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


spunko

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12 hours ago, DurhamBorn said:

Iv only got 3,though iv my eye on a chest one for the garage xD

I'll just post this here without the context.  Sounds so much more fun!

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On 01/11/2019 at 10:28, Tdog said:

Is anyone holding off buying dollar denominated shares/commodities until after the election, on the basis Boris probably wins ... gets his surrender treaty through and then the pound rises? Thus a rise to 1.5 is not beyond the realms of fantasy.

Nah, just been too busy logging and storing about 3 years wood supply, to add to the 3 years I already have!

Boy do I hurt!

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1 hour ago, Cattle Prod said:

@kibuc or any other miner folks, have you ever looked at Northern Dynasty Minerals? The geology of Pebble Mine looks astonishing. I was in the area recently looking at a project, and it came to my attention when they said there was a big mining project nearby that would need gas.

I understand the problems with sanctioning it (its a stunning area, full of bears and salmon etc) but I can't see how such a resource will not be sanctioned when gold/silver/copper truly start to move in the next few years - they can gold plate the environmental standards needed. Tempted with a small position.

Question I have is - why are the big guys not interested?

They were very interested (been JV'ed several times), however the environmental permitting process you mention means that the mine is very unlikely to be built.  

I hold a limited amount but its super super high risk and I've mentally written off the money invested in it, I deliberately haven't mentioned it here for that reason!

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4 hours ago, Errol said:

I'm still buying with the sole focus on what share prices will be when gold is $5000 an ounce or more.

Gold's story is really only just beginning.

Good luck

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1 hour ago, Tdog said:

You going into the baseball bat making business? could be very profitable if quite rightly it becomes socially acceptable to hit our glorious leaders with them.

Well I had to buy a new maul handle!  Nice piece of ash.  Enjoyed a moment tapping it a la "Warriors, come out to play" style.  Took me back to the day it was the only thing between me and some right hardies.  But I digress.....!

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51 minutes ago, Cattle Prod said:

Thanks Major. Agreed, But the resource isn't going to go away, so think I'll put in a very small amount. Some people buy lottery tickets...dyodd and I've already written off the money (gains on harmony).

I was reading taleb again on asymmetry and optionality and accumulating a large number of small high reward positions. The only thing stopping me is fees, and I see you can trade for free now in the States. If that came in here, I think I'd have 20 of these at a hundred a pop!

A possibly useful heads-up for you.  One of my options brokers, TastyWorks.com, now offer commission-free trading in stocks. They only cover US equities, but it makes that approach quite do-able.  You need to fund the account in dollars via a wire transfer ( or cheque drawn on a US bank account ), so it's not much good for people in the UK who want to drip feed money in every month, but if you're putting a lump sum in it's worth it. 

You still have to pay exchange fees, but these are a few cents per trade, so basically negligible. 

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36 minutes ago, Cattle Prod said:

Thanks Major. Agreed, But the resource isn't going to go away, so think I'll put in a very small amount. Some people buy lottery tickets...dyodd and I've already written off the money (gains on harmony).

Lottery is a good comparison, the resource isnt going to go away but it has been sitting there undeveloped since 1989.  Nothing wrong with a bit of gambling that this will finally be the kick it needs to get developed however!

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9 hours ago, Harley said:

Nah, just been too busy logging and storing about 3 years wood supply, to add to the 3 years I already have!

Boy do I hurt!

I just love felling and chopping wood for my own log burner. Been in my property 5 years now and it has a large garden, but not large enough! As soon as I hear a chainsaw and chipper in the local area I'm off to see what they are cutting up. I generally find a tree surgeon is willing to get rid of the chippings he will also give you the wood he's cut down. They hate taking away chip, but I have a large wooded area that I can spread it across.

I always have a smile on my face when burning wood and heating my house for free. Especially when it's been mine or very local. 

Just to add. The very best firewood? Yew. It's like thermite!

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1 hour ago, harp said:

I just love felling and chopping wood for my own log burner. Been in my property 5 years now and it has a large garden, but not large enough! As soon as I hear a chainsaw and chipper in the local area I'm off to see what they are cutting up. I generally find a tree surgeon is willing to get rid of the chippings he will also give you the wood he's cut down. They hate taking away chip, but I have a large wooded area that I can spread it across.

