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


spunko

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16 hours ago, sancho panza said:

Kibuc.Thanks for the heads up.I'm jsut coming off some night shifts so bit off kilter.

We've got some Guyana running a decent 30% loss but it's one of our .smallies.

Note sure I want to own silvercrest so what to do with the residue? Options to my unedcuated mind

1) Buy New Gold/Integra

2) Stick it all in Newcrest -run up the tier ones,then sell and buy some smallies.

3) Split it between Oceana/BVN

4) stick it in NGD/MAI????

5) Alexco.............?

 

Any possibilities I've missed? No pressure and dyor natch.

If you believe in silver, there are the usual suspects: Alexco, Silvercrest, Impact, Fortuna and MAG. 

Alexco largely unaffected by COVID, with water licence to be awarded any time now providing a near-term catalyst. 

Silvercrest sitting on a world-class asset and with full coffers, but their operations are on hold until at least end of April (lockdown in Mexico). 

Fortuna would usually occupy the top spot, but all of their operations are impacted: Lindero is not progressing (lockdown in Argentine until at least 10th of May), gold/silver is not being mined in Mexico and they just got 6 cases of covid in their lead/zinc operation in Peru. A real coiled spring, but how long it stays coiled is out of their control. 

Impact with great silver leverage, but again Mexico. 

MAG if you like to chase Sprott :)

When it comes to goldies, one thing I know is I'm not touching NGD before the bust. If they make it through with their debt level, should be dirt cheap. I like Minera Alamos, Fiore and Corvus, although the timeliness on Corvus are rather long, so I might focus on a shorter term plays first. Minera just broke out but with gold at 1700 they are still cheap. 

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1 hour ago, TheCountOfNowhere said:

The free market is a joke

 

https://www.ft.com/content/4ba98555-b45d-415b-80ea-a59d8b481f9e

 

BP Earnings plummets but two thirds as demand collapses....

 

Market Summary > BP plc
LON: BP
Follow
 

322.10 GBX +8.10 (2.58%)

 

You couldn't make it up.

What do you want? Another 40%+ down because they told the market what it already knew? 

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reformed nice guy
1 hour ago, TheCountOfNowhere said:

The free market is a joke

 

https://www.ft.com/content/4ba98555-b45d-415b-80ea-a59d8b481f9e

 

BP Earnings plummets but two thirds as demand collapses....

 

Market Summary > BP plc
LON: BP
Follow
 

322.10 GBX +8.10 (2.58%)

 

You couldn't make it up.

The price is based on expected future demand more than current or recent.

The market must think the world still wants to use cars, planes, plastics, fertilisers, pharmaceuticals etc so they need to buy the raw material 

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sancho panza
On 25/04/2020 at 09:19, BurntBread said:

@DurhamBorn, thank you again for this thread,which is an education in so many ways! I certainly don't want to pry into the details of your and your friend's formulas and correlations, but I am nevertheless very interested in the "most-macro" of your thoughts, and especially how they relate to recent history. I'm going to wrestle with my own understanding in this post, so if you take the trouble to read it, please forgive the length, and my stupid or misguided questions.

 

Fascinating and thought provoking post BB that's got me thinking and learning. Also from DB's responses. Don't wish tot read on anyone's toes but you raise some good issues for debate.

I come at things from a different angle to DB.I'm a committed debt deflationist but beyond that I'm more agnostic.I see the logic DB puts forward which is sound but I also see other bits of evidence that make me wary of committing fully to that thesis. Thus my timelines are more the next few years than having a strong thesis around which I can navigate the next ten years.

A while back, we had an excellent discussion on here regarding Jerome Powell and the dollar which enlightened me no end and contributed to my current thesis for the enxt few years.

As I've said,I don't have as full and far sighted thesis as DB, so this is more of a food for thought post.

 

'I believe you are saying that in this regard, the 2020's (when we get through the debt deflation) will resemble the 70's in so far as workers in suitable industrial sectors will get back their pricing power.'

 

 

It's worth noting a few things here.Firstly,in the US at least,workers didn't enjoy any real increase in pricing power.They pegged level with CPI and M1 money supply growth.At best,it would seem,in a time of recession and high unemployment comaprtively speaking,they kept their spending power.(Graphs courtesy St Louis fed)

It's also worth thinking about whether we're comapring apples and pears in terms of the inflation.Even to this day,the cost of buying $1 in retirement income or the cost of a house,isn't included per se, in the infaltion data.Which is something that reverberates aroudn teh current bubble trouble we're in.The inflation data isn't fit for purpose.Hence I tend to steer prefer the more nominal data.

