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

[sancho panza]

 @Cattle Prod Pictures  back up what you're saying/have been predicting for some months,slow decline of US shale(worse to come as wells drilled early 2020 come offline,inventories back within historical norms....

[DurhamBorn]

54 minutes ago, M S E Refugee said:

New Zealand wants to ban cigarette sales to anyone born after 2004 as part of plan to make nation ‘smoke free’ by 2025 https://www.rt.com/news/521201-new-zealand-cigarettes-smoking-ban/

Hope this doesn't catch on, I have a fair bit invested in Tobacco.

Be able to make a fortune smuggling.One of my best mates had a lovely business importing cheap doors from Spain stuffed with fags.Lovely down his lock up in winter burning all the doors  .New Zealand looks like woke hell already.

[sancho panza]

Jsut reading teh April 1st report

Consumption forecasts to lead production hgiher.Be interested to know  @Cattle Prod if you're seeing their US shale calls correctly and whether Saudi has the capacity to keep the blue line close to the brown line?

It wouldn't take much for this to end up one hell of a bull.

Decl: long oilies

https://www.eia.gov/outlooks/steo/report/global_oil.php

• EIA estimates that the world consumed 96.0 million b/d of petroleum and liquid fuels in March, an increase of 4.7 million b/d from March 2020. We forecast that global consumption of petroleum and liquid fuels will average 97.7 million b/d for all of 2021, which is up by 5.5 million b/d from 2020. We forecast that consumption will increase by 3.7 million b/d in 2022 to average 101.3 million b/d. We revised growth in global liquid fuels consumption in 2021 higher from last STEO. The higher forecast is primarily a result of higher global GDP growth forecasts from Oxford Economics, which increased 0.4 percentage points from the March STEO to 6.2% for 2021.

• According to EIA’s most recent data, U.S. domestic crude oil production averaged 11.1 million b/d in January 2021. We estimate that U.S. domestic crude oil production declined by 0.8 million b/d in February, mostly because of cold temperatures that affected much of the country, particularly Texas. We forecast crude oil production will average 10.9 million b/d in the second quarter of 2021 and increase to almost 11.4 million b/d by the fourth quarter of 2021. We expect U.S. crude oil production will average 11.9 million b/d in 2022. The forecast of rising U.S. crude oil production is the result of our expectation that West Texas Intermediate crude oil prices will remain above $55/b through the forecast period.

[M S E Refugee]

18 minutes ago, Hancock said:

Do you not think it'll fall in price if/when there are new sanctions put on Russia.

Applies to all Rusky stocks.

I have only invested in Lukoil so far and I am sure the Russians can find a market to sell their Oil.

Western Countries are putting sanctions on themselves by closing down their economies.

[sancho panza]

4 minutes ago, DurhamBorn said:

Be able to make a fortune smuggling.One of my best mates had a lovely business importing cheap doors from Spain stuffed with fags.Lovely down his lock up in winter burning all the doors  .New Zealand looks like woke hell already.

It's funny how all these Marxist types hate discrimination unless it's the kind they agree with.It's going to be ridiculous in NZ watching 20 year olds hanging corner shops asking the old biddies to buy them fags.

Word from South Africa is that some heavily connected ANC politicians have been involved with tobacco smuggling during their recent covid inspried tobacco ban.

[Harley]

1 hour ago, Hancock said:

Do you not think it'll fall in price if/when there are new sanctions put on Russia.

Applies to all Rusky stocks.

The US did it to China recently.  My broker sent a list of shares Americans could no longer deal in.  I must go back and see what impact that had.

https://www.barrons.com/articles/still-own-blacklisted-chinese-stocks-why-investors-may-be-in-limbo-for-a-while-51612015200

https://www.barrons.com/articles/delisting-chinese-companies-could-be-bad-for-investors-but-its-the-right-thing-to-do-51607728480

[Talking Monkey]

6 hours ago, Harley said:

Looks like @201p is already on the case and deserves more traction/support:

I like the link in his opening post that the Great Reset might already have happened!  Makes you do a 180 and exercise some mental agility!

