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Credit deflation and the reflation cycle to come (part 2)


spunko

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13 hours ago, geordie_lurch said:

I have added the details to my original post above now I'm back on my computer @Cattle Prod :Beer:

However in case others miss it then and the following is from Defying Hitler by Sebastian Haffner. You should be able to find more of it online for free. I've pasted some more of it below, with my emphasis added which sounds a bit like some of us and our Bitcoin investments to me and maybe the dating bit was the equivalent to Tinder :D

The old and unworldly had the worst of it. Many were driven to begging, many to suicide. The young and quick-witted did well. Overnight they became free, rich and independent. It was a situation in which mental inertia and reliance on past experience was punished by starvation and death, but rapid appraisal of new situations and speed of reaction was rewarded with sudden, vast riches. The twenty-one-year-old bank director appeared on the scene, and also the ‘sixth-former’ [the student in Britain between 16 and 18 years old, in his final two years of school, before entering the university] who earned his living from the stock-market tips of his slightly older friends. He wore Oscar Wilde ties, organized champagne parties, and supported his embarrassed father.

 

Amid all the misery, despair and poverty there was an air of light-headed youthfulness, licentiousness and a carnival atmosphere. No, for once, the young had money and the old did not. Moreover, its nature had changed. Its value lasted only a few hours. It was spent as never before or since; and not on the things old people spend their money on.

 

Bars and nightclubs opened in large numbers. Young couples whirled about the streets of the amusement quarters. It was like a Hollywood movie. Everyone was hectically, feverishly searching for love and seizing it without a second thought. Indeed, even love had assumed an inflationary character.

 

Unromantic love was the fashion: carefree, restless, light-hearted promiscuity. Typically, love affairs followed an extremely rapid course, without detours. The young who learned to love in those years eschewed romance and embraced cynicism. I myself and those of my age were not among them. At fifteen or sixteen we were a few years too young. In later years when we had to entertain our girlfriends with twenty-odd marks’ pocket money, we often secretly envied the older boys who had had their chance at this time. We only caught a glimpse through the keyhole, just enough to preserve a whiff of the perfume of the time forever in our nostrils. To us, it was thrilling to be taken by chance to a wild party; to experience a precocious, exhausting abandon and a slight hangover next day form too many cocktails; to listen to the older boys with their worn faces showing the traces of their dissolute nights; to experience the sudden transporting kiss of a girl in daring makeup . . .

 

There was another side to this picture. There were beggars everywhere and many reports of suicides in the papers. The poster columns were full of police ‘Wanted’ notices for burglars. Robbery and burglary occurred on a grand scale. Once I saw an old woman – perhaps I should say an old lady – seated on a bench in a park looking strangely blank and stiff. A little crowed gathered round her. ‘Dead,’ said someone. ‘Of starvation,’ said another. It did not surprise me particularly. At home, we also often went hungry.

 

Indeed, my father was one of those who did not, or did not wish to, understand the times, just as he had already refused to understand the war. He entrenched himself behind the maxim: ‘A Prussian official does not speculate’, and bought no shares. At the time I regarded that as extraordinarily narrow-minded and out of character, for he was one of the cleverest men I have known. Today I understand him better. In retrospect, I can sympathize with the disgust with which he rejected the ‘monstrous scandal’ and with the impatient contempt that lay behind the attitude that ‘what ought not to be, cannot be’. Alas, the practical result of such high-mindedness could degenerate into farce, and the farce would have turned to tragedy if it had not been for my mother, who adapted to the situation in her own way.

 

This is how the family of a high Prussian official lived from day to day. On the 31st or 1st of the month my father would receive his monthly salary, on which we depended for our survival. Bank balances and securities had long since become worthless. What the salary was worth was difficult to estimate; and its value change from month to month. One month a hindered million marks could be quite a substantial sum; a little while later five hundred milliards would be small change. In any case my father would first try to purchase a monthly pass for the underground as quickly as possible. That would at least enable him to get to his office and back, even though the underground involved considerable detours and waste of time . Then cheques would be written out for the rent and school fees, and in the afternoon the whole family went to the hairdresser’s . What was left was handed to my mother. Next day the entire family except for my father, but including the maid, would get up at four or five in the morning and go to the wholesale market by taxi. There, in a giant shopping spree, an Oberregierungsrat’s monthly salary would be spent on non-perishable foodstuffs in an hour. Giant cheeses, whole hams, stacks of tinned food and hundredweights of potatoes were piles into out taxi. If there was not enough room, the maid, with one of us to help, would get hold of a hand-cart. At about eight o’clock, before school began, we would return home, more or less provisioned for a month’s siege. And that was it. There was no more money for the rest of the month. A friendly baker gave us bread on credit. Otherwise we lived on potatoes, smoked or tinned food and soup cubes. Now and then there might be an unexpended supplementary payment, but it was quite common for us to be as poverty-stricken as the poorest of the poor for four weeks, not even able to afford a train ride or a newspaper. Putting aside money for such purposes would have been quite senseless. Within a few days the whole month’s salary would not have paid for a single tram ride. I cannot say what would have happened if some misfortune like a serious illness had befallen us.(pp.46-50)

