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


spunko

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3 hours ago, kibuc said:

A quick mining update from the last few days:

WDO - delivered yet another fantastic drilling update from Eagle River yesterday. Bonkers grades, bonkers widths, they'll be swimming in high-grade ounces for years to come.

PVG - posted 2020 guidance two days ago, grades nowhere near their reserve grade, fell like a rock and deservedly so. Expect a big cut to resources estimate in the future. Grades have been steadily falling for years now. Those guys are frauds. CEO and chief geologist out.

NGD - a bunch of releases yesterday and today: New Afton drillings, production, 2020 plan and guidance. As you would expect, everything not very impressive. Production guidance for Rainy River at 240-260k xD Fourth quarter AISC at RR $2429/oz xD Man they are so fucked that I can't even.

Harmony just bought Mponeng off Anglogold, $200m upfront for 40m ish oz of gold is a ridiculously good bit of business.  The market is currently going WTF, they wont be when they cycle turns and gold kicks off.

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1 hour ago, JMD said:

Interesting times ahead come end of year (...or is it just a Boris bargaining ploy?)

This combined with the Agents post about ports has got me visioning what could pass.  The UK could really put the willie's up the EU, a stone with fault lines waiting for a few taps with a hammer!  We have the initiative, just need no fifth column types.  Could change the regional map of the UK too.  Investing trends will follow.  Exciting.

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Bobthebuilder
33 minutes ago, Harley said:

This combined with the Agents post about ports has got me visioning what could pass.  The UK could really put the willie's up the EU, a stone with fault lines waiting for a few taps with a hammer!  We have the initiative, just need no fifth column types.  Could change the regional map of the UK too.  Investing trends will follow.  Exciting.

Its very interesting, could be massive for the UK if done right. Boris needs to deliver on his promise to the North, transport and industry, we shall see. It is wonderful and hopeful to watch.

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8 hours ago, JMD said:

Tdog, I want to be optimistic and I'm hoping its more because Javid wasn't radical enough (or dare I say it intelligent enough). We need real change and although I don't go in for Boris being merely the 'bumbling buffoon' type that media characterise him as being... I am however still suspicious of him being just an opportunist without depth (after all his family are all liberal types).    

As for the mansion tax, I don't think its only the Labour party that will be mooting wealth taxes in future years.

The media are the people that know him.Without boring on,I think a lot of middle aged Tory voters are going to be dissappointed in Boris.Much like they eventually were in Rees Mogg.

Promoting Goldman alumni tells us where we're going...QE,FLS2,HTB3 etc etc.Seems they excluded a few Brexit MP's today

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8 hours ago, Tdog said:

Pound has spiked, so presumably the markets think know Boris is more for the bankers than the plebs.

His family own a letting agency. 

corrected

8 hours ago, Democorruptcy said:

New chancellor Rishi Sunak, ex Goldman Sachs, then hedge fund.

What do the names Hank Paulson,Mario Draghi,Mark Carney,John Corzine,Jim Cramer and Steven Mnuchin have in common?

6 hours ago, kibuc said:

A quick mining update from the last few days:

WDO - delivered yet another fantastic drilling update from Eagle River yesterday. Bonkers grades, bonkers widths, they'll be swimming in high-grade ounces for years to come.

PVG - posted 2020 guidance two days ago, grades nowhere near their reserve grade, fell like a rock and deservedly so. Expect a big cut to resources estimate in the future. Grades have been steadily falling for years now. Those guys are frauds. CEO and chief geologist out.

NGD - a bunch of releases yesterday and today: New Afton drillings, production, 2020 plan and guidance. As you would expect, everything not very impressive. Production guidance for Rainy River at 240-260k xD Fourth quarter AISC at RR $2429/oz xD Man they are so fucked that I can't even.

I still can't forgive myself for not piling into Wesdome back in Nov 18 at CAD$3.70.............Thought I'd wait for a pullbackxD.That's one of those shares that I weighed up and then stuck the same amount in Hecla.............head hits table.

The only good thing about my losses on NGD are that they're more than balanced by gains in SIB.To be fair,I'll be averaging us intomorrow at an even better price than I'd have got today all being well.

