world economy, and it scares them.
  3. Have you read Luke Gromen’s book, The Mr X interviews? https://www.amazon.co.uk/Mr-Interviews-Fictional-Sovereign-Creditor-ebook/dp/B07M93N7MJ/ref=sr_1_1?ie=UTF8&qid=1548983899&sr=8-1&keywords=mr+x+interviews I’d recommend it-relatively quick/easy read about how he sees the dollar declining as the worlds sole reserve currency. Good book on what might well be a dry subject in other authors hands!
  4. I'd add a 4) in 2008 QE was unprecedented on the scale undertaken by the central banks. If the market sells off this time round, it won't be unprecedented, it will be expected by the market. Which I think may well mean money flows into the PMs, ahead it being announced. If you look at a chart of the GDX, it bottoms just before QE1 was announced by the Fed in late November 2008, whereas the S&P and DJIA didn't bottom til March 2009. If the deflation is big enough, then perhaps all bets are off, and the miners sell off as well, but I'm leaning more and more towards holding the miners I have in my ISA, through any dip.
  5. I’ve been thinking about how best to guard against gold/silver/miners being sucked into the final stages of a deflation, if they first rally to the levels DB suggests. I’d be reluctant to sell my mining shares if they go on a run from here, for the reasons I previously mentioned-the danger of losing your position if gold/silver don’t get sucked down by the deflation. One way I have thought of protecting any gains we might have made if the precious metals go on a run up from here, could be to buy put options in the GLD and SLV etfs, which are etfs that track the underlying price of gold and silver. Given that DB sees the (probable/potential) move down in gold/silver as both extreme (more than halving from the $22-24/$1500 levels) but also very quick, happening in months, rather than years, protecting against that specific scenario would be very cheap, if one were to buy 12-24 month put options with low strike prices that would only pay off in the event of such an extreme move, within that 12-24 month timeframe. You'd view the options as an insurance trade/hedge-if the move down occurs, then your mining shares have taken a hit, but your options have paid off, giving you extra money you can deploy at the bottom of the market. If it doesn’t occur, and the precious metals/miners keep going up, then you’ll have lost the option premium, but shouldn’t care that much if your main position in mining shares is going higher and higher. I’d see this as potentially being a good idea IF both of the following occurred: 1) Gold/Silver/GDX do run up to $1500/$22/$35 levels, giving us significant paper profits we want to protect. 2) This happens whilst the rest of the world/financial markets are really going to hell in a deflation, and a sell off in everything, including gold seems possible. Obviously this isn’t for everyone, as options can be a level of risk beyond even those of junior mining companies, particularly if people aren’t familiar with them. If anyone on this thread does have any experience with options, I’d be interested in their thoughts on this though-particularly why I might be wrong,
  6. I’ve been having similar thoughts DB. If the deflation is big enough, then I figure everything gets sold to fund margin calls etc, and gold/silver/miners etc all get sold off, regardless of intrinsic value. (There may also be cases where certain central banks sell off their gold reserves to try to defend their currencies?) However, if financial/economic conditions continue to deteriorate in 2019, I think the market sniffs out the likely central bank responses of massive money printing ahead of time, and so investor interest in gold/miners increases significantly. in that situation, say in Q3/Q4 2019, where gold has run up to $1500, gdx to $35, I think I’d be too scared to sell my miners, as I’d worry that a deflationary sell off in gold might not happen, or might be very mild-and the next thing you know the miners you sold have gone up 20/30/40% and it becomes psychologically very difficult to repurchase a decent size position quickly, as you’re both scared that deflation may yet take down gold, and also mentally berating yourself for selling the position in the first place. It will hopefully be a nice dilemma to have in a few months though!
  7. I'd agree with that-I think much of the potential downside from Brexit is built into Sterling's current price. But again-don't take that as advice.
  8. Bloomberg article on SA gold: https://www.bloomberg.com/news/articles/2018-12-09/south-african-gold-industry-enters-final-phase-of-slow-death
  9. Potentially interesting blog post for those of us holding First Majestic: http://angrygeologist.blogspot.com/2018/11/first-majestic-reserves-who-needs-them.html
  10. Haha-same response as me, kibuc! I was toying the idea of buying some in the last couple of weeks, but decided I owned enough PM miners! Ho hum...