...   

In August 1923 the dollar reached a million. We read it with a slight gasp, as if it were the announcement of some spectacular record. A fortnight later, that had become insignificant. For, as if it had drawn new energy at the million mark, the dollar increased its pace ten-fold, and began to mount by a hundred million and milliards [by British measurement, thousands of millions] at a time. In September, a million marks no longer had any practical value, and a milliard [a thousand million] became the unit of payment. At the end of October, it was a billion [by British measurement, a million million]. By then terrible things had happened. The Reichsbank stopped printing notes. Its notes – 10 million? 100 million? – had not kept up with events. The dollar and price levels in general had anticipated them. There was no longer any usable currency. For some days trade came to a standstill, and in the poorer parts of the city the people resorted to force and plundered the groceries. The atmosphere became revolutionary once again.

So I need more food ,fuck.

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8 hours ago, sancho panza said:

I've been running my slide ruile over barrick as well.I've jsut started doing coma scores for this year last Wed/Thu when kids at nrusery,so I'll be doing these in the next week or two.On first viewing KGC will get a strong score.FCF is looking like  $1bn+ for 2020.

Barrick yet to psot 2020 figures.But I'm hoping for some more drift.We're in Barrick sub $15 from 2018,and I'd happily add around that level again.

Our buy price on KGC is lower and I don't think we'll see sub $4-50 on that.But I'm thinking of offloading the royalty streamers to go into Barrick/KGC/Newcrest.

https://uk.investing.com/equities/kinross-gold-cash-flow

image.png.a23e81d120e72df2966e0aa5dbe0576b.png

Will you be posting your coma scores SP? Always very interesting to see them. Personally I am looking for silver minors. I was aiming for equal portfolio allocations of the silver/gold miners, but find I'm still underweight the silvies, and fear I have left it too late to buy at half decent prices. Though as these are all long term holds I don't mind 'overpaying' for some good ones. Others thoughts and suggestions most welcome. 

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4 hours ago, Bricks & Mortar said:

I've been getting itchy to buy a bit of Cornish Metals.  I mean, here in Britain, we know where the tin comes from, right?
They seem to be registered in Canada, and have a couple of former tin mines in Cornwall.  Just did an IPO on AIM, and plan to be exploratory drilling for tin soon and for next couple years. (they're drilling in a tin mine, which I reckon is a good place to start.)

Is your Ozzie producer Metals X Ltd?  (EDIT - I see it was.  not many tin miners about).  I fancied them a few months back, but not available on HL.  Almost bought Metals Exploration PLC by mistake!  Anyway, I continued wanting something tin, and this Cornish effort surfaced recently.  Just hovering over maybe selling a Uranium miner and having a bit of them instead.

 

I nearly bought them. But have recently decided to concentrate my hard commodities to mainly just copper, uranium, coking coal, lithium. But I get where your coming from, as buying British miners is almost irresistible prospect, so am personally waiting for Cornish Lithium to list shares.

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3 hours ago, JMD said:

I nearly bought them. But have recently decided to concentrate my hard commodities to mainly just copper, uranium, coking coal, lithium. But I get where your coming from, as buying British miners is almost irresistible prospect, so am personally waiting for Cornish Lithium to list shares.

why do you think that?  surely the UK has outsize input costs for power, staff wages, insurance, environmental controls, etc?

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8 hours ago, Metalheadz said:

I knew prepping at the initial Covid stage was going to pay off sooner or later. :)Soon the 20p tin of beans at Lidl will be worth more than the beans inside them.

I’ve inadvertently been stacking another physical PM other than silver without having a clue! B|

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7 hours ago, Cattle Prod said:

Stokie you'll never starve, just start charging the ladies for your services!