 Pamplona Trader has been psuhing Osisko Ro for a while.

IKN was saying PVG will get taken out but much lower.

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4 hours ago, Majorpain said:

Harmony just bought Mponeng off Anglogold, $200m upfront for 40m ish oz of gold is a ridiculously good bit of business.  The market is currently going WTF, they wont be when they cycle turns and gold kicks off.

Best mine in SA.Harmony now control most of the industry there.I think there is a lot of Uranium in that mine as well.Harmony made me a lot of money,but iv always admired the management there.They are real gold miners.Deep mines,experts at pillar mining etc.They have some great areas as well that might hold lots more gold.

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13 hours ago, Majorpain said:

Harmony just bought Mponeng off Anglogold, $200m upfront for 40m ish oz of gold is a ridiculously good bit of business.  The market is currently going WTF, they wont be when they cycle turns and gold kicks off.

It is a very shrewd piece of buisness indeed, but I wonder how they're gonna get moving with Wafi-Golpu if they splash cash on other assets. All that being said, HMY might be the first name on my list if gold tanks.

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UnconventionalWisdom

Good interview on the Keiser report about credit deflation and other things discussed here- QE, low velocity, liquidity trap etc. Doesnt really add much but good overview of the madness

 

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Democorruptcy
11 hours ago, sancho panza said:

What do the names Hank Paulson,Mario Draghi,Mark Carney,John Corzine,Jim Cramer and Steven Mnuchin have in common?

You are only scratching the surface, it's a much bigger group than that!

https://www.independent.co.uk/news/business/analysis-and-features/how-goldman-sachs-took-over-the-world-873869.html

https://en.wikipedia.org/wiki/Goldman_Sachs

https://www.infowars.com/goldman-sachs-investing-in-political-influence/

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TheCountOfNowhere

Would anyone disagree that after yesterday's cabinet shuffle they are about to unleash a tsunami of spending and QE theft? 

 

Db... Do you still see an asset pruce collapse or is it straight to insane inflation as I feared? 

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1 hour ago, kibuc said:

It is a very shrewd piece of buisness indeed, but I wonder how they're gonna get moving with Wafi-Golpu if they splash cash on other assets. All that being said, HMY might be the first name on my list if gold tanks.

Maybe sell it and then develop all the areas in SA they own.Lots of surface potential as well in the greenstone belts.

WP is an amazing asset for the future though and they might sell half their stake to finance building it.Massive amounts of copper their.

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29 minutes ago, TheCountOfNowhere said:

Would anyone disagree that after yesterday's cabinet shuffle they are about to unleash a tsunami of spending and QE theft? 

 

Db... Do you still see an asset pruce collapse or is it straight to insane inflation as I feared? 

World will be full on spending,they have no choice,politics and the cycle demands it.Remember governments arent driving the cycle,they are simply responding to its effects.Its like the spending coming in the north.I said that would happen right back on page one of this thread on HPC.The politics demand it due to the affects of the long dis-inflation.When the Tories won my seat here in the north for the first time ever,it was because rates topped out in the US in the early 80s.That seems crazy to people,but its true from a macro position.The rest is all cross market to that fact.Tax credits that pulled in mass immigration etc happened because of dis-inflation for instance.That then led to Brexit etc.

I expected lots of stocks to sell off to PE ratios between 5 and 9 and thats exactly where we are now with masses of companies.The headline indexes have kept up due to a very small number of glamour stocks.

I dont know if all stocks will get whacked down,or if there will be sector rotation instead.Thats why i start buying when im happy with price and place buy ladders.I remove all that emotion.

I think most shares will continue lower,but im also pretty convinced inflation loving sectors will be much much higher come 2027/28.So im buying now,with ladders.

I have no worries of been down 20%+ across my portfolio if it happens.Given all the investments are throwing off decent dividends as well i could end up down 10% after divis on a turn and id take a cycle turn on those terms every day of the week.

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With the amount of debt at all levels of society what breaks the debt trend?

Central banks refuse to raise interest rates as it will be like them removing their own control of the debt expansion.

I'm having difficulty with this aspect.

