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


spunko

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50 minutes ago, DurhamBorn said:

It could run higher yet before the falls due to the dollar not getting down below 90 yet.However i have sold most of my gold miners now as the profits were over 100%,some nearly 200%.That capital has already been re-deployed (a lot of it),the re-flation stocks i listed a few pages back that got some of the capital are now up on average over 10%.I wont be buying back into the gold miners until/unless gold hits around $1100,that is my downside buy target now,with the $900 lows been adjusted to about $1030.I still hold several silver miners and after top slicing some a bit im holding those.

I still think the dollar goes to about 88 before it turns back up during a deflation.

I havent dont hardly any work on gold targets since i sold simply as im building out my re-flation portfolio and time has been spent on those instead.

Thanks.  I suppose it is the old story of not trying to find the top/bottom -- close enough is good enough.

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13 hours ago, dgul said:

In the old fashioned sense, 'shorting' means borrowing stock from someone and then selling it.  Then, at some point in the future you have to buy the shares and give them back to the entity you borrowed them from.  The 'buying back' part is called covering.

[you don't actually see the 'borrowing' part any more, but it is still there in the background.  Most people see the process as 'cancelling' the short (or pressing the 'cross' on the screen, or whatever).  But what is actually happening is 'buying']

Many thanks dgul that explains a lot.

6 hours ago, Castlevania said:

Most large funds will enhance their yield by lending out the stock. That way they collect the dividends (the borrower/shorter pays this) and get a fee for lending out the stock.

👍

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19 minutes ago, Barnsey said:

Terminal stage or a bargain?

They need to raise lots of cash to finish building the mine, until that point all they have is a couple of holes in the ground.  If they have reached the stage of begging the government for cash and being turned down, its probably not a good investment IMO!

Quote

Due to the lack of depth in the commercial bank project finance market the Company developed its original stage 2 financing plan for its North Yorkshire Polyhalite Project (the "Project") based on the anticipated participation of the Infrastructure and Projects Authority ("IPA") which is part of HM Treasury.  Discussions with the IPA were paused in early 2019 to allow the Company to pursue the RCF based financing plan as per the RCF Commitment.

Following the postponement of the proposed senior secure notes offering in August, the Company re-engaged with the UK Government.  The Company had requested Government provide a commitment to enable the issue of up to US$1bn of guaranteed bonds in the event the Company was unable to issue unguaranteed bonds to refinance the RCF (after approximately at least a further 18 months of development activity and up to an additional US$2bn being invested in the Project).  The Government has reviewed the case for the provision of the support requested to facilitate the financing of the Project and has decided not to provide the support requested.  The Company believed this commitment would have enabled the Company's financing to be delivered as planned.

If they get bought out by someone big I will be looking at buying some shares, resource is world class but too big for them to develop alone.

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Bricks & Mortar
3 hours ago, dgul said:
3 hours ago, DurhamBorn said:

It could run higher yet before the falls due to the dollar not getting down below 90 yet.However i have sold most of my gold miners now as the profits were over 100%,some nearly 200%.That capital has already been re-deployed (a lot of it),the re-flation stocks i listed a few pages back that got some of the capital are now up on average over 10%.I wont be buying back into the gold miners until/unless gold hits around $1100,that is my downside buy target now,with the $900 lows been adjusted to about $1030.I still hold several silver miners and after top slicing some a bit im holding those.

I still think the dollar goes to about 88 before it turns back up during a deflation.

I havent dont hardly any work on gold targets since i sold simply as im building out my re-flation portfolio and time has been spent on those instead.

Thanks.  I suppose it is the old story of not trying to find the top/bottom -- close enough is good enough.

I'm still 100% in pm miners, (mostly silver, some gold).  I think they're most likely going up over the next several months as we get steadily more dire economic indicators, and the Fed gets ever looser and $ goes down.

But, I don't like Octobers.  I think Seasonal Affective Disorder upsets market sentiment, and this has the potential to bring the whole thing down prematurely.  It probably only takes the wrong tweet at the wrong time and it could all be fucked.

I think I'm going to hang on for the fed meeting, and then see what to do.  Sell out, or hang on.  I'll probably just make a snap decision on that at some point.

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4 hours ago, dgul said:

Thanks.  I suppose it is the old story of not trying to find the top/bottom -- close enough is good enough.

Yes,i use road maps to remove emotion.Gold hit my target and my miners at the time were over target so i sold,simple as that.Selling is the hardest thing to do in investing,its why i try to avoid it mostly and invest for whole cycles and turn most of my portfolio over a short period then hibernate again.I do keep a small pot to trade with though and if i sell i tend to top slice a few.

Its actually been incredible how this end of cycle has followed a copy book macro path.UK cyclicals even bounced up hard as soon as the press said sterling was toast,and then of course its up 5c since.

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1 hour ago, Barnsey said:

Terminal stage or a bargain?

No need to buy it,far better buys in the sector.Its the sort of contrarian buy signal i like this.Nobody will invest in the commodity.That says they cycle should be bottoming.I like Mosaic and K+S in the sector.

Worth watching though because if a big miner drops the funds in that should signal to buy the sector,though i already am in ladders.

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"Inherent uncertainty in the housing market means there are still risks to the Department achieving a positive return on its investment in homes."

This is the problem, right there. The govt is now an investor in the property market, so have material interest in seeing prices go up. It was a criminally short-sighted policy right from the get-go.

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42 minutes ago, kibuc said:

"Inherent uncertainty in the housing market means there are still risks to the Department achieving a positive return on its investment in homes."

