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


spunko

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5 hours ago, JMD said:

SP, that's an interesting list as I'm actively looking to reconfigure my PM miners to being all long-term holds. I bought some like Hecla/Couer that i'm now not happy to hold long-term; i.e. high extraction costs/debt, etc., so will sell these after their price rises.

I wonder have you any other Silvies that you don't currently own on a watchlist maybe, but ones that have a similarly high scs score? Or Gold miners in general even - I think you were planning on putting your scs scores onto computer, not sure if you have now done this?  

AS I alluded I sold our Hecla and Couer jsut before they ramped up ....I'm an awful timer....the only silvies from SIL/SILJ that we have as serious holdings are FRES/HOCM/AXU/GORO.

As Kibuc says a lot of the supposed silver companies don't necessarily produce a lot of silver.I pick through ETF's and spray n pray,for proper single stock advice you need K or major pain or DB etc.

I'm awaiting the full Q4 figures being posted  before doing any SCS scores as the latest data they're based on is 2018 for the whole ETF stuff.I do have a look at Q1- Q3 data for 2019 for companies I'm looking at buying but for comaporing across ETFs I use the full year data.So less acurrate but a better gauge of who's where.

I'll do them on computer this time(but I'm at Uni for 6 months so research time a little limited)

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AS I alluded I sold our Hecla and Couer jsut before they ramped up ....I'm an awful timer....the only silvies from SIL/SILJ that we have as serious holdings are FRES/HOCM/AXU/GORO.

 

 

Good holding although I hold some of these but not hold. I will do a small sell off in some but aim to hold and add long term in most, wesdome I want more of 

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6 hours ago, kibuc said:

Palladium setting new new all-time highs on a daily basis and Rhodium doubling YTD had more to do with SBGL meteoric rise than precious metal, I think. Which in my opinion puts a lid on how high it can go and assigns disproportionate downside risk, but I've been super wrong about Sibanye before so what do I know.

We still hold it.I've been surprised by it running like TSLA.It's due a pull back.My plan is to sell when the G+S ratio hits 40 or less or when I poop my pants.It's irrational where it is at the minute.Balances out our New Gold losses.....

on a separate matter, been pleasantly surprised how Newmont/Barrick and some of the bigger players have been going good guns lately.

Sold up our oil services and XOP constituents today to reallocate it to PM's,picked up some more OR/NCM/BVN as I feel the yellow stuff is getting reayd to run.

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8 hours ago, DurhamBorn said:

Iv hand made maps for all the main towns around me where i can park for free.Its getting harder,but iv never paid in over a decade.Darlington i park outside the Mosque ,you can get a cresent moon decal on Ebay for £2.50 does the trick.Durham is getting tricky because the council are building a new headquarters on the floodplain where there was free parking.Now i park for free at the Oriental Museum or the Oriental University and put a few Oriental Studies books i picked up on Ebay on the passenger seat.There are also a lot of one car slots where you can park,but the council are slowly putting lines on them,or people build on them etc.

Fucking classic :Jumping:

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6 hours ago, Lavalas said:

I’m getting twitchy fingers and considering repositioning one of my PM miners (currently a bit down, not much though) into something that might benefit more from a gold/silver bull. I don’t even care if it’s a good company. I want full on rubber band but I find the silver market so... sparse. I’d say ‘hit me up’ but it definitely might be taken as trading advice :D

I really need to learn to form my own Coma scores, which I am trying to do but it’s slow progress.

 

Silver market is sparse.Rubber band stocks are risky.....

14 minutes ago, Noallegiance said:

Why not just cover bases with GDX and GDXJ?

Because I don't want a lot of the -in my opinion-over priced/overhyped stocks but prefer to spread us around a bit where I perceive value.

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18 minutes ago, Noallegiance said:

Why not just cover bases with GDX and GDXJ?

It depends on your preference really! Me, rather than buying an ETF I'd rather check its content and buy only the best companies, no need to pay ETF fees and you'll get the dividend directly.

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18 minutes ago, Agent ZigZag said:

AS I alluded I sold our Hecla and Couer jsut before they ramped up ....I'm an awful timer....the only silvies from SIL/SILJ that we have as serious holdings are FRES/HOCM/AXU/GORO.

 

 

Good holding although I hold some of these but not hold. I will do a small sell off in some but aim to hold and add long term in most, wesdome I want more of 

I try not to look at their chart,when we bought some PM miners in Nov 2018,I baulked at paying the CAD$ 3.70 as they looked peaky........:ph34r:....preferred to wait for the pullback to CAD$3.......

