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

[Noallegiance]

18 minutes ago, sancho panza said:

 

The reckoning is coming, and everyone who counted on "eternal growth of borrowing" to stave off the reckoning is in for a big surprise: revenues will plummet, incomes will plummet, lending will plummet, college enrollments will plummet, and tax receipts will plummet. Defaults will skyrocket, triggering a collapse in debt markets, housing markets and stock markets, all of which are totally dependent on the delusion that we can deal with soaring costs by borrowing more, forever and ever.'

I was having a conversation with a 30 year old who is single with no dependants and has a mortgaged flat in the SE.

His plan is to sell the flat and go travelling, hoping to 'make' £25k or of the sale, using £15k to pay off his credit card debt leaving him with £10k. No viewings in 5 months. He's putting it down to anything other than price.

I said to him that being that his only responsibility is himself, at his age, with zero dependants on a manager's salary he could retire at 45. He (fake, so it turns out) liked the sound of it.

Within 15 minutes of said conversation he received a call from someone extolling the benefits of getting a new Ford for £250 per month.

"That sounds good. I could do with a new car. It would be nice."

I cannot convey to you the associated vacant sound that accompanied the above exclamation. On review, it was the same vacant sound he made when I was talking to him about getting himself a handsome freedom before the age of 45.

I chuck the odd comment into conversions every so often to check reactions. Many many people are dependent upon debt for life and faux happiness associating a feeling of progress when another loan is utilised for motoring/holidays/tech.

The social impact of another financial event is going to see stuff even folk on here can't fathom, I would guess.

And there ain't much most people can do to avoid it.

[Harley]

3 minutes ago, Noallegiance said:

The social impact of another financial event is going to see stuff even folk on here can't fathom, I would guess.

And what will happen to the prudent few?  Not the Megabucks who've gone off shore but the small fry.  They've already been robbed with penal interest rates to bail out the rest.  And Brown's pension raid.  Just straight out theft?  And what can people do to protect themselves?  The new year starts with the first year of five Conservative years.  This is the time for their bad stuff, this is the time to act.

[sancho panza]

On 27/12/2019 at 12:56, kibuc said:

SILV looks expensive, sure, but the grades they're hitting are mind blowing. Their resource estimate will increase massively in 2020.

If silver goes up, they will be taken over at a juicy premium me thinks. 

Having said that, in terms of multi bag potential I'm much more keen on Alexco and Impact, but there's room for some SILV in my portfolio as well, at least for now. 

They've nearly 100 bagged already........I find myself unwilling to take a punt at those odds

On 27/12/2019 at 13:04, kibuc said:

You bet

Impact & Alexco for silver leverage, Guyana as a major turnaround story, Fortuna for Lindero repricing potential, Minera Alamos for similar reasons, SILV as a silver equivalent of WDO, Corvus for takeover potential but with lowest conviction of them all. The latter two will be probably the first ones to have their profits taken and redistributed, while GUY and IMPT I'm planning to ride all the way. 

I'm in at full allotment on AXU,luckily picked some up under 80c Nov 18.I'm using some of the profits from the mid tier punts eg GFI to bulk up some more levereaged bets eg AXU/Integra/Guy.

As I mentioned before,can't believe how much hecla and couer have gone up over the last few months.

Very interested in Impact though.Very interested in anyhting leveraged to the silver price when it comes to that

On 27/12/2019 at 13:22, Lavalas said:

I decided to buy Minera Alamos but for some reason also decided to wait until it edged back to 0.21. It hovered around for a while but never quite got there and now it’s 0.315 and I own zero shares.

What an idiot. I thought I’d found some kind of zen like market patience.

Never mind - still holding plenty of others. With Wesdome and Alexco the stars. Down on Rio2 but got good hopes on that. Holding a few other I’ll advised explorecos which I’ll not mention lest anyone think they’re a good idea. Massively down on those but they have huge potential.

Dabbled in some MAI,A little at 21cents-waiting for the 20 but got the feeling it wouldn't happen,then a little less at 27c

Down on RIo2 too,but with these littlies,they can go from red to blue in no time....and vice versa of course.