Need go on a Rocky style keep fit regime I’ve pilled the weight on lol still got my hair mind

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https://www.businessinsider.com/personal-finance/mortgage-refinance-rates-today-february-22-2021-2?r=US&IR=T
 

So US mortgage rates ticking up. UK to follow?

Maybe we won’t see negative rates after all. If thats the case housing market is definitely screwed. Perhaps intentionally after BoE signalled to prepare for negative rates.

https://www.ftadviser.com/regulation/2021/02/04/banks-given-6-months-to-prepare-for-negative-interest-rates/

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18 hours ago, Noallegiance said:

The thing that causes me the biggest problem is looking at what people who aren't doing what I'm doing are doing. That's not an easy sentence to read.

I'm not a gambler. It's clearly late/approaching very late in the cycle where fashionable stuff is popular, with prices getting ridiculous for my (very) humble savings. 

I keep having to remember that I'm at the start of this. I don't have 000s to chuck at stuff and lose. I'm at least 25+ years from drawing my pension.

Today, my inflation/PM/telecoms/infrastructure/raw materials portfolio is looking well despite all indices being down. Those days are not common, but are becoming more so. I think money may be starting to flow toward where I have been positioned for just under a year. Long way to go yet, though. It's felt like a long year.  

For me, I'd be happier holding on to the reasons I'm doing this with my personal approach that suits me. If I start being duped into gambling now I'll hate myself for the losses and am unconvinced the 'wins' would be worth the stress.  

It's a very personal thing. I'll take 'more comfortable' in decision-making and outcome over 'moderately wealthy' but with added stress. 

But it's damned hard to keep that front and centre.

Agreed and I think I am in a similar boat. The challendge for me is working out where to save the cash I'm earning monthly while I'm earning well, to insulate myself from nasty surprises such as no longer earning well. I'm well positioned as a result of this thread but it's not life changing money at the moment

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10 minutes ago, C-gull said:

Agreed and I think I am in a similar boat. The challendge for me is working out where to save the cash I'm earning monthly while I'm earning well, to insulate myself from nasty surprises such as no longer earning well. I'm well positioned as a result of this thread but it's not life changing money at the moment

If I was back in employment then I'd select a portfolio approach (see earlier posts or shout) and then drip feed the monthly savings into the worst performing asset class, e.g. rebalancing the portfolio by buying low. With an appropriate porfolio you should be placed to benefit in the long run regardless of what happens in the economy. You wont make 100% gains but you wont have heartburn either.

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6 hours ago, wherebee said:

why do you think that?  surely the UK has outsize input costs for power, staff wages, insurance, environmental controls, etc?

re buying British Lithium, Wherebee you are right to remind me, as really i'm breaking one of my own rules regarding 'seeking value' (difficult to achieve at best of times), ie West has bigger costs compared to rest of world. ...So then, perhaps i'm just being sentimental, and 'returning supply chains', etc, does chime with this thread's cyclic thesis - plus the irony of mining returning to the UK is rather hilarious!! ...hmm, so not a purely investment decision after all, i will need to decide closer to the stock's ipo. 

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Bricks & Mortar

 

5 hours ago, wherebee said:

why do you think that?  surely the UK has outsize input costs for power, staff wages, insurance, environmental controls, etc?

I can't speak for JMD, but I'm also hot for British miners.  I'm imagining a future, where government, (EU + UK) require higher standards for mined minerals.  Like, measuring the carbon footprint, employee safety and working conditions. 

And, if not governmental regulation, then suppliers of electric cars, windmills and other users of the mined products are likely to want to put those carbon footprints and employee conditions in their sales brochures.  "All our lithium is produced from carbon neutral mines by fair pay workers at the highest safety standard"

Britain likely to have more zero carbon energy available than most places.

Then, you got the higher wages effect.  Leads to more mechanisation.  Which is great, until the thing breaks.  In Britain, you call the tech and he gets in his Tesla truck and has a screwdriver on the machine a couple hours later.  It doesn't work so well in less developed countries.

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23 minutes ago, Bricks & Mortar said:

 

I can't speak for JMD, but I'm also hot for British miners.  I'm imagining a future, where government, (EU + UK) require higher standards for mined minerals.  Like, measuring the carbon footprint, employee safety and working conditions. 

