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

[leonardratso]

13 minutes ago, JMD said:

I think that fund is a good one for gold+silver miners, performance comparable to gdx, etc, but when I initially looked the 1% fee put me off. I was hoping that eventually slvp/sil funds would be available 'over here' by now but alas no. I therefore instead bought silver miner stocks.

For gold miner exposure I bought gdx. Although its a gold fund I did approximate/guess - for the purposes of getting my overall personal portfolio allocation right - that it held approx. 15% silver miners, but i'm now not so sure if it is that high a figure. Does anyone have a view on what % silver the gdx fund holds in terms of a gold/silver ratio? 

 

 i bought this one thru lloyds, its never been in profit since it was after the great spike, but its never been in huge loss either, im happy to keep building it, i swapped SSLV over to it because SSLV never impressed me, it really didnt follow the rally very well even though it was supposed to be physical silver, and i could never get to the bottom of its large price discrepancies with spot, i know it has costs and will never be spot but the deviation was unfathomable to me at points. Anyway, i like using funds even at fees since i only pay £1.50 per trade for funds in and out, ive had SWERSO for a a while and i scalpped it regularly to pay for the losers.

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/smith-and-williamson-global-gold-and-resources-b-income

[DurhamBorn]

This from where i work lots of jobs to go,and we are probably one of the best lead indicators of recession,so a faster fall than during the financial crisis,might be worth shorting some US industrials if the market shoots up on QE expectations as it will be short lived.

"the downturn is happening at a sharper pace than we experienced in the previous two cycles".

[Loki]

12 minutes ago, DurhamBorn said:

This from where i work lots of jobs to go,and we are probably one of the best lead indicators of recession,so a faster fall than during the financial crisis,might be worth shorting some US industrials if the market shoots up on QE expectations as it will be short lived.

"the downturn is happening at a sharper pace than we experienced in the previous two cycles".

Was that an internal e-mail or something?

[janch]

I know it's ZH but an interesting take on investing in Russia as a contrarian play and mentions Gazprom.  Who knew Russia has no debt?

https://www.zerohedge.com/geopolitical/stay-strong-go-long-bulletproof-russia-becomes-contrarian-haven

[janch]

For some unknown reason I bought some Ariana Resources (AAU) as a gold mining stock and it has been sitting there for a while.  But today it's gone up a bit and this is why apparently:

https://www.morningstar.co.uk/uk/news/AN_1574702436331880600/ariana-resources-signs-non-binding-agreement-with-turkish-contractor.aspx

I'm holding as I have such a small investment it's not worth cashing in as yet and maybe it has higher to go.

[Agent ZigZag]

1 hour ago, DurhamBorn said:

This from where i work lots of jobs to go,and we are probably one of the best lead indicators of recession,so a faster fall than during the financial crisis,might be worth shorting some US industrials if the market shoots up on QE expectations as it will be short lived.

"the downturn is happening at a sharper pace than we experienced in the previous two cycles".

The construction and manufacturing industry generally are always first leading indicators to go into recession but always the first to come out of one. Whilst technically were not in a recession the last year has shown me the bad times are just around the corner. I will give it about 3 years from now before the first real signs of any meaningful recovery. Thats what I have planned and budgeted for.

[Talking Monkey]

4 hours ago, DurhamBorn said:

This from where i work lots of jobs to go,and we are probably one of the best lead indicators of recession,so a faster fall than during the financial crisis,might be worth shorting some US industrials if the market shoots up on QE expectations as it will be short lived.

"the downturn is happening at a sharper pace than we experienced in the previous two cycles".

On the dollar I would have thought it would be heading down by now on the anticipation of rate cuts and QE not sure why it has held up so long. Defo feels like there is a storm coming, can't see it being delayed till after the US elections, feels like will be next year sometime

[Errol]

5 hours ago, janch said:

I know it's ZH but an interesting take on investing in Russia as a contrarian play and mentions Gazprom.  Who knew Russia has no debt?

https://www.zerohedge.com/geopolitical/stay-strong-go-long-bulletproof-russia-becomes-contrarian-haven

Russia has been avidly buying gold as well.