[Harley]

43 minutes ago, sancho panza said:

We've used a simple trick to keep the status quo from imploding for the past 11 years: borrow whatever it takes to keep paying the skyrocketing costs

It's a zero sum game.  Always was.  Only real (real) growth changes that.  And there's been very little of that for a long time

[sancho panza]

On 27/12/2019 at 18:36, Bricks & Mortar said:

I've been considering a bit of a shuffle these last few days.  wondering whether to take profits on the like of Yamana or First Majestic.  Cut losses on Fresnillo and Hochschild.  And whether to stick with Endeavour even though its barely broken even.
I'd like Alexco, after Kibuc's suggestion.  And also Kirkland Lake, as suggested by an Aussie I follow on Twitter and after reading a lot about a potential deal to buy a new mine.

But I got my fingers burned the last time I shuffled.  Sold Couer and Hecla to buy Hochschild and Fresnillo, in Sep/Oct.  Reasoning these were FTSE listed, and hoped to mitigate a currency move.  Couer and Hecla took off immediately afterward and I'm down about 20% on the ones I bought.  I think the drivers of a PM move are rising spot prices and a falling DXY.  I guess that'll favour US, and maybe Canadian or Mexican miners if their currencies follow the USD to an extent.  I think the USD/GBP part will be outweighed by the rising share prices if it happens.   But, because its a rising tide lifting boats scenario, I'm leaning toward just saving the trading cost and sticking with what I got.  I may yet split a better performer in half and use the funds to buy whatever looks cheap at the time.
 

I personally wont be cutting losses n fres and Hoc,in about the same time as you.You got to ride these periods of red.They're a great play on silver price

But I also took profits in Yamana so can't preach....

 

Im defo in the rising tide school of thought,jsut trying to pick some stable plays then have some leveraged plays running of the pack.

[sancho panza]

20 minutes ago, Harley said:

It's a zero sum game.  Always was.  Only real (real) growth changes that.  And there's been very little of that for a long time

Just amazing how long theye kept the plates spinning.....it really is.Look at buy backs.

 

Alos look at how many great minds have been sideswiped by it.

Couple of Hodges links worht reading in bound.Super analysis as ever from him................but it begs the question .....

By Paul Hodges on 22nd December 2019 in Financial Events

SHARE THIS STORY

Chart of the Decade – the Fed’s support for the S&P 500 will end with a debt crisis

 

Each year, there has been only one possible candidate for Chart of the Year.  Last year it was the collapse of China’s shadow banking bubble; 2017 was Bitcoin’s stratospheric rise; 2016 the near-doubling in US 10-year interest rates; and 2015 the oil price fall.

This year, the ‘Chart of the Decade’ is in a league of its own. Produced by Goldman Sachs, it shows that the S&P 500 is in its longest-ever run without a 20% downturn.

The reason for this amazing performance is not hard to find.  It has been caused by the US Federal Reserve’s adoption of Ben Bernanke’s concept that:

“Higher stock prices will boost consumer wealth and help increase confidence“.

Set out in 2010, it replaced the previous policy set out by William McChesney Martin that their job was:

“To take away the punchbowl as the party gets going”.

“Don’t fight the Fed” is one of the best short-term investment principles, but the Fed’s success is quite extraordinary when one looks back over the past decade.  Each time the market has threatened to slide, they have rushed in with yet more support:

• In QE1, the Fed pumped out $1.3tn of support for financial markets, in addition to reducing interest rates to near-zero
• This free money mostly went straight into asset markets such as stocks, which weakened when the stimulus stopped
• QE2 came to the rescue with another $600bn of support – but again, stocks then weakened
• QE3 provided longer-term support, with $40bn/month then increasing to $85bn/month

President Trump’s tax cuts provided even further support when the Fed finally paused, as the Financial Times chart confirms, by encouraging a massive wave of share buybacks.

Remarkably, these buybacks came at a time when profits were actually falling as a percentage of GDP, as the third chart shows. Investors should really have been pulling out of shares, rather than buying more. But after so many years of Fed support, most asset managers had either forgotten how to read a Profit & Loss account and Balance Sheet – or had decided these were irrelevant to stock valuation.

Since September, we have been in a new Fed stimulus cycle. As I noted then, a $50bn hole had appeared in New York financial markets.  Regulators and consensus commentators combined to explain this was only due to temporary factors. But since then, the support has reached $376bn, and the Fed has announced it will happily supply another $500bn of support to cover possible year-end problems, probably taking the total close to $1tn since September.