The thread deserves more attention and a far larger discussion than just about Bitcoin.  It all works for me and my "burning building" metaphor. 

Maybe our BK is a distraction in the bigger picture or is a key part (milestone) of the bigger picture.  Again, context is everything as prepping for the BK might look a bit different.

We are in danger of thinking walking with a red flag in front of this threatening new horseless carriage will be sufficient.

Defo food for thought on the BK being a distraction if not a key milestone. If we here see the inevitability of a BK, that miniscule ultra elite will too and have plans on how to fully exploit it.

[nirvana]

hat tip to @JREWINGfor flagging up Centamin....chugging along nicely, any news on the 150p takeover?

 

[DurhamBorn]

4 minutes ago, sancho panza said:

It's funny how all these Marxist types hate discrimination unless it's the kind they agree with.It's going to be ridiculous in NZ watching 20 year olds hanging corner shops asking the old biddies to buy them fags.

Word from South Africa is that some heavily connected ANC politicians have been involved with tobacco smuggling during their recent covid inspried tobacco ban.

Every time i go abroad (hardly ever since i stopped going to Amsterdam) i get stopped and searched at customs."known associate" marked on my file  .None of my mates ever got done though,too sharp. 

[planit]

Quote

We forecast that consumption will increase by 3.7 million b/d in 2022 to average 101.3 million b/d. 

 

Thanks for those posts Sancho, I was wanting a prediction of oil consumption over the nearer term

I am wondering where the extra oil will come from as US production will probably stay 2mbpd below 2019 but demand within 18 months needs to be 1.5mbpd higher than 2019.

This means there is a 3.5mbpd increase needed from somewhere but I have seen no mention of a country that can meet this without oil at $120 per barrel making investment in shale start again (and even then it's a stretch). 

This article suggests the US is already producing as much as they can to try to make their finances look better for returning value to depressed investors. The investors are not even willing to reinvest their profits.

US oil drillers ‘dying on the vine’ as PE flight prompts funding drought

Quote

  Just 11 funds closed last year and only $4.5bn was raised as oil prices crashed, according to Preqin. Production plunged and remains around 11m b/d now.

“What’s different this time is there’s very little new private equity going into forming new private companies, because they don’t have capital to deploy,” said Kimmeridge’s Dell. “They are not confident they can raise more capital.”

Some private oil operators are spending an unexpected bounty from higher oil prices into more drilling, hoping extra output will lift valuations and attract buyers — a “last gasp” effort to secure a profitable exit, said Van Loh

Shale investment needs confidence of consistent high oil prices but I can't see this environment coming along soon. Oil prices will have to get so high the investment becomes a no-brainer.
 

[Hancock]

20 minutes ago, M S E Refugee said:

I have only invested in Lukoil so far and I am sure the Russians can find a market to sell their Oil.

Western Countries are putting sanctions on themselves by closing down their economies.

I agree with that, just if sanctions are put on the Russians if history repeats what happened a few years ago then their currency and company prices will take a considerable hit.

[Calcutta]

20 minutes ago, DurhamBorn said:

Every time i go abroad (hardly ever since i stopped going to Amsterdam) i get stopped and searched at customs."known associate" marked on my file  .None of my mates ever got done though,too sharp. 

I've never been charged, never even been arrested. But for some bloody reason I've been dragged out of every fucking airport I've ever been in and stripped, made to squat, explosive swabbed, it's a nightmare. 

Tel Aviv was the worst, the lad who searched me was sound but when we got back out to the check in desks these bitch girls had torn my bag to shreds and were individually x-raying every item in there, my shit was spread all over the fucking floor. 

[Hancock]

21 minutes ago, DurhamBorn said:

Every time i go abroad (hardly ever since i stopped going to Amsterdam) i get stopped and searched at customs."known associate" marked on my file  .None of my mates ever got done though,too sharp. 