There's a chance we get a spike in wage inflation but for that to occur,we'd need to see a relative cut in the levels of immigration.as you allude,some sectors requiring certain skills might enjoy some pricing power but that's always the case.

The flip side of increasing population growth worldwide is that longer term,it gives power to the owners of capital and land,rather than the labour that works it.

Especially if a debt deflation occurs and the credit driven growth we've enjoyed over the last thirty years gets unravelled.If we take Japan, which has printed trillions of yen,has a shrinking working age population,there's been little if any wage inflation.And their demographic problems are accompanied by relatively tight immigration rules and an aging population that's leads tables.

 

image.thumb.png.f443c7e6fb6940c3135a439a7ee286e1.png

 

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'However, I am very puzzled by your phrase "the government can print all the disinflation that has happened since '82". I find this puzzling for two reasons: firstly, I don't really know what it means, as it seems to mix different categories of things; and secondly, you seem to be treating money-printing with approval, which is very much not in accord with Hazlitt's book ("The inflation crisis, and how to resolve it"), which you recommended earlier. Hazlitt argues that inflation (defined as an increase in money supply) is always damaging: '

 

 

Money printing isn't always damaging. I haven't read up on Hazlitt but his assumption very much runs  alongside Friedman's 'inflaiton is always a moentary phenomenon'.If you print into declining velocity-as we have post 2008-then it isn't inflationary.(obviously depending how you're measuring inflation).Govts can print as much as they like but politically,stability remains a primary concern and therefore the CB's have to try and tread a careful line as they do so.

The reality is that periods of stability inevitably beget periods of instability as Minsky hypothesized.For me the mistake the CB's are making is to try and iron out the economic cycle rather than try and navigate a steady course through it.

The problem we're facing,and the japanese more so, is that if at some point we start to see more nationalistic attitudes to immigration,we could see unparalleled levels of wage inflation. I still tend toward the deflationista view but it's entirely possible and logical that we see some 20% inflation prints.

The other assumption that underpins CB printing is that they can control the outcome.I'd say the reason we haven't had inflation since 2008 is that they've been blindly not measuring it in terms of the cost of housing and pensions.

 

 

 

 

'I have been thinking about this, and my guess is that what you really mean is roughly as follows: That the disinflation has, over the last 40 years, allowed a large build-up of debts, many of which are on non-productive assets (e.g. houses), and many of these will never be repaid. '

 

The infaltion has occurred in the assets rather than the cost of building them.Much as DB states we shoudl see the distribution between consumer back to labour,we could also see it back from assets to labour(and/or capital)

 

 

 

'We now face a debt deflation, which has the potential to destroy many productive businesses, as well as unproductive ones. A strict Austrian economist might say "this is fine: let them go bankrupt and be bought up by stronger hands; that is the free market doing its job of purging excess". However, I recognise that supply chains are fragile things, and if too many companies go to the wall, then entire sectors might get destroyed, and recovering them would take decades. In that sense, there is a good role to be played by government forcing liquidity into the system (even to the extent of just printing), in order to keep whole technology chains from dissolving in the chaos. This is not only beneficial, but also necessary. However, being a government, and not a free market, this injection of money must create distortions and corruption. I think you are saying that the amount the government can print before those distortions become catastrophic, is roughly comparable to the scale of the bad debts; '

 

I'd agree that it amkes perfect sense not to destroy entire supply chains. The problem you have with the printing is as DB has said,right sizing it.The consequential problem you have is that the govt then has to monitor the inflationary effect in terms of both price inflation and credit inflation to prevent an even more destabilizing bubble than the one they're trying deal with.This is something that Neo Classical economics with it's myriad structural failings, has demonstrably failed to do over the last forty years. Inventory recession after inventory recession has been solved with the blowing of an even bigger credit bubble.The idea that these same people-who ignore the role of private debt in their modelling on the whole- are going to 'right size the printing'(DB's words),goes firmly against the evidence of recent history.