Behind this panic is the IMF’s warning that the $8.1tn of Treasury bonds available as collateral for the repo market, are in fact “owned” by an average of 2.2 different banks at the same time. Understandably, bank CFOs are pulling back, and trying to establish if “their” Treasury bonds in fact belong to someone else.

Regulators should never have allowed this to happen.  They should also have focused long ago – as I suggested this time last year – on the implications of the decline in China’s shadow banking sector.  Just as I expected, China is now exporting deflation around the world, with its PPI falling since June.

China’s slowdown also means an end to the flow of Chinese cash that flooded into New York financial markets, which hedge funds have then leveraged into outsize profits in financial markets.

The Fed turned a blind eye to this, just as it allowed BBB corporate debt to expand at a record rate, as the chart from S&P confirms.   As we noted in June’s pH Report:

“US BBB grade debt, the lowest grade in which most funds are allowed to invest, is now more than $3tn, with 19% of this total ($579bn) in the very lowest BBB– grade. And this BBB– total jumps to $1tn if one includes financial sector debt. S&P also report that global BBB debt is now $7tn, with US companies accounting for 54% of the total.

“The problem is that BBB- debt becomes speculative debt if it is downgraded by just one notch to BB grade. And most investors are then forced by their mandate to sell their holding in a hurry, creating the potential for a vicious circle, as the most liquid bonds will inevitably be sold first. In turn, this creates the potential for a “waterfall effect” in the overall bond market – and to contagion in the stock market itself.”

The Fed’s focus on boosting the stock market is clearly going to end in a debt crisis.  But when warning of this, the consensus responds as in 2006-8, when I was warning of a global financial crash, “That’s impossible”.  And no doubt, once the debt crisis has occurred, it will again claim “nobody could have seen this coming”.

This is why the S&P 500 chart is my ‘chart of the decade’.

[sancho panza]

From 2019 Hodges chart of the year.Interesting he focuses again on Bernanke's thesis from 2010..........

Whislt he may have been wrong on US stock prices,he wasnt wrong on China deflating

https://uk.reuters.com/article/uk-china-autos/china-auto-sales-fall-in-golden-september-as-turnaround-hopes-fade-idUKKBN1WT0LO

Total auto sales fell 5.2% from the same month a year earlier to 2.27 million vehicles, the China Association of Automobile Manufacturers (CAAM) said on Monday.

This followed declines of 6.9% in August and 4.3% in July. Car sales in 2018 declined from a year earlier, the first annual contraction since the 1990s against a backdrop of slowing economic growth and a crippling trade war with the United States.

http://www.new-normal.com/economic-growth/chart-of-the-year-chinas-shadow-banking-collapse-means-deflation-may-be-round-the-corner/

Chart of the Year – China’s shadow banking collapse means deflation may be round the corner

Dec 16, 2018 | auto sales, Bank of Japan, Ben Bernanke, deflation, Economic growth, housing bubble, inflation, lending, shadow banking, stimulus, US Federal Reserve

Last year it was Bitcoin, in 2016 it was the near-doubling in US 10-year interest rates, and in 2015 was the oil price fall.  This year, once again, there is really only one candidate for ‘Chart of the Year’ – it has to be the collapse of China’s shadow banking bubble:

• It averaged around $20bn/month in 2008, a minor addition to official lending
• But then it took off as China’s leaders panicked after the 2008 Crisis
• By 2010, it had shot up to average $80bn/month, and nearly doubled to $140bn in 2013
• President Xi then took office and the bubble stopped expanding
• But with Premier Li still running a Populist economic policy, it was at $80bn again in 2017

At that point, Xi took charge of economic policy, and slammed on the brakes. November’s data shows it averaging just $20bn again.

The impact on the global economy has already been immense, and will likely be even greater in 2019 due to cumulative effects.  As we noted in this month’s pH Report:

“Xi no longer wants China to be the manufacturing Capital of the world. Instead his China Dream is based on the country becoming a more service-led economy based on the mobile internet.  He clearly has his sights on the longer-term and therefore needs to take the pain of restructuring today.