Head hits the table..........

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8 hours ago, DurhamBorn said:

The Darlo one was given to me by a guy i worked with.He retired at 50 bags of dosh,looked like he had nothing.He even knew the way the wind blew in car parks and deposited the buy one get one free KFC meal tickets on the back of parking tickets.He often had his wife crawling around the bush getting them out.xD

 

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3 minutes ago, Noallegiance said:

It's in my SIPP

Gdx, gdxj are available; SIL and some oil producers etfs aren't for soms reason

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Durhamborn and posters

 

First of all my thanks for the excellent resource that this blog is. The range of ideas here surpasses pretty much anything ive seen elsewhere and ranges from the macro ideas and big themes to more specific details of individual companies and buying techniques. I can't thank you all enough for how useful this blog is.

I've recently finished working (im 55 next year) and although my wife still works I have a couple of questions about structuring income in retirement.

- If you have non ISA held assets and defined contribution pensions that you are no longer paying into which asset should you draw income from first? I am minded to take from the pensions first because of the desire to utilise the pension income before things like state pension use the tax threshold up. Does this make sense and are others planning this? I'm also short of my full state pesnion by a few years. Do others here top up to the full 35 years?

- When you draw down income in retirement should you be looking to spend cash funds first, then funds in bonds and hold onto shares longest. I saw an article saying use cash for 1-3 year funding needs, bonds for years 4-12 and then shares for above 12 years. That seemed to make sense but I dont know how others plan to utilise their assets in retirement?

 

Festival

 

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5 hours ago, Cattle Prod said:

I do. I'm pretty much 100% gdxj apart from 3-4 fun companies (and fres/hoch/poly in my limited selection sipp). I appreciate the work the guys do on here, but I don't have the time for dd. I too sold Sib, but kept Harmony. So thats ok. Still have a little punt on Northern Dynasty minerals. That mine is big enough to float the Alaskan state budget which is suffering from loss of oil revenue. I can't see how it won't get sanctioned, realpolitik wise.

Northern Dynasty is quite interesting ATM, the environmental side is looking positive and your quite right that the Alaskans need the revenue.  They have a load of real estate still to explore in the local area as well.....

Still very casino like and not for widows and orphans, but there is a light at the end of the tunnel.

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Speaking of shit "silver" miners and nasty surprises:

Coeur reports 4Q adjusted loss, suspending Silvertip operations

https://www.kitco.com/news/2020-02-19/Coeur-reports-4Q-adjusted-loss-suspending-Silvertip-operations.html

 

$270mil loss for a quarter:o thanks to $250mil impairment on Silvertip.

Mining at Silvertip suspended - produced over 1mil oz silver, 17mil lbs zinc and 16mil lbs lead in 2019.

It's the New Gold of the silver mining world, only it's not really a silver miner.

image.png.6130fd4e1c66e0cb178c6ae9b1fe776c.png

 

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1 hour ago, Festival said:

- When you draw down income in retirement should you be looking to spend cash funds first, then funds in bonds and hold onto shares longest. I saw an article saying use cash for 1-3 year funding needs, bonds for years 4-12 and then shares for above 12 years. That seemed to make sense but I dont know how others plan to utilise their assets in retirement?

 

I retired at 51. I get a small(ish) DB+AVC generated pension monthly and supplement with income drawn from my 25% Tax Free Cash. The strategy I settled on for investing the 25% TFC was based on Harry Browne's Permanent Portfolio (get the book) - 25% Cash, 25% Equity, 25% Long Term Bonds and 25% Gold. I would draw my income from the Cash element and then rebalance each year back to the 25% allocations.

I modified that a little to a Golden Butterfly Portfolio ( https://portfoliocharts.com/commentary-all/page/2/ ). I made a killing on my Long Term Gilts but finally lost my nerve and reduced that allocation to 0% temporarily. I heavily diversify within each asset allocation, e.g. Cash = Physical, Bank, Savings, Premium Bonds, Foreign Currency; Gold = Silver, Physical, Vault, Miners, ETF; etc.

Good luck.

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1 hour ago, Festival said:

Durhamborn and posters

 

First of all my thanks for the excellent resource that this blog is. The range of ideas here surpasses pretty much anything ive seen elsewhere and ranges from the macro ideas and big themes to more specific details of individual companies and buying techniques. I can't thank you all enough for how useful this blog is.