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TheCountOfNowhere
30 minutes ago, Noallegiance said:

With the amount of debt at all levels of society what breaks the debt trend?

Central banks refuse to raise interest rates as it will be like them removing their own control of the debt expansion.

I'm having difficulty with this aspect.

I'm having difficulty with all of it. 

I keep coming back to... We'll see massive inflation....the British sheeple will pay whatever they want for a house, the see it as a one way bet, no one much cares about shares. 

If the ex goldman sachs banker is handing out money like sweeties their aint going to be a house price crash, it's going going to collapse the currency follower by major social problems 

Next months budget it the most important one in our life time 

The question only remains... When to get all your cash out the bank and go all in. 

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12 hours ago, sancho panza said:

The only good thing about my losses on NGD are that they're more than balanced by gains in SIB.To be fair,I'll be averaging us intomorrow at an even better price than I'd have got today all being well.

Interesting insight from IKN hey. Can’t believe I’m considering another nibble at New Gold ffs :S 

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14 minutes ago, Lavalas said:

Interesting insight from IKN hey. Can’t believe I’m considering another nibble at New Gold ffs :S 

We'll be averaging down this afternoon with an outsize sum.

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1 hour ago, Noallegiance said:

With the amount of debt at all levels of society what breaks the debt trend?

Central banks refuse to raise interest rates as it will be like them removing their own control of the debt expansion.

I'm having difficulty with this aspect.

the problem comes with how the MMTers think that inflation is purely monetary in nature.Yes they can control the supply of money.

 

What they can't control is velocity.If we get inflation resulting from rising velocity then quite simply they're play books won't work.
faced with a crashing currency or rasing rates.History shows us most western politicians will raise rates.

 

Our mistakes made by me post 2009 have been to totally underestimate a) how most politicians will selfishly pursue their own interests at the costs of wider society b) how little real world experience some of the msot powerful people in the world have.

This will end in disaster for msot British people(many already suffering despite the supposed headline growth in wealth for the 1% masquerading as wealth for the 99%).My only aim these days is to give my kids options....and food on the table.

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1 hour ago, DurhamBorn said:

World will be full on spending,they have no choice,politics and the cycle demands it.Remember governments arent driving the cycle,they are simply responding to its effects.Its like the spending coming in the north.I said that would happen right back on page one of this thread on HPC.The politics demand it due to the affects of the long dis-inflation.When the Tories won my seat here in the north for the first time ever,it was because rates topped out in the US in the early 80s.That seems crazy to people,but its true from a macro position.The rest is all cross market to that fact.Tax credits that pulled in mass immigration etc happened because of dis-inflation for instance.That then led to Brexit etc.

I expected lots of stocks to sell off to PE ratios between 5 and 9 and thats exactly where we are now with masses of companies.The headline indexes have kept up due to a very small number of glamour stocks.

I dont know if all stocks will get whacked down,or if there will be sector rotation instead.Thats why i start buying when im happy with price and place buy ladders.I remove all that emotion.

I think most shares will continue lower,but im also pretty convinced inflation loving sectors will be much much higher come 2027/28.So im buying now,with ladders.

I have no worries of been down 20%+ across my portfolio if it happens.Given all the investments are throwing off decent dividends as well i could end up down 10% after divis on a turn and id take a cycle turn on those terms every day of the week.

I increasingly keep looking back at tech bubble charts.It's got some of the hallmarks of that bubble.Old economy stocks on the floor,New names riding high ,way past where normal pricing would put them.

Difference this time is the leverage in China and much of the Western world.People keep telling me the banks are more ready this time,but I'm not so sure.

All it takes to destroy wealth is for marginal prices to move eg 100 house estate all sold at £400k,then one sells for £300k and one for £200k and probably 35-40% of the net wealth of most hosueholds on the estate has been destroyed for a period of time until prices move higher.

Personally Im anticipating some sector rotation to occur before the big kahuna.We're already seeing the goldies move higher.Turn in the dollar could set that off.