“Financial deleveraging has been a key policy, with shadow bank lending seeing a $609bn reduction YTD November, and Total Social Financing down by $257bn. The size of these reductions has reverberated around Emerging Markets and more recently the West:

• The housing sector has nose-dived, with China Daily reporting that more than 60% of transactions in Tier 1 and 2 cities saw price drops in the normally peak buying month of October, with Beijing prices for existing homes down 20% in 2018
• It also reported last week under the heading ’Property firms face funding crunch’ that “housing developers are under great capital pressure at the moment”
• China’s auto sales, the key to global market growth since 2009, fell 14% in November and are on course for their first annual fall since 1990
•  The deleveraging not only reduced import demand for commodities, but also Chinese citizens’ ability to move money offshore into previous property hotspots
• Real estate agents in prime London, New York and other areas have seen a collapse in offshore buying from Hong Kong and China, with one telling the South China Morning Post that “basically all Chinese investors have disappeared “

GLOBAL STOCK MARKETS ARE NOW FEELING THE PAIN

As I warned here in June (Financial markets party as global trade wars begin), the global stock market bubble is also now deflating – as the chart shows of the US S&P 500.  It has been powered by central bank’s stimulus policies, as they came to believe their role was no longer just to manage inflation.

Instead, they have followed the path set out by then Federal Reserve Chairman, Ben Bernanke, in November 2010, believing that:

“Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

Now, however, we are coming close to the to the point when it becomes obvious that the Fed cannot possibly control the economic fortunes of 325m Americans. Common sense tells us that demographics, not monetary policy, drive demand. Unfortunately, vast amounts of time and money have been wasted by central banks in this  failed experiment.

The path back to fiscal sanity will be very hard, due to the debt that has been built up by the stimulus policies.  The impartial Congressional Budget Office expects US government debt to rise to $1tn.

Japan – the world’s 3rd largest economy – is the Case Study for the problems likely ahead:

• Consumer spending is 55% of Japan’s GDP.  It falls by around a third at age 70+ versus peak spend at 55, as older people already own most of what they need, and are living on a pension
• Its gross government debt is now 2.5x the size of its economy, and with its ageing population (median age will be 48 in 2020), there is no possibility that this debt can ever be repaid
• As the Nikkei Asian Review reported in July, the Bank of Japan’s stimulus programme means it is now a Top 10 shareholder in 40% of Nikkei companies: it is currently spending ¥4.2tn/year ($37bn) buying more shares
• Warning signs are already appearing, with the Nikkei 225 down 12% since its October peak. If global stock markets do now head into a bear market, the Bank’s losses will mount very quickly

CHINA MOVE INTO DEFLATION WILL MAKE DEBT IMPOSSIBLE TO REPAY

Since publishing ‘Boom, Gloom and the New Normal: how the Ageing Boomers are Changing Demand Patterns, Again“, in 2011 with John Richardson, I have argued that the stimulus policies cannot work, as they are effectively trying to print babies.  2019 seems likely to put this view to the test:

• China’s removal of stimulus is being matched by other central banks, who have finally reached the limits of what is possible
• As the chart shows, the end of stimulus has caused China’s Producer Price Inflation to collapse from 7.8% in February 2017
• Analysts Haitong Securities forecast that it will “drop to zero in December and fall further into negative territory in 2019“

China’s stimulus programme was the key driver for the global economy after 2008.  Its decision to withdraw stimulus – confirmed by the collapse now underway in housing and auto sales – is already putting pressure on global asset and financial markets:

• China’s lending bubble helped destroy market’s role of price discovery based on supply/demand
• Now the bubble has ended, price discovery – and hence deflation – may now be about to return
• Yet combating deflation was supposed to be the prime purpose of Western central bank stimulus

This is why the collapse in China’s shadow lending is my Chart of the Year.

[DurhamBorn]

3 hours ago, Eventually Right said:

That’s a shame, thanks anyway.  Guess it is a fairly niche area of macro-maybe there’s an obscure academic paper or two lurking somewhere in the depths of the internet!

I could scan in the contents of my Buffy the Vampire slayer file and jotter.For those who bought the goldies (or the UK cyclicals) with your hard earned i think i should mention most of the data points i used was based on some formula in-between photos of Buffy and Willow and iv been known to miss off the odd zero when looking at the photos of Buffy,,,,dont worry,it will be fine 

[sancho panza]

49 minutes ago, Noallegiance said:

I was having a conversation with a 30 year old who is single with no dependants and has a mortgaged flat in the SE.