I've recently finished working (im 55 next year) and although my wife still works I have a couple of questions about structuring income in retirement.

- If you have non ISA held assets and defined contribution pensions that you are no longer paying into which asset should you draw income from first? I am minded to take from the pensions first because of the desire to utilise the pension income before things like state pension use the tax threshold up. Does this make sense and are others planning this? I'm also short of my full state pesnion by a few years. Do others here top up to the full 35 years?

- When you draw down income in retirement should you be looking to spend cash funds first, then funds in bonds and hold onto shares longest. I saw an article saying use cash for 1-3 year funding needs, bonds for years 4-12 and then shares for above 12 years. That seemed to make sense but I dont know how others plan to utilise their assets in retirement?

 

Festival

 

People wont be able to go into the specifics really as that would be 100% financial advice.So il say for myself,what im doing.

At 55 il put my SIPP (pensions) into draw down and take the 25% tax free cash.Il invest that into my ISA over time.Il then take £12.5k from my pension each year until state pension age when il then take about £4k (whatever it is that + state pension = tax allowance).From 55 until 67 while im drawing down that from my pension the income in my ISA will mostly be re-invested.£12.5k is well enough for me.

The only thing to remember is inheritance tax.If you over then it pays to leave the money in the pension as long as possible,but its a tricky choice.(pensions dont count to inheritance tax)

If your short of a few years for the state pension,if you have grand children under 12 and your son/daughter earns over £6200 a year you can claim the Specified adult childcare credit ,its for grandparents who look after grandkids.The credit comes from the child benefit so your son/daughter then dont get the ni credit but if earning over £6200 it doesnt matter as they get it of their earnings,im 2 years short and will be claiming it next year and the year after and will keep claiming it in case the government change the 35 years upwards at any time.Its free so might as well.

If not go self employed,sole trader,selling on ebay.Sell a few 2nd hand bits (or put sell on Facebook and sell a couple of items easy) and put tax form in at end of year with £100 turnover youl make no profit,then elect to pay the NI class 2 credits within the tax form ,it costs you £160 for a years credit not the £780 cost of buying a year.

How you draw down assets is personal and very very tricky.

For myself i have a portfolio bigger than my needs (i need £12.5k a year) so will simply withdraw the natural yield from the investments.I pretty much do that at the moment anyway from my ISA.

For ordinary people the state pension is very important.I actually think its generous and as long as you have prepared its a fantastic base.Myself i only need about £120 a week on top of the state pension to live very well,within a couple even easier.The problem is they keep pushing it back,so the key is to make your you have enough from 55 until getting it.I would expect to go from now to then with investments intact ,but if i didnt i could still be fine if i reached state pension age with half the assets i have now.

 

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7 hours ago, Cattle Prod said:

I like seeing this. A good contrarian indicator. Northman Trader consistently gets hate tweets at S&P 500 tops. Dave H timing may be off, but no one reads the bit where he says he's not trying to time his targets.

David worked in the same team my friend did at Fidelity.It was the pensions team investing UK blue chip pensions in US assets mostly,hence why my friend was at the then Glaxo,they were getting involved in investing the then 100% DB pension schemes assets.I never met David,and i think at the time he was involved in allocation strategy on the macro roadmaps my friend and others made.

What people dont understand is Davids job isnt to time.It isnt even considered.The process was that they would (my friend) provide a macro road map of where they saw the cycle going given all the numbers they had.That was then passed to others to allocate and invest.When David says oil below $10 that will be the extreme he sees on his road map.Hes playing to an audience now and so he simply puts that out there.In reality his road map will have lots of cross market work along that way and turn points.If he was back at Fidelity other parts of the team would be working out how and what and when to buy along that road map.They wouldnt be sat drinking coffee waiting for $8 oil.People reading him also forget the longer term calls of oil at $300+ again maybe slightly high,but again a direction road map.

The reason the Fidelity team were the best in the game was because they looked at the longer term macro position and ignored the noise.Looking to today my friend would say things like "i dont care where Tesla is in 3 months,i care where the long bond is in 8 years" The reason?,because where that long bond is will show whats likely happened to different sectors.