Those border guards at Schiphol like a good grope of your bits more than any other i've come across, dirty cunts!

Good thing is since Brexit i've been told that the Dutch are no longer hiring Brit contractors so i'll hopefully never have to bite the bullet and visit that 2nd Division Germany esq country again. 

[sancho panza]

18 hours ago, Cattle Prod said:

I'm tempted to say gold is good for a run here, but I won't . Actually I've noticed a really good sentiment indicator in myself. When something I'm invested leveraged in has completed a long consolidation, I'm apathetic about it, exhausted of it, all sentiment washed out, and had to force myself to hold on. I wish I could be as Zen as DB, Kibuc and others here, but I'm just not made that way.

So gold finally is up decently today, whatever. Wake me up at new ATHs . 

Oil is irritating me too, which could be a good sign. China upping it's buying from Iran has upset the physical market a bit, so my supply calcs are be pushed out a few weeks. There may be another washout, f u oil  but market likes inventory drawdowns. Let's see what next week's inventory says.

I'm looking to redeploy some previous profits taken into the goldies here.But that was pre yesterday.It'll jsut be options exposure but will also allow some leverage as I think the certain goldies have oversold the market.Because we're using options then some companies are off the table due to volatility being priced in eg EGO.

Howver,I'm liking the look of barrick,YamanaB2G,KGC.

I finsihed off the coma scores for the sector on the back of your prompt.Some eye wateringly solid balance sheets and FCF in this sector.Nowehere near as good value as when DB started steering the one eyed basement dwellers like myself towards it in the heady days of 2018 when the commercials went net long in August

dyodd natch

Company	Share price	Date	Chart	Inc	BS	CF	Sector	SCS
Agnico	USD 60.61	23/02/21	1	2	4	2	4	13
Alamos	USD 7.55	03/03/21	3	3	5	3	4	18
Anglogold	USD 20.89	23/02/21	3	4	3	4	4	18
B2Gold	USD 4.55	03/03/21	2	5	5	5	4	21
Barrick	USD 18.67	01/03/21	3	3	4	4	4	18
Buenaventura	USD 10.65	16/04/21	4	1	4	2	4	15
Centamin	GBP 1.13	16/04/21	3	4	5	5	4	21
Centerra	CAD11.88	03/03/21	2	5	5	5	4	21
Eldorado	USD 11.01	03/03/21	3	3	5	5	4	20
FNV	USD 136.52	16/03/21	1	2	5	2	4	14
Freeport	USD 37.55	23/02/21	1	2	2	2	4	11
Fresnillo	GBP 9.42	03/03/21	3	3	4	3	4	17
Gold fields	USD 8.69	23/02/21	2	4	3	3	4	16
Gold resource	USD 2.69	01/03/21	4	1	5	3	4	17
Harmony	USD 4.05	23/02/21	4	1	3	2	4	14
Hochschild	GBP 2.13	01/03/21	4	2	3	4	4	17
IAM gold	USD 3.02	01/03/21	3	2	4	2	4	15
Kinross	USD 6.73	23/02/21	3	5	4	5	4	21
Kirkland	USD 33.24	01/03/21	2	3	5	3	4	17
New gold	USD 1.65	01/03/21	4	1	2	1	4	12
Newcrest	USD 20.04	23/02/21	3	3	4	3	4	17
Newmont	USD 54.52	01/03/21	1	3	4	4	4	16
Oceana	CAD 1.78	01/03/21	4	1	4	1	4	14
Osisko Gold Royalty	USD 9.80	01/03/21	3	2	4	1	4	14
Pan African	GBP 00.184	23/02/21	2	5	3	3	4	17
Pan American	USD 32.18	01/03/21	1	3	5	3	4	16
Petropavlosk	GBP0.2596	16/03/21	3	2	3	1	4	13
Polymetal	GBP 14.57	05/03/21	2	4	3	3	4	16
Royal Gold	USD 103.29	01/03/21	1	2	5	2	4	14
Sandstorm	USD 6.07	01/03/21	3	2	5	3	4	17
Sibanye	USD 18.91	01/03/21	1	2	3	4	4	14
SSR	USD 13.87	01/03/21	3	3	4	3	4	17
Wesdome	CAD 9.85	16/03/21	2	2	5	1	4	14
Wheaton	USD 42.03	16/03/21	1	2	5	5	4	17
Yamana	USD 4.015	01/03/21	4	3	3	4	4	18