[Loki]

5 minutes ago, Errol said:

Russia has been avidly buying gold as well.

 

+55.07% now 

I just don't know enough to know if this has further to run.  

 

[MrXxxx]

5 hours ago, Tdog said:

Sorry to be the bearer of bad news.

YRS will be on in a moment explaing that he saw Janch`s post and decided to buy :-) :-):-)

[Talking Monkey]

5 hours ago, Agent ZigZag said:

The construction and manufacturing industry generally are always first leading indicators to go into recession but always the first to come out of one. Whilst technically were not in a recession the last year has shown me the bad times are just around the corner. I will give it about 3 years from now before the first real signs of any meaningful recovery. Thats what I have planned and budgeted for.

Would it be that long 3 years, I get the vibe we'll be in the middle of the total shiyte this time next year so wouldn't the recovery be a year after that at most, or is your view on the shit hitting the fan a lot further out

[Agent ZigZag]

In the last recession October 2008 things started turning down work wise for me but only slowly. March 2009 to December 2009 was probably the worst part. From about Jan 2010 it was 'what recession' as I noted International money began coming back into prime London and work picked up fast to the end of 2011. Then 2012 more international money came in then by 2013/2014 confidence had returned to the market and rippled out. So for me 18 months for any signs that money printing works to 3 years full steam ahead for the economy. Through printing money it takes time to show its face. The first tranche will do nothing then the next nothing and so on until it does. All of this takes times but when it does there is the chance of there being so much money in the system that we could have serious debasement of the currency and high inflation.  I do not consider money will flow into residential housing like last time as that is an easy one trick pony. If we are to have an infrastructure spend then that takes time to implement and bear fruit. It will be interesting this time around to see what areas of the UK economic growth concentrates and what careers will benefit most. Im quietly betting on it wont be London and that the North will catch up with the south.  

[Bobthebuilder]

2 hours ago, Tdog said:

I saw this one coming a mile off and it was long before October 2008,  2007 when NR had the run that it became clear.  Anyway i was flogging new build property overseas (as the owner im no fucken estate agent) and during the winter of 2006/7 when we were selling ski property we did not get a nibble, no one emailing, no thing ... and it continued for the months afterwards until we jacked it in.

Was clear then but more so in hindsight that the banks had stopped lending money to people who were using their house as an ATM to buy shite overseas property

i was working self employed trades back then, 2006 was my alarm time by 2009 i had altered my business and had the most profitable time until 2014 when every other foker jumped on the band wagon.

IMO it feels like 2007 again now, to many people in trades chasing a diminishing market, looking for top doller (expensive vans to pay for etc etc).

[Talking Monkey]

6 hours ago, Bobthebuilder said:

i was working self employed trades back then, 2006 was my alarm time by 2009 i had altered my business and had the most profitable time until 2014 when every other foker jumped on the band wagon.

IMO it feels like 2007 again now, to many people in trades chasing a diminishing market, looking for top doller (expensive vans to pay for etc etc).

So the big turmoil could be well over a year away rather than just round the corner

[Loki]

1 hour ago, Talking Monkey said:

So the big turmoil could be well over a year away rather than just round the corner

It's always a year away 

[Loki]

35 minutes ago, Tdog said:

Ive been saying that for too long now. Im now of the opinion it may come shortly or it might not ... on HPC they used to mock that we are in a new paradigm, but its clear with potential of NIRP, printy printy to destroy currencies, and govt doing anything it can kick recessions into the future that we are in a new paradigm.

Sad but true

[Majorpain]

1 hour ago, Tdog said:

Ive been saying that for too long now. Im now of the opinion it may come shortly or it might not ... on HPC they used to mock that we are in a new paradigm, but its clear with potential of NIRP, printy printy to destroy currencies, and govt doing anything it can kick recessions into the future that we are in a new paradigm.

No more boom and bust?  (trademark G Brown)

Governments cannot stop the economic cycle, there will be another recession at some point in the future, and with world GDP/Debt at 320% its a case of how high can it go before the entire thing topples.

[Loki]

Is it possible for durhamborn's forecast to be accurate and yet things to carry on much the same on the surface?