Steve keen has written extensviely on the subject and I include a video here

http://www.debtdeflation.com/blogs/2012/12/01/the-debt-issue-in-neoclassical-economics/

 

 

 

'and further, that a wise government can use those distortions in ways that have long-term benefits, by directing them towards building infrastructure. '

 

Whilst I follow the logic,I think it's hard to know whether the govt will be in a position to do anything given the many variables it faces,not least in terms of currency depreciation forcing price inflation/how that infaltion falls.I see  @Viceroy has posted something on this which I'll get to later but mapping that far out comes with a lot of variables. Instability, be it either the financial sort Minsky worte about or the politcal/social sort Schumpeter also addressed can really restrict a lot of govts room for manouvre.

 

 

'The 1970s were a time of rising inflation, and I think you are expecting the 2020s (after the debt-deflation) to be similar in this regard.'


there's also a chance we get a decade or two long deflation like Japan has had. These prices have dropped depsite trillions of yen in printing/population growth/the govt owning 40% of ETF's/huge rise in govt debt etc.The people are getting poorer they jsut don't know it.

The 2020's will follow a huge debt deflation possibly, the 1970's was the beginnign of the ddemogrpahic dividend of teh end of WW2(hattip Hodges)

image.png.fcd6807423bc46cf90a6cf3256f8a2c7.png

 

'the end of the 2020s. It sounds like we will face the possibility of currency collapse, which I think we did (to some extent) at the end of the 70's - and which is always a danger at the end of an inflation. In the early 80's, we had Paul Volker reining in the inflation'

 

Volcker wasn't conteding with a huge debt deflation at the same time.Raising rates when unemployment is below 10% doesn't necessarily affect election outcomes,raising them when unemployment is 15% is political suicide.We will be facing the possbile unleashing of all the built up money velocity from the last twenty years being unleashed which teh CB's won't be able to control.I suspect they will opt for a long drawn out depression with some sort of war instead.

Steve keen had a great quote in 2009-still valid today as the deflation hasn't finished:'the last debt deflation ended after ten years with WW2'.

 

 

'I think we had what could be called a "stabilisation crisis" here in the UK, as money became tighter through Thatcherite monetarist policies'

 

There were otehr structural issues too and the fact we were digging out north sea oil which nailed sterling.My Dad was in the knitting machine business back then and he said British manufacturers jsut didn't get the theory of in built obscelescence.

 

'it would be fascinating if you could say what you think will be notable about the end of the 2020s that will make it so perilous? '

We could face a number of potential problems-the unwinding of the debt deflation over a decade,the rise of nationalism-which historically accompanies these periods of rising poverty,the debasement of certain currencies,an increase in world population.The best result we'll get is a second great Depression,the worst is what happened after but with nuclear bombs.

 

 

'Coming back to the uncomfortable idea of global war, I have to say that I have been pleasantly surprised that we didn't end up sucked into WWIII after the "great recession" of 2008.'

I wouldn't offer a comment until we're sampling the coffee they serve after dinner.

 

 

''I was expecting the sort of correlation which I think people have seen with Kondratiev cycles and major conflicts.'

A point I would make here,is that with all cycles work you have to adjsut for average lifespans.Kondratiev lived in a time and a place where many died at 40-50. I think it's signifcant that it was only after the people who'd been young men and women during the Great Depression left public office in the main,that you got the repeal of Glass Steagall in 1998.It's not a coincidence.

 

 

 

 

 

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sancho panza
On 25/04/2020 at 12:25, DurhamBorn said:

@BurntBread

The 2nd main point on the disinflation from 82 being available to be printed is too complex to go into.Its actually the bedrock of the calculations and so im not putting that public on the mechanisms.The key concept though is liquidity is only lost during a debt deflation at first.The assets still stand.The longer they stand out of use the more they fall apart and fail.The key is knowing how much dis-inflation was there from 82 so knowing how much they can print.We think they will print all of it and more.We cross market that to oil for instance and that gives us a price of $200 to $300+.

This of course assumes the CBs act,but they will.Its not a case of agreeing or not with them.Its the system we live under.To right size the economy they need to print all that dis-inflation so profit can return.

I've no wish for you to answer as it's private but I would reason that some sort of calculation of the discrepancy bewteen the rises in the real cost of living-including homes/food/fuel/pension provision and the offical measure of inflation,would make a lot of sense.