  11. I’m very interested in seeing whether you’re right on this DurhamBorn! I’m seeing plenty of predictions for DXY going well above 100 on twitter (by macro guys) but nobody predicting sub 90 in the short to medium term. Your dollar calls have been spot on so far, so it will be interesting to watch how it plays out. Have you heard of Brent Johnson’s “dollar milkshake” theory by any chance? His thesis is that the central banks have injected a huge amount of liquidity into the financial system since 2008, and by tightening, the US is going to suck that liquidity into the dollar, and dollar assets. So DXY and US equities way up in the next year or so, because the rest of the world is even more of a financial basket case than the US. Short 3 min video here of him explaining it: https://m.youtube.com/watch?v=6mkV-c0mlZE written explanation here: https://www.capitalandconflict.com/investing-in-gold/a-most-destructive-milkshake/ I can see some logic in his argument, so would be interested in why you think he’s wrong, if you’ve got time.
  12. I treated myself to a real vision subscription recently, and was listening to one of their latest videos today, an interview with a PM fund manager, Ned Naylor-Leyland. I found one of the points he made about how gold reacted initially in 2008 interesting. his argument was basically that gold’s 30% price dip in 2008 was due to the market’s believing that the use of unconventional monetary policies (QE etc) was very unlikely to occur. Once it became obvious that they were going to be used, gold quickly reversed. As markets no longer have that psychological hurdle to believing QE to infinity can/will be used, his argument is that a market/economic crash wouldn’t have that same depressing initial influence that happened in 2008. In fact it would be the opposite. I’ll post the relevant transcript below-I’d be interested in people’s views on this, why it might be wrong/right. “So 2008 often gets referred to. But we're not there anymore. And it's not a it's-different-this-time point. It's very, very clear what happened to me. If you look at the Real Yield index I referred to, what you will see is before QE was mentioned, we were in a deflationary collapse. That meant that money on deposit, dollars on deposit, on a forward-looking basis were, according to the bond market, gathering purchasing power just being sat there. Now that is not good for the dollar-gold price. So the dollar-gold price went down nearly 30% in very short order during 2008 before this new, wonderful world of QE was even discussed openly. The moment that happened, it turned. The bond market understood that we are now in an environment where conventional-monetary policy is not around. And we are still in that post-'08 environment, where if we need to, we can go into yet more unconventional environments-- more QE, negative rates-- all these things. We're not where we were in '08 when gold went down 30%. It went down 30% because the bond market-- if you look at the Barclay's-Bloomberg index, it was pricing $1.04. So it was saying, money will be worth 4% more in seven to 10 years' time than it is today. I cannot see any environment of stress where the bond market is going to be pricing that. For me, it's clearly going to go the other way. And people will realize we're going from what is already a tight environment to an extreme-loose one very quickly. It should be the opposite of what we had before.”
  13. A guy I follow on twitter made a case for gold not plunging during a stock market crash in the last few days. His rationale was that whereas in 2008 the large spec positions were long, and gold was in a bull market, at the moment specs are short, and gold seems to be in a bear market. Therefore in 2008, when the spec longs had to close their positions to meet margin calls, they sold, and gold sank. If the same were to happen today, the specs would have to close their short positions by buying, which would have a positive effect on the price of gold and the miners. It makes rational sense to me, although I'd have no clue what the spec position on gold was in 2008, so couldn't confirm whether it was net long, and by how much. It may just mean that the PM miners wouldn't get to quite so crazy a bargain price, compared to other sectors, in the event of a crash.
  14. Anecdotally, I was a VW garage a couple of weeks ago as my girlfriend was looking for a new (second hand) car. i was talking to one of the salesmen about the new 18 plate Polo, and noted to him that they seemed significantly bigger than the old model. His response was that the reason behind this increase in size, was that Golf drivers on finance deals were finding it difficult to afford to finance a new Golf, and so the Polo had been increased in size to give them a similar sized, but more affordable option. No idea whether it’s true or not (it tripped off his tongue, and he seemed confident-but that’s his job), but surely a sign of a bubble running out of road if so.
  15. If you buy UK coins (Britannia’s) are they not exempt from CGT? (obviously UK govt could change the rules)