So for people who are in the know (like us thanks to durhamborn!) There is a chance to preserve wealth, while everyone else gradually gets poorer BUT without an epic crash and recession?

[Majorpain]

4 minutes ago, Tdog said:

Of course there will be another recession, my point is the new paradigm is the lengths theyll go to to kick it into the future. Imho the so called recession in 07/08 was kicked into the future and wasnt allowed to run its course thanks to QE/ZIRP and bank bailouts ... as will the coming one. Hence this thread.

A lot of that was due to China printing like mad 2008-2016, they are seriously struggling with food inflation due to swine flu so no more trillions of $ of free money from them for the foreseeable.

Its a change in circumstances, but not a new paradigm, that will come when inflation starts kicking in from the QE.

[CVG]

14 minutes ago, Loki said:

Is it possible for durhamborn's forecast to be accurate and yet things to carry on much the same on the surface?

So for people who are in the know (like us thanks to durhamborn!) There is a chance to preserve wealth, while everyone else gradually gets poorer BUT without an epic crash and recession?

I don't think so. That monumental debt and asset price bubble has to be deleveraged. The next recession will likely be a depression. See Ray Dalio 101 on Youtube.

[Majorpain]

7 minutes ago, Tdog said:

Isnt the whole point of the printy to infinity and govt spending to avoid a depression ... hence another 2007/8 short recession then all is good until they can no longer kick the can.

The Weimar Germany option isn't popular with the middle class, or indeed anyone really, so printing is on the table when it doesn't generate inflation, when it does its a big problem and adding a zero to the end of the currency causes more problems than it solves.

China's exported deflation for the past 10 years with their massive malinvestment in manufacturing trying to put everyone else out of business, they consumed more concrete in the past 10 years than the US in the last 100,  remove that from the equation going forward and IMO QE will cause inflation a lot faster than the past.

[Bobthebuilder]

19 minutes ago, Tdog said:

Isnt the whole point of the printy to infinity and govt spending to avoid a depression ... hence another 2007/8 short recession then all is good until they can no longer kick the can.

I thought the premise behind this thread was that they will print but directly into projects energy, infrastucture etc, rather than to the banks and into assets like houses etc and this will lead to high inflation.

[DoINeedOne]

Was on the train in London last night and saw this in the paper

 

[Clueless Imbecile]

If I've understood it correctly, the basic scenario that's been discussed on this thread is:

(1) Debt deflation causing a lot of wealth to be destroyed (across many asset classes)
(2) Massive QE (money printing) by central banks
(3) Governments use the QE money to fund massive infrastructure spending
(4) Inflation rising throughout the next cycle due to the infrastructure spending
(5) Possible collapse of the financial system (or at least of fiat currency) at the end of the next cycle

But... why would (5) happen?

My first thought was that with such a huge amount of debt in the world nowadays, any significant rise in interest rates or inflation would quickly put a lot of people (& companies) into a monthly loss, resulting in a massive wave of insolvency.

However, a thought occurred to me today.... wouldn't (1) (the debt deflation) wipe away a lot of the excess debt?

Also, if peoples (& companies) income rises, perhaps due to inflation, then wouldn't that make it easier for them to pay off their debts?

I suppose I'm looking for some hope that things might not be quite as bad as predicted at the end of the next cycle.

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

[sancho panza]

9 hours ago, Majorpain said:

The Weimar Germany option isn't popular with the middle class, or indeed anyone really, so printing is on the table when it doesn't generate inflation, when it does its a big problem and adding a zero to the end of the currency causes more problems than it solves.

China's exported deflation for the past 10 years with their massive malinvestment in manufacturing trying to put everyone else out of business, they consumed more concrete in the past 10 years than the US in the last 100,  remove that from the equation going forward and IMO QE will cause inflation a lot faster than the past.

Simply put but very true

10 hours ago, Majorpain said:

A lot of that was due to China printing like mad 2008-2016, they are seriously struggling with food inflation due to swine flu so no more trillions of $ of free money from them for the foreseeable.

Its a change in circumstances, but not a new paradigm, that will come when inflation starts kicking in from the QE.

China has done a lot of the heavy lifting post 08 iirc Paul Hodges had a great post on it.