I always have a smile on my face when burning wood and heating my house for free. Especially when it's been mine or very local. 

Just to add. The very best firewood? Yew. It's like thermite!

One of the things I really miss from my last house. We had two log stoves and a small area of woodland. Something very therapeutic about swinging an axe and stacking a log store. Currently in town with only a gas fire. Next house will definitely have stoves and ideally some woodland as well. 

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On 01/11/2019 at 11:41, Tdog said:

It was over 1.5 though falling in the year prior to the referendum. Are you holding off in the case it rises to 1.4?

image.png.b899b724b32392b376a4f45be49f2310.png

I was in Afghan 2012/13.Everything ran on USD there and the rate for cable was $1.64 or something mental fixed and supported by Uncle Sam.I filled my boots.My mates were asking my why I was buying dollars and diamonds.............never look a gift horse.

On 01/11/2019 at 16:47, stokiescum said:

Builders will be slaughtered in we get a 2009 style crash you could easily get tw. At sub 50p and I suspect tw has a larger land bank and readys in the bank than tef saying that tw did have an American arm and Spanish one that hamstrung it somewhat but I think they have off loaded both even so it's often said that builders are often the first into a recesion and the first to recover coming out of one

Agreed Stokie,I know I've been shorting builders on and off for a year so I'm slightly biased but why anyone's buying them jsut before the banking system deleverages,I don't really know.

And I think you're right on them being a great recovery play.Look at BDEV psot 2008.I got that worng

 

7 hours ago, Cattle Prod said:

Thanks Major. Agreed, But the resource isn't going to go away, so think I'll put in a very small amount. Some people buy lottery tickets...dyodd and I've already written off the money (gains on harmony).

I was reading taleb again on asymmetry and optionality and accumulating a large number of small high reward positions. The only thing stopping me is fees, and I see you can trade for free now in the States. If that came in here, I think I'd have 20 of these at a hundred a pop!

Looking at my own experiences of the opast two years since we started buying the goldies ,the actuion thus far has been in the $1bn + market.

I've set it up in lines but basically looking to have  a last line of invemsnets that are very smal but that's where all the pontential 50 baggers are going to be.Bet on 10,gold goes to $2500 and one of thems a winner.You only need one.

I think it's well worth having a few well placed small/high risk reward bets.We're on some Barrick,reality is that they''ll likely go nowhere.Reality is a small holding in sibanye has alredy done more than chunky Barrick/Newmont holdings

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5 minutes ago, sancho panza said:

 

 

I was in Afghan 2012/13.Everything ran on USD there and the rate for cable was $1.64 or something mental fixed and supported by Uncle Sam.I filled my boots.My mates were asking my why I was buying dollars and diamonds.............never look a gift horse.

Agreed Stokie,I know I've been shorting builders on and off for a year so I'm slightly biased but why anyone's buying them jsut before the banking system deleverages,I don't really know.

And I think you're right on them being a great recovery play.Look at BDEV psot 2008.I got that worng

 

Looking at my own experiences of the opast two years since we started buying the goldies ,the actuion thus far has been in the $1bn + market.

I've set it up in lines but basically looking to have  a last line of invemsnets that are very smal but that's where all the pontential 50 baggers are going to be.Bet on 10,gold goes to $2500 and one of thems a winner.You only need one.

I think it's well worth having a few well placed small/high risk reward bets.We're on some Barrick,reality is that they''ll likely go nowhere.Reality is a small holding in sibanye has alredy done more than chunky Barrick/Newmont holdings

Tw. Dropped to sub 10p I think my mate bought 10k worth and sold at a quid each yet still moaned when he found out I’d sold my 1000 bought at 32 p for 180 lol daft twat that he is mind I’d made 36p on the dividends hence all profit nothing to you guys but to me a lot of money 

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Yeah this will end well...... @Errol@err l knows more thasn he lets on....

https://wolfstreet.com/2019/11/02/us-national-debt-passed-23-trillion-jumped-1-3-trillion-in-12-months/

The US gross national debt – the sum of all Treasury securities outstanding – passed another illustrious milestone, $23.01 trillion, the US Treasury department disclosed on Friday. And it got there at lightning speed just eight months after having passed the illustrious milestone of $22 trillion on February 11. Over the past 12 months, the US national debt has jumped by $1.33 trillion – and these are the good times, and not a financial crisis when everything goes to heck:

US-Gross-National-Debt-2011-2019-11-02.p

 

 

https://wolfstreet.com/2019/10/31/mexico-suffers-first-year-over-year-decline-in-gdp-since-2009/

In the third quarter of 2019, Mexico notched up its first year-over-year decline in GDP since the final quarter of 2009, when it was in the midst of a sharp recession brought on by the Financial Crisis. According to a preliminary estimate published by Mexico’s statistical institute INEGI, in the third quarter, the economy shrank 0.4% compared with the same quarter a year earlier.