[sancho panza]

11 hours ago, wherebee said:

i've posted on here before about my RM Williams aussie boots.  I have pairs well over 10 years old, still going stong.  600 bucks new now, but that's 60 bucks a year at most, and they are a joy to wear.  They were the only thing I had on my feet for a two month crisscrossing of a country a few years back, through snow, sun, and dust, and they came out fine.

 

in shoes, paying for quality is worth it.  

There's a Cheaney's factory shop in Rothwell,Northants.Have to say,shoes is the one thing that it generally pays to get goodquality.

This shop does slight seconds(I can't tell the difference) for under £100 as opposed to £300.Last years.

https://www.cheaney.co.uk/factory-shop-i121

[Bricormortis]

 Things heating up around Ukraine / Crimea with the partial closure of the Black sea's Kerch Strait.

 I like to think Biden is withdrawing from Afghanistan because he can't see a benefit to being there, but I have some concern he has been advised the troops may need to redeploy in Ukraine / East Europe.

From Plymouth Herald.......https://www.plymouthherald.co.uk/news/uk-world-news/royal-navy-reports-russia-closing-5304504

"Russia has reportedly announced it will close a crucial strait in the Black Sea to foreign warships, including the Royal Navy, for the next six months.

It comes amid growing tensions in the region - with the UK and other G7 nations demanding that Russia 'ends provocations and de-escalates tensions' in Ukraine.

Royal Air Force (RAF) Typhoon jets, armed with Paveway bombs and Brimstone missiles, have already been sent to Romania amid fears President Putin is preparing to invade its neighbour.

Earlier this week, UK defence chiefs confirmed the multirole fighter jets will police the skies around the Black Sea.

And, yesterday, Russia warned America - as two US destroyers headed towards the area - to stay away from the region: “For their own good,” reported The Mirror.

Meanwhile, Reuters reported that the United States had cancelled the deployment of the two warships, according to Turkish diplomatic sources.

Now sources in Ukraine report that the Russian Federation has announced it will close the Kerch Strait, from next week until October 2021, "for warships and state ships of other countries under the pretext of military exercises".....

Says the Ukranians " "This step is a gross violation of the right to freedom of navigation, guaranteed by the UN Convention on the Law of the Sea."

[Hancock]

20 minutes ago, sancho panza said:

 

Centamin	GBP 1.13	16/04/21	3	4	5	5	4	21

I'm looking to deploy the £500 of free money i got off the govt today into goldies for my kids Junior ISA.

Think i'll opt for the above.

[Bricormortis]

US 10 year yield 1.57.

[Majorpain]

48 minutes ago, sancho panza said:

I'm looking to redeploy some previous profits taken into the goldies here.But that was pre yesterday.It'll jsut be options exposure but will also allow some leverage as I think the certain goldies have oversold the market.Because we're using options then some companies are off the table due to volatility being priced in eg EGO.

Howver,I'm liking the look of barrick,YamanaB2G,KGC.