This is the problem, right there. The govt is now an investor in the property market, so have material interest in seeing prices go up. It was a criminally short-sighted policy right from the get-go.

It would not surprise me that those that bought under the Right to Buy scheme get bailed out if the mkt corrects significantly against them. A political hot potato. Just think of the political outcry from the opposition in the House of Gobshites crying out for those hard working families in negative equity. Anyway back to the future regarding reflation stocks. Been quietly buying a number of Uk stocks as some great yields out there. Added recently Royal Mail and Drax

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6 minutes ago, Agent ZigZag said:

It would not surprise me that those that bought under the Right to Buy scheme get bailed out if the mkt corrects significantly against them. A political hot potato. Just think of the political outcry from the opposition in the House of Gobshites crying out for those hard working families in negative equity. Anyway back to the future regarding reflation stocks. Been quietly buying a number of Uk stocks as some great yields out there. Added recently Royal Mail and Drax

As mentioned many times on ToS, customer bail-out is built into Help To Buy. If prices fall and you sell, you only have to re-pay what's left after paying off your mortgage and you're scot-free while the taxpayer foots the bill.

I remember a few people objecting to that, but if my memory serves me well it has eventually been proven that this is the case.

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1 hour ago, kibuc said:

As mentioned many times on ToS, customer bail-out is built into Help To Buy. If prices fall and you sell, you only have to re-pay what's left after paying off your mortgage and you're scot-free while the taxpayer foots the bill.

I remember a few people objecting to that, but if my memory serves me well it has eventually been proven that this is the case.

There was the case of someone who’d tried to remortgage but the bank had come back with a value of zero due to the building having those combustible insulation panels ala Grenfell. So not being one to let a good crisis go to waste asked to repay the government loan, and paid back 20% of zero.

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30 minutes ago, Castlevania said:

There was the case of someone who’d tried to remortgage but the bank had come back with a value of zero due to the building having those combustible insulation panels ala Grenfell. So not being one to let a good crisis go to waste asked to repay the government loan, and paid back 20% of zero.

Great thinking!

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3 hours ago, kibuc said:

As mentioned many times on ToS, customer bail-out is built into Help To Buy. If prices fall and you sell, you only have to re-pay what's left after paying off your mortgage and you're scot-free while the taxpayer foots the bill.

I remember a few people objecting to that, but if my memory serves me well it has eventually been proven that this is the case.

Its incredible really.Its like Tesco adding 20% onto the weekly shop at the till,not charging you but getting the cash sent to them by the government.No extra costs to them,just a massive boost to margins for free.Its lunacy.The estates they have built are shocking as well.Probably knock them down in 30 years.

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24 minutes ago, DurhamBorn said:

Its incredible really.Its like Tesco adding 20% onto the weekly shop at the till,not charging you but getting the cash sent to them by the government.No extra costs to them,just a massive boost to margins for free.Its lunacy.The estates they have built are shocking as well.Probably knock them down in 30 years.

It worse than that as the developers put an extra 20% markup on the price. £600,000, 2 bed Help to Buy flats here in London are worth no more than £500,000

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Yellow_Reduced_Sticker
6 minutes ago, Agent ZigZag said:

It worse than that as the developers put an extra 20% markup on the price. £600,000, 2 bed Help to Buy flats here in London are worth no more than £500,000

Don't ya mean £250,000 ?! ...9_9

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Yellow_Reduced_Sticker

"GOLD will be Explosive, unlike anything we’ve EVER seen says Canada’s Billionaire Frank Giustra"

 

 

Well worth a watch for us folks on this thread, love some of the comments below the video, i reckon our very own @Errol has been posting there...xD

"if gold will be explosive, silver will be atomic."

https://www.youtube.com/watch?v=BnTHFGS58iE

 

 

 

 

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$ overnight market just blew up, main driver was (unsurprisingly...) a lack of $:

sep08-3.png?w=721&ssl=1

https://monday-morning-macro.com/2019/09/17/far-too-little-far-too-late/

One to watch IMO, this puts a lot of pressure on the fed to restart QE to get that market liquid again if it doesnt come back under control.  $53bn has already been thrown at it today so its far from pocket money, thats the Yearly UK Defence budget gone in a single afternoon.

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54 minutes ago, Majorpain said:

$ overnight market just blew up, main driver was (unsurprisingly...) a lack of $:

sep08-3.png?w=721&ssl=1

sep08-3.png?w=721&ssl=1

https://monday-morning-macro.com/2019/09/17/far-too-little-far-too-late/

One to watch IMO, this puts a lot of pressure on the fed to restart QE to get that market liquid again if it doesnt come back under control.  $53bn has already been thrown at it today so its far from pocket money, thats the Yearly UK Defence budget gone in a single afternoon.

This is bad, right?

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12 minutes ago, Noallegiance said:

This is bad, right?

It suggests that there is a shortage of dollars.  Left alone to get worse this could end up with a massive deflationary episode.  But, the inference is that the Fed will print to add the liquidity (ie print dollars).

I'd note that the dollar shortage is actually linked to the melt-up in oil yesterday, so that it might be a short-term thing.  But, the fact that it has happened suggests that the entire market is on a knife edge, and that the slightest thing could set it off.

The theories of DB and others would suggest that they will print (imminently), but that it is actually too late and the damage was done 18 months ago.

So that would mean we'd have a melt-up in everything (Fed printing) but then we'd have the massive deflationary episode anyway some time down the line.

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