 

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17 hours ago, kibuc said:

Piles of shit like Great Panther will fly in the silver bull, until they won't. That's the perennial problem with crap companies - they are crap. If they are (often mistakenly) seen as silver miners AND they look cheap on the chart, they might ride the wave of euphoria and be biggest winners, but you never know whether they won't drop some hidden turd on you, like operating without proper licence, community issues, resources being fraudulently made up, sudden round of financing to pay off their friends and families etc. That's adding another layer of risk (and reward) on top of what is already a wild tiger ride where the tiger is on fire. And you're on fire. And everything is on fire. That's what I like (and should probably avoid), but it's important to recognize what you're getting into.

Anyway, portfolio going up 8% yesterday definitely brought a smile to my face. I might even get into green one day :P

K,what Im trying to prep a plan for is the equivalent of Augst 2010 to April 2011

image.png.c35a70a3836b2db79461b898798f724d.png

or July 79 to jan 1980.

image.thumb.png.ae1851eb7af8594f6e20139f7378f7ad.png

I'm still waiting the full years to get posted on marketwatch before runnign soem coma scores through SIL/SILJ.

Main parameters

1) will they still be in business

2) is silver a decent proportion of their output

Looking through my scores for SILJ and going for those 16(ie the dog poo ones) and under we get the likes of

MRZ 16,AUMN 15,MND 13,KTN 16,MGG 14,TV 14,EXN 16,MYA 16,GPL 16,MUX 16,USA 15,Coeur 15,Hecla 16

Edit to add:the reasson a lot of these get such decent scores despite making very little profit is that their charts are on the floor and they have strong balance sheets(probably because no sane person will lend them any money)

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9 hours ago, Cattle Prod said:

Not at all, smart lady your Mum. I have a similar feeling. Oil industry people are not investing geniuses by and large. We can see the coming supply problems, and the mood is bullish. But the market needs to wash most of us out first  I think. I've noticed, very clearly, that when I'm getting "screw this for a game of soldiers, just save money, reduce your position' feelings are at or close to a bottom. Not there yet. I have huge risk tolerance (its my job): I don't get washed out easily, and tend to be over invested and sometimes leveraged. So I do feel pain in washouts. Too many of my colleagues are content - I want to see some fear! If I hear the redundancy insurance conversation in the pub again I'd feel a whole lot better. 

Or maybe I'm too harsh on judging insiders as a wider market indicator? We are privvy to a lot of sensitive information after all. 

3 month lag from @DurhamBorn sounds reasonable. Let's see how it plays out into a historically strong month for oil.

My Mum has seen a few cycles and watched her Dad build out his portfolio over time.I sent her that Russell Napier podcast and she picked up on the one salient point of disagreement bewteen me and him ie weak dollar phase after she'd lsitened to the whole hour and a half.I was impressed.I filter the stuff i send her because she's 70 odd now and basically is the sounding board I use before making changes to the medium/long term portfolio.

Two days back I had the urge to offload our oil services and FCG/XOP positions.Mainly because a) big oil is dirt cheap b) I view XES/OIH/XOP/FCG as leveraged plays on wider commodity prices c) the corona virus effect steers me away from leveraged positions until I've seen how it plays out- I think there'll be other opportunities to buy SLB/BH/KMI back d) free up capital

I confess I bought some BP/RDSB/EQNR/XOM with the proceeds.I jsut couldn't stop myself.it seemed a reasonable compromise because I'm not seeing the oil price drop as a result of the corona V.

Longer term,I think we're possibly willing to go as high as 35-40% portfolio value in the oilies.Crazy?Sane?

 

I agree with you that redunacny chatter in the pub is one of the best indicators of a bottom approaching and I'm a big fan of insider mood,it's jsut getting access to it thats the problem.

On that matter,Mrs P works for a large US multinat and they jsut had a round of lay offs that shocked a lot of people there.Some really senior bods got the chop.We have a happy home life becuase Mrs P is part time and works locally without too much travel.Seeing these lay offs made her realise how fickle these businesses can be(she's younger than me and not seen an epoch defining recession yet) and it's made her really look at whether she want to rise any further.A couple of her friends who are Directors have basically said they realise now they're jsut a number.

 

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9 hours ago, Cattle Prod said:

Ive used Saxo to pick up some very cheap options in natural gas. It quite often rallies after a bearish winter. Just a punt, but its so hated, and cheap. And US supply may also be peaking. So a buy deep otm and forget for a while. Happy I have exposure. Same for uranium.

Which options did you get?I've had a look jsut now and can't find any.I'd be happy to buy options on FCG etc but none listed I presume because it's an ETF

Can you buy any on gold?