 

As I've said,I think the models of msot neo classical economists are fatally flawed,my working assumption is that they'll get it wrong,as they normally do.

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2 minutes ago, sancho panza said:

I've no wish for you to answer as it's private but I would reason that some sort of calculation of the discrepancy bewteen the rises in the real cost of living-including homes/food/fuel/pension provision and the offical measure of inflation,would make a lot of sense.

 

As I've said,I think the models of msot neo classical economists are fatally flawed,my working assumption is that they'll get it wrong,as they normally do.

It would.However we see lots of those things going in the opposite direction.House will get cheaper as will providing a pension.The reason they went up in price/cost is because all the dis-inflation savings flowed to them instead of shareholders and workers in wages or profits.That will unwind.They were the great winners from a long falling rates cycle.They will be the main losers from a rising rates one.

 

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sancho panza
On 25/04/2020 at 12:31, DurhamBorn said:

 

They will be better for the consumer longer term,but remember there will be a lag.A generation lag mostly.Those young people with HTB mortgages wont enjoy the inflation or wage increases because rates going up will take it all and more.

£400 interest on mortgage at 3% rates doubles at 6% rates.The wage increases will lag way behind that.Of course if you get a 10 year fix now;)

I msut say that thanks to this debate,I'm beginning to get the drift of what a dsitribution cycle is.

On 25/04/2020 at 12:41, DurhamBorn said:

My friend says he hopes he is dead before the next cycle ends.Its exactly because of what you say.We will have a much better economy in industrial areas,and yes similar to Germany pre WW2 in output but not scale.However government spending  is and will be at eye water levels for welfare.The CBs wont be able to print at the end of the cycle.Inflation could be 20%+.Once they cant print governments cant pay the bills,benefits stop.This is where we will be in 2029.Likely the greatest financial dislocation and wealth destruction in all of history.Of course lots can change between now and then.If this thread is going,then the next several years will be about trying to work out if there are any areas to protect wealth.Where we are now and the next 12 months dislocation is nothing to the next one.

If you look at Germany's economy 1932 to 1939,it featured a debt/GDP spiral that would make a lot of neo classicals proud.Forget about private debt.Those sprials are currently unsustainalbe.What worries me is that we're already well down that road of debt GDP spirals,this jsut isn't going to end well.

On 25/04/2020 at 12:46, DurhamBorn said:

 

The removal of the ability to print from CBs due to being on the edge of hyper inflation (20%+)

Imagine March 12th for two weeks with the Fed and CBs printing nothing.Injecting nothing.

Imagine that same scenario with treble the debts on government balance sheets.

Imagine the UK government now being unable to borrow anything and nobody to monetize.Imagine that now.All pensions and welfare payments stop last week.

When the government becomes  the main driver of the economy,but cant borrow.Worldwide.

 

I think hyperinflationists forget that hyperinfaltion is a political choice on the whole but not exlcusively so.

If we get an inflationary spell then I'd agree with your logic.

Forgive my using wiki but here's a brief bit on Schumpeter but he was quite prescient.Histroy doesn't repeat itself etc

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

'Schumpeter believed that capitalism would gradually weaken by itself and eventually collapse. Specifically, the success of capitalism would lead to corporatism and to values hostile to capitalism, especially among intellectuals.

"Intellectuals" are a social class in a position to critique societal matters for which they are not directly responsible and to stand up for the interests of other classes. Intellectuals tend to have a negative outlook of capitalism, even while relying on it for prestige, because their professions rely on antagonism toward it. The growing number of people with higher education is a great advantage of capitalism, according to Schumpeter. Yet, unemployment and a lack of fulfilling work will cause intellectual critique, discontent and protests.

Parliaments will increasingly elect social democratic parties, and democratic majorities will vote for restrictions on entrepreneurship. Increasing workers' self-management, industrial democracy and regulatory institutions would evolve non-politically into "liberal capitalism". Thus, the intellectual and social climate needed for thriving entrepreneurship will be replaced by some form of "laborism". This will exacerbate "creative destruction" (a borrowed phrase to denote an endogenous replacement of old ways of doing things by new ways), which will ultimately undermine and destroy the capitalist structure. '

 

7 minutes ago, DurhamBorn said:

It would.However we see lots of those things going in the opposite direction.House will get cheaper as will providing a pension.The reason they went up in price/cost is because all the dis-inflation savings flowed to them instead of shareholders and workers in wages or profits.That will unwind.They were the great winners from a long falling rates cycle.They will be the main losers from a rising rates one.