His plan is to sell the flat and go travelling, hoping to 'make' £25k or of the sale, using £15k to pay off his credit card debt leaving him with £10k. No viewings in 5 months. He's putting it down to anything other than price.

The social impact of another financial event is going to see stuff even folk on here can't fathom, I would guess.

And there ain't much most people can do to avoid it.

I've given up trying to talk about it with other people.Young kids at work,£50k student debt, £25k p.a job and getting 35 year mortgages once hir first car lease has been signed.

This will end,as you say but there are a lot of people relying on the ponzi to square them away in old age.First few out get their money back,after that it's more hope than strategy.Same for govts for as people jsut different parameters.

For many years on ToS I used to cock a sneer at the likes Of @Errol and goldfinger.As tiem has progressed I've succumbed to their way of thinking. My mistake was to place to much faith in politicians to govern for the benefit of their people rather than their  own self interest

 

[DurhamBorn]

@Yellow_Reduced_Sticker you will be pleased to hear im back on the 75% off food shopping.Tesco tonight was empty and i got loads.Lots of really good beef for casseroles reduced £5 to £1.25,loads of corn fed chicken breasts 75% off,lots of cooked chicken breast you can freeze,perfect for curries/pasta bakes etc.I got around 4 weeks main meals sorted for around £18.I pushed the boat out though and spent £50 on a pair of curtains on Facebook marketplace last week,they are superb though and were likely £200/£300 when new,the house was really posh where i got them from.That marketplace is amazing for getting quality stuff for really cheap prices.hope your settling into things in the new place.

[Sound Money]

15 minutes ago, DurhamBorn said:

I could scan in the contents of my Buffy the Vampire slayer file and jotter.For those who bought the goldies (or the UK cyclicals) with your hard earned i think i should mention most of the data points i used was based on some formula in-between photos of Buffy and Willow and iv been known to miss off the odd zero when looking at the photos of Buffy,,,,dont worry,it will be fine 

I don’t care what your method is as long as it keeps working 😂

74% up for me on the miners over 1Y. SBGL being my best and NGD being the worst of course.

Ive started averaging into oil stocks. I prefer monthly dollar cost averaging to ladders only because it’s simpler for me to work out/track, and I want to continue buying even if they have already turned up.

But does anyone recommend any gas company plays? I’m only buying big well known oil companies so far. Shell, Exxon, chevron, BP, total. And also some XES that was mentioned. I won’t take them as financial advice, just a cue to look at them in more detail

[sancho panza]

Mish on China

https://moneymaven.io/mishtalk/economics/bills-now-due-on-vacant-useless-chinese-properties-jKpVwGBQN0yzmGtZm0LT0Q

After years of malinvestment, the bills are now coming due in China.

With more than $6 trillion worth of debt, Chinese SOEs and cities find it increasingly difficult to meet payment deadlines.

Malinvestments aside, the Bills Come Due for China’s Local Governments.

For decades, local governments in China borrowed heavily to build urban infrastructure, helping to fuel the country’s red-hot economic growth. Now, they are under pressure to pay the bill, adding another financial worry to Chinese policy makers’ list.

Independent economists estimate that China’s municipalities have racked up more than $6 trillion in debt—including debts authorities don’t acknowledge on their books. Tax revenue and returns on the roads and other infrastructure built with borrowed money aren’t enough to pay down the debts. Land sales, which local governments have relied on, have weakened as the economy slows.

With nearly 3 trillion yuan ($428 billion) in bonds coming due in the next two years, on top of bank loans and hidden debt, local governments need to find ways to refinance.

Meanwhile, it has become nearly impossible for local governments to tap riskier lending channels. Beijing’s efforts to rein in overall debt has meant new restrictions on informal lending. “Previously, local governments could just keep on rolling over debt, but now they can’t do that,” said Allen Feng, a China analyst for consulting firm Rhodium Group in Singapore.

China, like Japan in the 1990s, Will Be Dominated by Huge Zombie Banks

None of the above is in the least surprising.

As noted on November 18, China, like Japan in the 1990s, Will Be Dominated by Huge Zombie Banks

On November 22, I commented Key Thought of the Day: China Today is Like Japan in 1989.

But it's not just China.

$250 Trillion in Global Debt

Questions abound.

For example, I wonder about the $250 Trillion in Global Debt: How Can That Be Paid Back?