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"Thanks to years of investment,our CapEx to sales ratio peak is behind us"

From Telefonica's results today.As iv been saying about the next cycle the above is key and ignored by the market.Increasing prices on falling Capex spend and depreciation means massive increases in free cash.

You can buy all of BT,Vodafone,Telefonica and Telia including most of the debt or buy 1/10th of Apple.

Iv started to buy Telefonica and Telia.I have a feeling we will see lots of corporate activity in the sector next cycle.Could be more falls still so ladders as usual.

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Yellow_Reduced_Sticker

...This has gotta be the MOST contrarian article on Oil yet, I'm filling me boots!:Jumping:

"Warning! It could be game over for Royal Dutch Shell & BP the 2 top FTSE 100 dividend income stocks"

Nothing lasts forever. Even the mightiest companies can face existential threats. Remember ICI? Marconi? They’re just names now.

Campaigners reckon all humanity faces an existential threat from global warming and, as Greta Thunberg’s cohorts take up arms against carbon, major FTSE 100 companies could end up as collateral damage. The BP (LSE: BP) and Royal Dutch Shell (LSE: RDSB) share prices are both coming under pressure. This is a worry for shareholders, because the oil majors are some of the most generous dividend stocks on the entire UK stock market.

BP’s share price currently yields income of a whopping 6.98% a year, while Shell’s dividend yields 7.57%. These thrash the returns on cash, where you will be lucky to get more than 1%. No wonder they continue to underpin so many successful Stocks and Shares ISA portfolios, both for investors seeking growth, and those taking income in retirement.

Stock market fossils

They are torn between playing down the threat and planning for it. Outgoing BP chief Bob Dudley reckons the world will need oil and gas for some time yet, and will still account for 73% of energy in 2040. In my view, he’s right to say decarbonising the world economy won’t be easy, but wrong to underplay the potential pace of change.

New CEO Bernard Looney is targeting net zero carbon emissions by 2050 as part of a group overhaul, and will continue the shift away from oil and gas production towards renewables. This will be a challenge as he has to maintain BP’s generous dividends and reduce its $45.4bn debt pile at the same time.

Shell has shown how hard it is to live up to promises in this area. It pledged to invest up to $6bn in green energy projects between 2016 and the end of this year, but looks set to spend just a third of that. Over the same period, it’s lavishing more than $120bn on fossil fuel projects.

Trend is not a friend

Yet a shift is underway, and BP and Shell risk being left behind. BlackRock, the world’s biggest fund manager, is pushing sustainability. Boris Johnson is driving electric car use. Offshore wind is spreading, solar panels proliferating. Scientists are exploring fusion. Even BP accepts renewals will be biggest energy source by 2040. WTI crude idles just above $50 a barrel. Oil futures are low for the next decade. 

There will be no stopping the green revolution, as the planet keeps warming and people carry on worrying. This is taking its toll on both the BP share price, up just 2.82% in five years, and the Shell share price, down 12.55%. Dividend income is now the main reason to invest in these two stocks, not share price growth.

The tobacco giants have survived the war on cigarettes, and BP and Shell can survive, if they’re able to adapt. As yet, there’s no existential threat to these two companies and their dividends. But, as I said, nothing lasts forever.

The post Warning! It could be game over for these 2 top FTSE 100 dividend income stocks appeared first on The Motley Fool UK.

https://uk.finance.yahoo.com/news/warning-could-game-over-2-081439947.html

 

IF Motley Fool were so smart ...WHY do they sell investment advice/newsletters?
 
From what ive seen Motley Fool get it MORE WRONG than correct with there tips!:P

AS EVER: DYOR!

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2 hours ago, sancho panza said:

Edit to add:the reasson a lot of these get such decent scores despite making very little profit is that their charts are on the floor and they have strong balance sheets(probably because no sane person will lend them any money)

Share price chart can be deceptive as it doesn't account for dillution. Take Golden Minerals from your list, for example. A simple glance at their press releases from the last 5 years:

2016: Converted $5m debt into 28m shares, and then completed a placement for another $5m.

2018: Placement of $1.3m plus $10m (!) worth of options for the next 36 months.

2019: Placement of $2.25m plus warrants for the same number of shares.

That's some serious dillution for a $30m company over there, which you won't see on a regular chart. Market cap chart or, ideally, TEV chart would be brilliant.

 

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