Mexico-GDP-2019-Q3-YOY.png

 

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5 minutes ago, stokiescum said:

Tw. Dropped to sub 10p I think my mate bought 10k worth and sold at a quid each yet still moaned when he found out I’d sold my 1000 bought at 32 p for 180 lol daft twat that he is mind I’d made 36p on the dividends hence all profit nothing to you guys but to me a lot of money 

It ain't nothing stokie....it's all relative.I've done more shit jobs for fuck all money than most people I know.

I haven't had thrid world experiences but I remember the 90's recession well./

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1 minute ago, sancho panza said:

It ain't nothing stokie....it's all relative.I've done more shit jobs for fuck all money than most people I know.

I haven't had thrid world experiences but I remember the 90's recession well./

Caused me chaos saw the shit comeing in London and fucked off up to Glasgow to break a strike in 89 that was fun lol European city of culture my arse 

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https://www.icis.com/chemicals-and-the-economy/2019/10/budgeting-for-paradigm-shifts-and-a-debt-crisis/

It is now 8 years since John Richardson and I published our 10-year forecast for 2021 in Boom, Gloom and the New Normal: How the Western BabyBoomers are Changing Demand Patterns, Again’. Remarkably, its core conclusions are very relevant today, as the summary confirms.

2021.png

Unfortunately, as we feared, policymakers refused to junk their out-of-date models, despite the lesson of the 2008 financial crisis. Instead, they doubled down on their failed stimulus policies.

  • Yet nearly 1/3rd of the world’s High Income population are in the Perennials 55+ age group and are a replacement economy
  • As a result, and as we suggested in 2011, central bank policies have not, and cannot, produce sustainable growth or inflation

As a result, they have created record levels of government, corporate and individual debt – which can never be repaid. Even the IMF has now started to recognise the timebomb that has been created:

“We look at the potential impact of a material economic slowdown – one that is half as severe as the global financial crisis of 2007-08. Our conclusion is sobering: debt owed by firms unable to cover interest expenses with earnings, which we call corporate debt at risk, could rise to $19tn. That is almost 40% of total corporate debt in the economies we studied.”

Already we are starting to see the unwinding of some of the most extreme examples of the bubbles that have been created in asset prices:

And if the IMF are right, which is almost certain, we must expect major bankruptcies to take place over the next few years.  Over-leveraged businesses go bust very quickly when profits decline, as they can no longer pay their interest bills.

As with the run-up to the 2008 crisis, the signs of trouble are already building. The Fed has had to provide $200bn of support to overnight money markets in New York over the past 6 weeks, and is having to add another $60bn/month into next year.

Companies now face a binary choice as they finalise their Budgets for 2020-2022.

They can choose to ignore what is happening in the real world and continue to hope ‘business as usual’ will continue? Or they can start contingency planning by working through the implications of our forecasts for their Downside Scenario?

Transitions.png

One key issue is that our 2021 predictions included paradigm shifts as well as economic forecasts. And as the chart above shows, the transitions associated with paradigm shifts are now accelerating:

  • It took decades for the telephone, electricity, autos and even the radio to reach most Americans
  • But it took only years for the microwave, computer, cellphone and internet to become mainstream

It is clear that a whole series of major paradigm shifts are now underway, as I noted 2 weeks ago:

  • Climate change is finally being taken seriously by legislators and many companies
  • This will lead to dramatic declines in the use of fossil fuels for both transport and petrochemicals
  • It highlights how sustainability is now the key issue for corporate strategy, replacing globalisation
  • Affordability is also moving up the agenda, and will become critical as the debt crisis starts to impact

The problem is that incumbents, as we have seen with central banks, are usually very slow to notice what is happening in the real world outside their office or factory.  The reason is simple – they forget what they have discussed with their friends and family once they go to work. Group-think instead takes over, and everyone goes blindly on believing their own propaganda until it is too late.