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1 hour ago, DurhamBorn said:

World will be full on spending, they have no choice, politics and the cycle demands it. Remember governments arent driving the cycle, they are simply responding to its effects. Its like the spending coming in the north.I said that would happen right back on page one of this thread on HPC. The politics demand it due to the affects of the long dis-inflation. When the Tories won my seat here in the north for the first time ever,it was because rates topped out in the US in the early 80s.That seems crazy to people,but its true from a macro position.The rest is all cross market to that fact.Tax credits that pulled in mass immigration etc happened because of dis-inflation for instance. That then led to Brexit etc.

DurhamBorn, comments like the above always fascinate me - there must be a book on this subject just waiting to be written - I wonder, have you thought about writing it? 

There are so many cynical and/or trite socio-political books out there with doomsday themes - however, you could be the first(?) to write one from the perspective of how markets, malinvestment and short-sighted political policies drive toward eventual outcomes (so crucially you needn't go into any cross market/trading specifics that you might rather not divulge (save that for your follow up best seller!)).

I'd wager that 6-months of your time 'invested' in writing would be worth it, especially as book would also be relevant to the huge US readership. Maybe pad it out with historical examples, and lots of charts. You could then promote yourself as an academic type and further clean up on the lecture tour circuit! But seriously, if Thomas Piketty can write the dry tome 'Capital', i'm sure you could create something far more punchy... anyway just saying. 

   

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48 minutes ago, TheCountOfNowhere said:

I'm having difficulty with all of it. 

I keep coming back to... We'll see massive inflation....the British sheeple will pay whatever they want for a house, the see it as a one way bet, no one much cares about shares. 

If the ex goldman sachs banker is handing out money like sweeties their aint going to be a house price crash, it's going going to collapse the currency follower by major social problems 

Next months budget it the most important one in our life time 

The question only remains... When to get all your cash out the bank and go all in. 

Markets always hurt the most people possible.The fact "everyone" will pay whatever for a house shows who will be hurt hard.

As for a HPC, its ongoing.My son is looking at a house tomorrow,3 bed semi,built early 2000s sold for £139k then,its up for £110k.Add the inflation from 2002 ,18 years inflation + £29k nominal down thats a hell of a fall.It it has kept up with inflation it would be £227,827.Its down by over 50%.Now i dont expect that house to go up in price,i expect it to maybe hold steady and fall against inflation,maybe another inflation adjusted 50% over the cycle.However my son has £8k in silver.He can fix at 2.14% for 5 years with 10% over payments.Him and his partner will overpay by around that each year so as rates rise at the end of the 5 year fix they would owe half.If rates are 7% by then silver will likely of 400% up,he will sell the silver and clear the mortgage.Is so he will be mortgage free on a decent 3 bed semi at 28 years old.

The fact nobody cares about shares is true,its always like that just before that asset class delivers the goods.

Its like energy now.Everybody hates it because we are going green.To get green demand for other energy will go up by a lot,just after nobody has invested.Oil will be $250+ by 2027/28.

 

 

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44 minutes ago, sancho panza said:

tOur mistakes made by me post 2009 have been to totally underestimate a) how most politicians will selfishly pursue their own interests at the costs of wider society b) how little real world experience some of the msot powerful people in the world have.

This will end in disaster for msot British people(many already suffering despite the supposed headline growth in wealth for the 1% masquerading as wealth for the 99%).My only aim these days is to give my kids options....and food on the table.

SP, Adam Curtis has produced some (very long - this one is 2hrs - but worth the watch I think) documentaries on the subject of our modern day detachment from reality.

Frightening but entertaining at the same time!

Btw its not just about Trump, the themes explored are far deeper… but tbh i am left asking myself is this just a collection of images with a cleverly constructed narrative?

 

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7 minutes ago, sancho panza said:

All it takes to destroy wealth is for marginal prices to move eg 100 house estate all sold at £400k,then one sells for £300k and one for £200k and probably 35-40% of the net wealth of most hosueholds on the estate has been destroyed for a period of time until prices move higher.

I don't think it's that simple, for a wealth destruction like that we need more than just one forced sale... Aberdeen is a good example, the city is a total disaster now and it took 5 long years for the prices to go down 40-45%.

We need higher rates or some sort of property tax (eg. high tax on second homes, empty properties etc) for prices to crash.

 

Disclaimer: I don't own a property, I wish I could afford the one I like...

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