And, if not governmental regulation, then suppliers of electric cars, windmills and other users of the mined products are likely to want to put those carbon footprints and employee conditions in their sales brochures.  "All our lithium is produced from carbon neutral mines by fair pay workers at the highest safety standard"

Britain likely to have more zero carbon energy available than most places.

Then, you got the higher wages effect.  Leads to more mechanisation.  Which is great, until the thing breaks.  In Britain, you call the tech and he gets in his Tesla truck and has a screwdriver on the machine a couple hours later.  It doesn't work so well in less developed countries.

fair call, but has that worked for any other manufacturer or producers?  Pressure for ethical sourcing has been around for 30+ years.  All the factories overseas do is put in suicide nets...

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13 hours ago, ThoughtCriminal said:

Looks like the tesla bubble is popping 

 

Canary in the coal mine? 

Screenshot_20210222_220711.jpg

That'll be the 1.5 billion Tesla have in bitcoin devaluing over last few days. xD

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13 hours ago, ThoughtCriminal said:

Looks like the tesla bubble is popping 

 

Canary in the coal mine? 

Screenshot_20210222_220711.jpg

Could be crypto-related, given how it coincides with pullback/correction/crash in BTC. If there was no connection between crypto and stocks, there certainly is one now.

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Bricks & Mortar
42 minutes ago, wherebee said:

fair call, but has that worked for any other manufacturer or producers?  Pressure for ethical sourcing has been around for 30+ years.  All the factories overseas do is put in suicide nets...

Agree on the last 30 years.  I'm looking forward at things like the Paris Climate Accords.  I'm guessing they're actually serious and prepared to apply it down the supply chain.

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Yellow_Reduced_Sticker
38 minutes ago, kibuc said:

Could be crypto-related, given how it coincides with pullback/correction/crash in BTC. If there was no connection between crypto and stocks, there certainly is one now.

 
INDEED...I spoke to a long time friend last week, she has NO interest in anything financial, AND brought up SH*COIN ??? :o
 
2 days later i got a cold call from some ditsh*t trying to sell me asome SH*COIN-investment, i told 'em to piss-off then blocked their number! :Old:
 
They knew my first name and had my mobile number. How the f*** did they get it?
 
UNLESS it was @MrXxxx trying to SCAM me outta my moolah!:ph34r:
 
Anyways wanted to post this info last Friday but busy - if there was EVER a sign of the TOP ...in my eyes that was it! BUT what do i know! :Geek:
 
 
image.jpeg.952b7dd46c06c2b9e362844216261550.jpeg
 
 
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2 hours ago, kibuc said:

Could be crypto-related, given how it coincides with pullback/correction/crash in BTC. If there was no connection between crypto and stocks, there certainly is one now.

Very good point.  The potential may still be there to bring down the two and leave holders of hard assets/commodities (and related shares) laughing

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It’s back up to $49k (£35k) now you have to be quick with the updates in crypto world. 

The poor news articles can’t cope. When the dip happened yesterday they were still releasing articles how it was at a ATH and how much Elon had made over making cars.

Now their all calling out a BTC crash and it’s already showing signs of up back over $50k :)

edit: I would hasten to add however, if this drop in the tech/FAANGs continues today then it should resume its fall

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ThoughtCriminal
2 hours ago, kibuc said:

Could be crypto-related, given how it coincides with pullback/correction/crash in BTC. If there was no connection between crypto and stocks, there certainly is one now.

What's weird is there was already a pretty close correlation between Tesla and Bitcoin if I recall correctly. 

 

You're right though, there's good reason for it now. 

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ThoughtCriminal
28 minutes ago, Cattle Prod said:

The correlation is that Tesla and BTC have a large crossover of buyers who are behaving similarly.

You're probably right. 

 

Hell of a tight correlation. 

Screenshot_20210223_152137.jpg

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It's not only Tesla but other trendy things which are falling.  I've been in and out of a couple whilst awaiting the rotation to the reflation stocks.  This is one which is falling hard:

image.png.c1451f9016d06c2779faeac6f69cb11d.png

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50 minutes ago, Cattle Prod said:

The correlation is that Tesla and BTC have a large crossover of buyers who are behaving similarly.

But now it's supercharged by Tesla actually holding BTC. A positive feedback loop.

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8 minutes ago, kibuc said:

But now it's supercharged by Tesla actually holding BTC. A positive feedback loop.

If it's like leverage, we all know how that works on the way up, and down. xD:ph34r:

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