German car company VW was a classic example of a blinkered strategy. As top executives now recognise, it was only the “dieselgate” emissions disaster that enabled new management to introduce the Transform 2025 strategy based on a transition to Electric Vehicles.

Most companies don’t face the near-death challenge faced by VW in 2015. But they do face major challenges over the next 2-3 years, which will require them to implement major shifts in their strategy if they want to continue to grow revenue and profits in the future.

The good news is that these challenges can be turned into opportunities with hard work and imagination.  Please let me know if I can help you to achieve the necessary transformation.

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Nice comments on logging, pizzas, etc.  Funny old world.  Been busy at it but maybe not really so far from this thread.  Illustrates how broad we have to think about capital, assets, money, etc. 

Sure, the financial investing side is important but I also feel my other "investment" work is as relevant.  I have financial investments but equally important is building other capital like my log stores, allotment, shelter belt, insulated house, outhouses, fencing, knowledge, skills, tools, servicing abilities, etc.

As per my investment strategy, it's nice being as close to the source of things as possible, whether that's growing food, securing fuel, fixing your own stuff, or making your own A1 pizzas and the like! I'll probably die before I finish but it's a great road to travel.

Anyways, I really should get back to this financial malarkey for a bit.

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9 hours ago, Cattle Prod said:

Thanks Major. Agreed, But the resource isn't going to go away, so think I'll put in a very small amount. Some people buy lottery tickets...dyodd and I've already written off the money (gains on harmony).

I was reading taleb again on asymmetry and optionality and accumulating a large number of small high reward positions. The only thing stopping me is fees, and I see you can trade for free now in the States. If that came in here, I think I'd have 20 of these at a hundred a pop!

CattleProd, I think looking at this as a bet would be the right approach. High risk, but then again more fun and probably better chances than the lottery!

Wpould anyone have a list of a dozen or so similar - 'northern dynasty minerals' - type companies? Perhaps ones that have been similarly around since 1980's, with known mineral assets - so unlikely they would decide to suddenly wind-up in 12-months time.    

   

 

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10 hours ago, JMD said:

CattleProd, I think looking at this as a bet would be the right approach. High risk, but then again more fun and probably better chances than the lottery!

Wpould anyone have a list of a dozen or so similar - 'northern dynasty minerals' - type companies? Perhaps ones that have been similarly around since 1980's, with known mineral assets - so unlikely they would decide to suddenly wind-up in 12-months time.    

   

 

get thee to the crypto traders, might win, probably lose, never know.

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No worries here, folks.

 

- GDP Now cut to 1% while median CPI is at 3%.

- Fed just printed $260B in 2 months.

- 3 rate cuts in 3 months.

- The entire Treasury curve now below inflation.

- CBs easing worldwide.

- $15+T of neg yielding bonds.

 

EIc_UMuXUAECbEa.png

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14 minutes ago, Errol said:

Silver:

 

EIb64GWW4AA-1so.png:large

Can I ask where the chartts from?

I've posted before about the correaltion between bottoms in the Gold:Silver ratio portending the end of bull markets.Only problem is that there's only a few data points...

We're nowhere near at the minute.When I look at the charts silver does the greater %age increases versus gold but crucially does them in shorter time spans.

 

 

Decl:Long positions Silver PM miners

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15 hours ago, Harley said:

Nice comments on logging, pizzas, etc.  Funny old world.  Been busy at it but maybe not really so far from this thread.  Illustrates how broad we have to think about capital, assets, money, etc. 

Sure, the financial investing side is important but I also feel my other "investment" work is as relevant.  I have financial investments but equally important is building other capital like my log stores, allotment, shelter belt, insulated house, outhouses, fencing, knowledge, skills, tools, servicing abilities, etc.

As per my investment strategy, it's nice being as close to the source of things as possible, whether that's growing food, securing fuel, fixing your own stuff, or making your own A1 pizzas and the like! I'll probably die before I finish but it's a great road to travel.

Anyways, I really should get back to this financial malarkey for a bit.

Was there a Monty Python sketch about investment bankers (I'm sure there probably was!)?...there was one about being a lumberjack...which one do you aspire to Harley?...what's you strengh, `fashion sense` or financial acumen? :-)

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