 

Absolutely.Like I said,it's beginning to make sense to me.It soemtiems takes years for the penny to drop.

 

Thanks both.

Got go cook dinner or I'll be in trouble.Back later.FAscinating discusion.

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Baird limiting purchases of King Edward VII Gold Half Sovereign to 1 per customer.

Apologies if better suited to PM thread but I know this thread gets more views and PMs are part of the plan.

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sancho panza
On 25/04/2020 at 21:57, Loki said:

Just reading some of that Raoul's latest tweets and I am struggling to understand this one

 

 

https://twitter.com/RaoulGMI/status/1254111689374666754

 

In the preceding tweets he seems to spell out why a strong dollar is a problem, then seems to imply a weaker dollar/lower DXY is bad.

 

I think we live in a bizzarro world where a strong dollar will break the world economy and a weak dollar will too.Strong dollar will break a lot of EM $ debt anda weak dollar will lift commodity prices.

On 26/04/2020 at 11:38, Bricks & Mortar said:

Well worth reading this set of tweets.   It seems to be a slightly different view of debt deflation, and the cause/mechanism.

The one I homed in on, was near the end



Raoul seems to be expecting negative interest rates, (or at least, the bond market to expect NIR), in the near future.  It seems he can't imagine the scale of money-printing needed to lower the dollar.
Thanks to DB, for letting us know the number is indeed, almost unimaginably high, (all the disinflation since 1981).
For myself, I have difficulty imagining negative interest rates in the reserve currency.  But I don't count.
What matters is whether the Fed can imagine that level of printing, OR negative interest rates.

The problem is with negative rates is that they kill banks,maybe not shorterm but long term as they destroy margins which in itself will undo a lot of the stimulus.

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King of Fools
10 hours ago, DurhamBorn said:

Tinned Princes corned beef £1.89 in Home Bargain,shortcrust pastry make own or buy ready to roll .I do extra potato mash when making a dinner and freeze some.Defrost when needed to make a pie and then squeeze the water out of the potato (only works after its been frozen),mix corned beef with potato and grate 2 onions into the mix.

Lovely.I usually soak my own peas to go with it.Touch of gravy.

 

I think you were my mum in the 1970s 😊

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sancho panza
On 27/04/2020 at 22:32, Viceroy said:

This article about the many types of historical inflation was recently posted on Armstrong’s private blog which I found to be an interesting read. He does agree the upcoming cycle will be inflationary, many due to shortages..

“What Kind of Inflation is Coming & Why Goldbugs Are Wrong

TUESDAY, 21 APRIL 2020 BY: MARTY ARMSTRONG

5e9e39637bc98f1100bf5b59

Inflation, therefore, is far from our dimensional definition of money supply and prices. Inflation has several faces and has struck in different forms from one decade to the next. This is why the simplistic definition used by central banks and even the goldbugs simply fails to understand the true trend.”

 

I must say that people sometimes overly focus on Armstrong's Pye theory,they forget that's he's written some great pieces on economic history.

That last few sentences above are bang on.Infaltion,cause and effect change between eras.

 

One piece of his I remember from a few years back was wehn he was talking around generational changes and talked about how we go from big govt to small govt, and how the current trend to big govt will eventually lead to an era of smaller govt.Something that has an indelible logic to it.

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41 minutes ago, sancho panza said:

I think we live in a bizzarro world where a strong dollar will break the world economy and a weak dollar will too.Strong dollar will break a lot of EM $ debt anda weak dollar will lift commodity prices.

Painted themselves into a corner? Would they just throw the EM to the wolves?

 

And a more broad question to all, are we missing any areas to weather the financial environment ahead? I'd Assumed a reflation portfolio and physical PMs was fairly bullet proof.  (Although having re-read the Armstrong piece he was specifically talking about gold, with this thread being one of many places saying silver is undervalued)

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sancho panza
6 hours ago, kibuc said:

If you believe in silver, there are the usual suspects: Alexco, Silvercrest, Impact, Fortuna and MAG. 

Alexco largely unaffected by COVID, with water licence to be awarded any time now providing a near-term catalyst. 