I finsihed off the coma scores for the sector on the back of your prompt.Some eye wateringly solid balance sheets and FCF in this sector.Nowehere near as good value as when DB started steering the one eyed basement dwellers like myself towards it in the heady days of 2018 when the commercials went net long in August

dyodd natch

Company	Share price	Date	Chart	Inc	BS	CF	Sector	SCS
Agnico	USD 60.61	23/02/21	1	2	4	2	4	13
Alamos	USD 7.55	03/03/21	3	3	5	3	4	18
Anglogold	USD 20.89	23/02/21	3	4	3	4	4	18
B2Gold	USD 4.55	03/03/21	2	5	5	5	4	21
Barrick	USD 18.67	01/03/21	3	3	4	4	4	18
Buenaventura	USD 10.65	16/04/21	4	1	4	2	4	15
Centamin	GBP 1.13	16/04/21	3	4	5	5	4	21
Centerra	CAD11.88	03/03/21	2	5	5	5	4	21
Eldorado	USD 11.01	03/03/21	3	3	5	5	4	20
FNV	USD 136.52	16/03/21	1	2	5	2	4	14
Freeport	USD 37.55	23/02/21	1	2	2	2	4	11
Fresnillo	GBP 9.42	03/03/21	3	3	4	3	4	17
Gold fields	USD 8.69	23/02/21	2	4	3	3	4	16
Gold resource	USD 2.69	01/03/21	4	1	5	3	4	17
Harmony	USD 4.05	23/02/21	4	1	3	2	4	14
Hochschild	GBP 2.13	01/03/21	4	2	3	4	4	17
IAM gold	USD 3.02	01/03/21	3	2	4	2	4	15
Kinross	USD 6.73	23/02/21	3	5	4	5	4	21
Kirkland	USD 33.24	01/03/21	2	3	5	3	4	17
New gold	USD 1.65	01/03/21	4	1	2	1	4	12
Newcrest	USD 20.04	23/02/21	3	3	4	3	4	17
Newmont	USD 54.52	01/03/21	1	3	4	4	4	16
Oceana	CAD 1.78	01/03/21	4	1	4	1	4	14
Osisko Gold Royalty	USD 9.80	01/03/21	3	2	4	1	4	14
Pan African	GBP 00.184	23/02/21	2	5	3	3	4	17
Pan American	USD 32.18	01/03/21	1	3	5	3	4	16
Petropavlosk	GBP0.2596	16/03/21	3	2	3	1	4	13
Polymetal	GBP 14.57	05/03/21	2	4	3	3	4	16
Royal Gold	USD 103.29	01/03/21	1	2	5	2	4	14
Sandstorm	USD 6.07	01/03/21	3	2	5	3	4	17
Sibanye	USD 18.91	01/03/21	1	2	3	4	4	14
SSR	USD 13.87	01/03/21	3	3	4	3	4	17
Wesdome	CAD 9.85	16/03/21	2	2	5	1	4	14
Wheaton	USD 42.03	16/03/21	1	2	5	5	4	17
Yamana	USD 4.015	01/03/21	4	3	3	4	4	18

Perfect timing for me, and i agree that there is nowhere near as much value these days as a year ago.  That said, the standout share for me is Sibanye, it just refuses to stop and I wouldn't be surprised to see it tagging 35-40 a share in the near future.  The much derided Stillwater acquisition doesn't look quite so bad now 

Still undecided whether to go big miner and safe for my next purchase or little miner and more leveraged.....

[sancho panza]

Worth a full watch as ever.But from 15 minutes,he begins the 'Road to Serfdom' and it's utterly compelling.

Basement dwellers are familair with the theme of how FUBAR the West is,but this really spells it out for simpeltons like me.

 

[geordie_lurch]

25 minutes ago, sancho panza said:

Worth a full watch as ever.But from 15 minutes,he begins the 'Road to Serfdom' and it's utterly compelling.

Basement dwellers are familair with the theme of how FUBAR the West is,but this really spells it out for simpeltons like me.

 

Yep that's the best explanation of what's going on and where we are heading I have seen - linking all the money printing to totalitarianism via the convenient Covid 'pandemic'

[sancho panza]

1 hour ago, Hancock said:

I'm looking to deploy the £500 of free money i got off the govt today into goldies for my kids Junior ISA.