If you don't believe it can be paid back, then I am with you.

My answer is to buy gold. What's yours?

For discussion, please consider How Does Gold React to Interest Rate Policy?

Mike "Mish" Shedlock

[DurhamBorn]

2 minutes ago, Sound Money said:

I don’t care what your method is as long as it keeps working 😂

74% up for me on the miners over 1Y. SBGL being my best and NGD being the worst of course.

Ive started averaging into oil stocks. I prefer monthly dollar cost averaging to ladders only because it’s simpler for me to work out/track, and I want to continue buying even if they have already turned up.

But does anyone recommend any gas company plays? I’m only buying big well known oil companies so far. Shell, Exxon, chevron, BP, total. And also some XES that was mentioned. I won’t take them as financial advice, just a cue to look at them in more detail

Iv been buying South Western Energy Co SWN for a gas play,but its very volatile and very risky.Iv only got a small holding.Not for widows or orphans DYOR etc.

[Harley]

1 hour ago, sancho panza said:

I don't know whether  @Harley has a view on the technicals.

My weekly and monthly tech data say overbought but not yet weakening and can stay this way for a while.  But this one is a monster which could do anything.

[Talking Monkey]

14 hours ago, Viceroy said:

I’m looking to sell my US equity etfs v v soon. Martin Armstrong is sounding the alarm for the week of 13 Jan 2020. 

’If the US share market rallies into the ECM turning point on 18 Jan 2020, there may be a crash into January 2021. This remains tricky. So do NOT anticipate. Let the market make the decision for you.

The Fed will stand behind US banks. They will have no choice. Trump has been now briefed (about the REPO crisis) but they did not brief him of the Mother of All Financial Crises...

 

If we get the high on the ECM in January, then this will warn that the Liquidity Crisis will play out as it did in 1998 where they will sell assets in other investments to raise cash to cover losses in bonds.’

 

He says it will be a sharp correction so I will buy inverse Dow and S&p etfs for the first time. Not betting the house tho, being conservative. No harm sitting in cash for a bit. 

 

Hope everyone had a fab Xmas & thx for all the input on this thread. I am always learning 😊😊

What does ECM stand for  Viceroy

[Castlevania]

11 hours ago, DurhamBorn said:

@Yellow_Reduced_Sticker you will be pleased to hear im back on the 75% off food shopping.Tesco tonight was empty and i got loads.Lots of really good beef for casseroles reduced £5 to £1.25,loads of corn fed chicken breasts 75% off,lots of cooked chicken breast you can freeze,perfect for curries/pasta bakes etc.I got around 4 weeks main meals sorted for around £18.I pushed the boat out though and spent £50 on a pair of curtains on Facebook marketplace last week,they are superb though and were likely £200/£300 when new,the house was really posh where i got them from.That marketplace is amazing for getting quality stuff for really cheap prices.hope your settling into things in the new place.

The days after Christmas is usually a gold mine for yellow reduced stickers. I’m abroad at the moment so can’t benefit. All the nice seasonal stuff such as those cheese selection boxes and big packs of sausage meat for 75-90% off. 

[NogintheNog]

11 hours ago, sancho panza said:

It has been caused by the US Federal Reserve’s adoption of Ben Bernanke’s concept that:

“Higher stock prices will boost consumer wealth and help increase confidence“.

Set out in 2010, it replaced the previous policy set out by William McChesney Martin that their job was:

“To take away the punchbowl as the party gets going”.

There is of course a huge change in circumstance between the era of William McChesney Martin and Ben Bernanke as chairman of the US Federal reserve. William McChesney Martin presided over the FED in the Bretton Woods era, and US$/Gold convertibility.

The US had been on a 60's and 70's spending spree in the Vietnam war, the Apollo space program, and US Homeland government spending which it really couldn't afford.

Other countries saw this as their wealth and labour supporting US lifestyles and Companies and eventually starting buying back Gold at the $35 official rate, France being the first. Bretton Woods began to fall apart as countries took themselves off the system after repatriating Gold. The US was literally running out of Gold when after William McChesney Martin had left the FED in 1970, president Nixon ended Gold convertibility (temporarily!) This was a debt default.

So in fact William McChesney Martin had in reality totally failed to “To take away the punchbowl as the party gets going”, to the point where the US had lost a large proportion of Gold reserves.