Silvercrest sitting on a world-class asset and with full coffers, but their operations are on hold until at least end of April (lockdown in Mexico). 

Fortuna would usually occupy the top spot, but all of their operations are impacted: Lindero is not progressing (lockdown in Argentine until at least 10th of May), gold/silver is not being mined in Mexico and they just got 6 cases of covid in their lead/zinc operation in Peru. A real coiled spring, but how long it stays coiled is out of their control. 

Impact with great silver leverage, but again Mexico. 

MAG if you like to chase Sprott :)

When it comes to goldies, one thing I know is I'm not touching NGD before the bust. If they make it through with their debt level, should be dirt cheap. I like Minera Alamos, Fiore and Corvus, although the timeliness on Corvus are rather long, so I might focus on a shorter term plays first. Minera just broke out but with gold at 1700 they are still cheap. 

I don't necessaily believe in silver but I do belive in being exposed to it.

The GUY moeny is from our smallies,so I'm keen to try and find a potnetial ten bagger with it(or 90% loser obviosuly :-)).I've said before,if and when we sell some of our tier one stocks then the profits will get ploughed into the late runners if they're still cheap.Alecco jsut has the look and feel of a company that offers amazing potnetial.We're already at our maximum on a small share with Alexco but it's genuinely tempting after reading between the lines of your post to get some more.

Must say,I think you might be right on Impact.That really fits the bill and means I'm not over exposed on ALexco....Seems all the great silver miners are Mexcio based.Maybe split it between Impact and Fortuna.

We already hold MAG and MAI...I have a little space to add some more MAI but it's hard when I got in a lot further down the line.

 

Thansk as ever for taking the time to reply K.Much appreciated...

 

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sancho panza

@Cattle Prod XOM look to have properly bottomed.I din't get any calls on a$50 as I was bitching over the pennies in the trade.

Hada  look at the XOP calls but theyre quite a hefty price asa  %age of the underlying.Much like with SLB which  I also ran my slide rule over for a long calls trade.

image.thumb.png.6cbfbc76eac5262d5a5aab628cb9acfc.png

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Wow some incredibly thought provoking posts from you there @sancho panza, although at 4:30am it’s a tad heavy to fully process xD

I too am struggling with deflation/inflation ahead, I’m definitely leaning towards @DurhamBorn’s expectations, although it could take a little while to kick off in earnest. Few points spinning round my head at present:

- Yield curve control, will it work?

- Scale of cuts in energy sector and job losses/bankruptcy, some irreversible or will take some time to reinstate. Implications 2 years from now. Tie in with the excellent documentary Planet of the Humans and increased awareness of not so green energy.

- Dangerous complacency that because Japan didn’t get inflation, the U.S. can follow with no trepidation. It’s the lack of complete fear and appreciation for lags that concerns me.

- If U.K. stocks tank along with damage to pensions, do they pump the property market globally as we saw post tech bust? Flight to safety in real estate?

- Length of higher unemployment and measures to be taken to get back to the record lows of 2019, took 8 years or so after the GFC, will they be desperate to get back to such levels much sooner? We’re only just starting to see the longer term damage now, unemployment rate seems to be inextricably linked to house prices when looking at GFC and early 90s, obviously a popular vote winner for 2024.

- Tensions regarding reopening economy, Germany already seeing a 2nd wave

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9 hours ago, sancho panza said:

I don't necessaily believe in silver but I do belive in being exposed to it.

The GUY moeny is from our smallies,so I'm keen to try and find a potnetial ten bagger with it(or 90% loser obviosuly :-)).I've said before,if and when we sell some of our tier one stocks then the profits will get ploughed into the late runners if they're still cheap.Alecco jsut has the look and feel of a company that offers amazing potnetial.We're already at our maximum on a small share with Alexco but it's genuinely tempting after reading between the lines of your post to get some more.

Must say,I think you might be right on Impact.That really fits the bill and means I'm not over exposed on ALexco....Seems all the great silver miners are Mexcio based.Maybe split it between Impact and Fortuna.

We already hold MAG and MAI...I have a little space to add some more MAI but it's hard when I got in a lot further down the line.

 

Thansk as ever for taking the time to reply K.Much appreciated...