Think i'll opt for the above.

I remember recently someone mentioning some problems they had ,can't remember exactly.Coma scores jsut reflect the finanicals. Which in their case are solid as of the time of their full year resutls.

@Majorpain @kibuc may have a more informed view on the stock

[Lightscribe]

8 minutes ago, sancho panza said:

I remember recently someone mentioning some problems they had ,can't remember exactly.Coma scores jsut reflect the finanicals. Which in their case are solid as of the time of their full year resutls.

@Majorpain @kibuc may have a more informed view on the stock

I mentioned some time ago on this thread, when I decided to change my monthly allocation into them after they had their biggish fall. It was due to a landslide in one of there mines causing disruption in output. 

[Harley]

1 hour ago, sancho panza said:

Worth a full watch as ever.But from 15 minutes,he begins the 'Road to Serfdom' and it's utterly compelling.

Basement dwellers are familair with the theme of how FUBAR the West is,but this really spells it out for simpeltons like me.

 

I listened to his Q&A podcast last night so this does not surprise me.  Defo worth a listen as it's more him talking somewhat off the record.  I don't quite agree with his step one except maybe in the very short term but understand why he said it having listened to him last night - he had to jog to the testing centre to get tested to go to Puerto Rico to interview Schiff because all the uber drivers were sat at home with their cheques!  And Schiff is the one talking about goods and services making an economy, not money.  His story goes on (which is what made the podcast fun) to explain he only stayed in Puerto Rico for 11 hours because the covid rules were so oppressive.  And then goes on to talk about Idaho and a shop in Florida.  All great George stuff!  Love the guy!

Friedman, Road to Serfdom, etc - yep I've been a long term advocate.  The political economy.  We are in the end game of the politicisation of what Keynes said.  Friedman said inflation is a monetary phenomenon and in the long term it is.  Money supply growth exceeding real productive (GDP) growth is inflationary (so far mainly limited to assets because that is where the money has flowed - those assets are not intrinsically worth any more).  Cost push inflation can often be dealt with through the market and with technology and substitution.  Monetary based pull inflation can't.  It needs social and political will (e.g. a special sort of Fed Governor) and that is a rarity.   It initially creates a feel good factor but that soon runs out. 

This is the door to Venezuela, Zimbabwe, Weimar, etc.  They know this is the end game and a new monetary system is needed to prevent this, just like a new Roman Emperor with his new coin.  But, it has to be a global initiative to avoid winners and losers.  In the meantime they will indeed double down with their price controls, distractions, corruption, etc.  China, Russia, etc know this and China at least has apparently not contributed to that global discussion.  Both are accumulating precious metals, running the backbone of the Bitcoin network, etc.  Will they be what the Huns were to the Roman Empire?  Yes totalitarianism (whatever facemask it wears) and limited opportunities to protect yourself.  It was always about the money folks and it always will be!!!!

[kibuc]

48 minutes ago, sancho panza said:

I remember recently someone mentioning some problems they had ,can't remember exactly.Coma scores jsut reflect the finanicals. Which in their case are solid as of the time of their full year resutls.

@Majorpain @kibuc may have a more informed view on the stock

They had a major poop moment in October, when it turned out part of their pit wall was unstable and needed immediate attentiont (meaning both stopping production and putting time and money into preventing the whole thing from collapsing). Sukari is their only producing mine, so it was (and still is) quite a big deal. Share price halved and, coincidentally, so did the Q4 production, while costs skyrocketed.

Their lowered 2021 guidance is already priced in, but it strikes me as optimistic if their Q4 performance is anything to go by. They assume that the issue will be resolved in H1 and production in that part of the pit will resume in H2, but unstable open pits can be real money... err, pits, and they have nothing else to fall back on. Risky business to me, and not the kind of risk I'm comfortable with, either. I can deal with poor management because managers can be replaced, but you cannot replace poor geology.