Countries Central Banks have been repatriating Gold again recently, why?? What happens when the deflation hits and the FED has to print enough dollars to cover the coming losses and defaults?

History doesn't always repeat, but it sure does rhyme!

[Castlevania]

11 hours ago, Sound Money said:

I don’t care what your method is as long as it keeps working 😂

74% up for me on the miners over 1Y. SBGL being my best and NGD being the worst of course.

Ive started averaging into oil stocks. I prefer monthly dollar cost averaging to ladders only because it’s simpler for me to work out/track, and I want to continue buying even if they have already turned up.

But does anyone recommend any gas company plays? I’m only buying big well known oil companies so far. Shell, Exxon, chevron, BP, total. And also some XES that was mentioned. I won’t take them as financial advice, just a cue to look at them in more detail

Gazprom.

Shell have a fair bit especially after buying BG (the old exploration arm of British Gas). All the frackers produce loads.

[Castlevania]

14 minutes ago, NogintheNog said:

There is of course a huge change in circumstance between the era of William McChesney Martin and Ben Bernanke as chairman of the US Federal reserve. William McChesney Martin presided over the FED in the Bretton Woods era, and US$/Gold convertibility.

The US had been on a 60's and 70's spending spree in the Vietnam war, the Apollo space program, and US Homeland government spending which it really couldn't afford.

Other countries saw this as their wealth and labour supporting US lifestyles and Companies and eventually starting buying back Gold at the $35 official rate, France being the first. Bretton Woods began to fall apart as countries took themselves off the system after repatriating Gold. The US was literally running out of Gold when after William McChesney Martin had left the FED in 1970, president Nixon ended Gold convertibility (temporarily!) This was a debt default.

So in fact William McChesney Martin had in reality totally failed to “To take away the punchbowl as the party gets going”, to the point where the US had lost a large proportion of Gold reserves.

Countries Central Banks have been repatriating Gold again recently, why?? What happens when the deflation hits and the FED has to print enough dollars to cover the coming losses and defaults?

History doesn't always repeat, but it sure does rhyme!

The Dutch National Bank has this quote on their website which is surprisingly transparent

Gold: anchor of trust

Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. That is why central banks, including DNB, have traditionally held considerable amounts of gold. Gold is the perfect piggy bank – it's the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank's balance sheet and creates a sense of security.

https://www.dnb.nl/en/payments/goud/index.jsp#

[SillyBilly]

20 hours ago, Tdog said:

Has there ever been anyone as consistently wrong as the convicted fraudster that is Martin Armstrong. 

Astonishing people still buy it. So many "ifs" "buts" and "maybes" that it is absolutely useless "advice". And heavy marketing of the 1 in 10 calls he does get right while sweeping the rest under the carpet. The numbers he appears to be calling out now are remarkably similar to the ones I last read in 2015. If you keep calling for a number you will eventually hit it...a fool and his money are easily parted.

[Bricormortis]

I've been at the Brussels sprouts.

Now I am a major gas producer.

[janch]

1 hour ago, Bricormortis said:

I've been at the Brussels sprouts.

Now I am a major gas producer.

Seriously someone should try to harvest all the methane we humans emit.............if only it might be possible to capture all those farts.  There would be 2 good effects:

1)  Lowering the methane level in the atmosphere (methane is a more potent greenhouse gas than CO2)

2) The methane could be put to good use as a fuel.

People could be paid for the methane they produce.

It just needs someone to work out how this could be done and we might just have the goldmine idea which was mooted for dosbods a few months back.

[Bricormortis]

Think I just destroyed the rest of Australia 

[Errol]

They are trying to close the stable door and the Germans are queuing to buy gold:

 

From Jan 1st, the limit to buy gold anonymously drops from 10,000 EUR down to 2,000 EUR. Not much earlier (2 years only) it was 15,000 EUR.

https://www.welt.de/wirtschaft/article204562092/Neue-Bargeldobergrenze-Lange-Schlangen-vor-den-Gold-Handelshaeusern.html

 

Take note:

 

[Castlevania]

@Cattle Prodyou can buy an ADS of Gazprom via Hargreaves Lansdown

https://www.hl.co.uk/shares/shares-search-results/p/pjsc-gazprom-ads-representing-2-ord-shares