 

No worries. Regarding Impact, it would be my primary pure silver play (as opposed to Fortuna, which will become a gold play with Lindero) if it wasn't for their very low volumes. Usually I can only get a quote for £1000, sometimes £2000 worth of shares, so if you're dealing with larger amounts then getting in and (more importantly) out of the market quickly might take some effort. 

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Whats people views on trimming especially in the miners its something i sometimes struggle with (Greed)

Sold most of my miners last year with profits only to watch them go higher but then drop I have gradually been buying back into them and feel i need to set a rule for trimming 

 

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Talking Monkey
4 minutes ago, DoINeedOne said:

Whats people views on trimming especially in the miners its something i sometimes struggle with (Greed)

Sold most of my miners last year with profits only to watch them go higher but then drop I have gradually been buying back into them and feel i need to set a rule for trimming 

 

As I subscribe to the view that the big Kahuna will arrive later this year or in the first half of next year my view is to trim in line with the price of Gold, hence I will start trimming above 1800 and expect to be completely out of PM miners if Gold approaches 2000

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Does anyone know what has driven stocks higher today? My reflation portfolio is up by 2.5% which is nice to see.  I'm not looking to trade this rise, I just want to know the reason for it, if there is a solid one.  Can't see much action on DXY or 10Y/30Y treasuries

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sancho panza
1 hour ago, Democorruptcy said:

You beat me to it. I suggested a while back if they could lower the USO permanently to exclude Saturday it would be very profitable for them. 

When I used to be a posty I had no idea why we delivered mail on saturdays.Best job I ever had to be honest.I was fit as a butcher's dog.

6 hours ago, Barnsey said:

Wow some incredibly thought provoking posts from you there @sancho panza, although at 4:30am it’s a tad heavy to fully process xD

I too am struggling with deflation/inflation ahead, I’m definitely leaning towards @DurhamBorn’s expectations, although it could take a little while to kick off in earnest. Few points spinning round my head at present:

- Yield curve control, will it work?

- Scale of cuts in energy sector and job losses/bankruptcy, some irreversible or will take some time to reinstate. Implications 2 years from now. Tie in with the excellent documentary Planet of the Humans and increased awareness of not so green energy.

- Dangerous complacency that because Japan didn’t get inflation, the U.S. can follow with no trepidation. It’s the lack of complete fear and appreciation for lags that concerns me.

- If U.K. stocks tank along with damage to pensions, do they pump the property market globally as we saw post tech bust? Flight to safety in real estate?

- Length of higher unemployment and measures to be taken to get back to the record lows of 2019, took 8 years or so after the GFC, will they be desperate to get back to such levels much sooner? We’re only just starting to see the longer term damage now, unemployment rate seems to be inextricably linked to house prices when looking at GFC and early 90s, obviously a popular vote winner for 2024.

- Tensions regarding reopening economy, Germany already seeing a 2nd wave

Ref the bits in bold,

One of the issues of assuming CB omnipotence is that people assume the CB's have their back.For now,the Fed has controil of the yield curve,but if we get a situation where they don't then we could see huge dislocations in capital/debt markets.This is what Dimartino Booth exposes so well,the raw underbelly of the corporate bond markets and their exposure to rising rates/defaults getting into a vicious circle. as @StrugglingMillennial post regarding Diamond offshore going to Ch 11............and this US Shale drop will get worse before it gets better.

 

I think your point on Japan is excellent and somehting I've not considered before.Maybe they have looked at japan and scoffed at the possibility of velocity rising............dangerous given japan's being at an obscure end of teh demogrpahic specturm. It's worth noting that since 08,govts-particualrly China's-have added a lot of debt both public and private that has provided for increasingly small upticks in growht.At some moment in the future,we'll reach teh point where they're adding debt and getting negative GDP gowth.it will happen.Just don't know when.

 

ref your last point and the hosuing amrktet-I thinkw here covid has been really effective is creating a huge U turn in consumer psychology.I'm seeing it already.People who've never seen a recession my wife's age,are starting to look over their shoulder at job security,IR security etc and I think we're about to get that seismic shift in consumer attitudes that ensures we'll get the inital drops in aggregate demand that gurantee the debt deflation.Like I sadi,every recession psot GD 1, they've managed with liquidity injections and pumping the money supply.Broader money supply measures didn;'t even dip in 09.

image.thumb.png.9b003bfeb2e601dcda257e3065f76708.png

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