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


spunko

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1 hour ago, Shamone said:

Our long-term plan is to move to Powys somewhere quiet.

I was told it's called "heartbreak County"!  Apparently they come with their wads and full of hope and leave poorer and wiser!  But some hardy types survive, but the ones I know are very hard and down to earth.  Most are ex forces.

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leonardratso

i wouldnt bet much on bitcoin et al, i actually made most of the money on litecoin, theres no assets, no regulation, nothing to actually back your hard earned up, you can read as many articles and websites as you like, theres no comeback for you if the exchange decides to shut up shop and disappear with your coins, or if in a wallet somewhere and you try to sell out a lot can go wrong with the process, the hacking and theft also was a problem. It is a lot better than it used to be and the remaining exchanges are certainly large and liquid and the fly by nights and scammers are much less now, but still theres no backing to your actual cash, nothing can be pointed at and said to be a hard asset that your cash owns a part of.

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1 hour ago, Democorruptcy said:

There must be some good assets going cheap. Maybe they need the money to do some spending?

Indeed.  I was immediately interested in what they would do with the money.  I'm thinking on balance something good which could quickly make up for any losses.  And it's not like I need the div right now.  A larger or more secure one later would be fine!

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1 hour ago, Cattle Prod said:

Further down that chain I qualified my flippant 'nothing' remark!

I said I'd be shocked if they cut the divi, and I am. I watched the stock being dumped this morning, presumably by 'angry from Tunbridge Wells', I wouldn't be surprised to see it up on the day. I need to think about this, because there is nothing fundamentally wrong with the company. Maybe the next quarter is going to be absolutely horrendous. Maybe they are just using the virus as an excuse to skip a divi payment (much like people are using it as an excuse to skip a mortgage payment), but that is a dangerous game. Hopefully, they are eyeing up an acquistion, and looking at the recent bounce in the Centrica share price, who knows?

Either way, I was wrong, and if Shell is going to cut their divi at a time like this, which I still think is a storm in a teacup and temproary, I need to re-think my whole income portfolio. Maybe I should lean more towards a permanant portfolio as Harley/Raoul Pal outline. If you are getting penalised for having 100k in cash in the bank, that is going to put an effective yield into gold and bitcoin.

I'll wait for XOM, they have always been the strongest financially.

Id say its a sign of good management.It will of taken them a massive amount of thinking to do this.They have a chance to pick up very very cheap assets here,the last chance before an inflation cycle.I suspect they have their eyes on a few things.As a contrarian i love seeing this divi cut.Its another signal the cycle is ending.

Tunbridge Wells will have to sell assets for income = distribution cycle.

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1 hour ago, Shamone said:

Our long-term plan is to move to Powys somewhere quiet. Not self-sufficient but even more frugal. I suspect DB is correct about how things will look in the next decade. This crap has been building for decades now, it won’t unwind prettily. I’d rather get a few quiet years in away from people before the nukes fly or the real virus is released.

Powys always brings back feelings of dark/damp to me (CCF outings to Senny Bridge, or really any outings around that way... the road winds down the valley and it always feels miserable. Or the winding A483 up through the 'well's, always seems to be damp). Grew up just across the border in Carmarthenshire which always seems much more open and fresh. Probably complete bollocks.

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sancho panza
26 minutes ago, NogintheNog said:

That's the key. A lot less demand, but growing. Less supply but not growing, probably for years!

 

As CP has outlined.Lots of amrginal production getting shut at $15 that will never reopen.There's 7.8bn people on the planet wanting food,fuel and shelter.

It's going to take sometime for alternative new fuels to come on board and till then I think big oil is better place to be than small oil and a much better place to be long term than cash.

3 minutes ago, confused said:

@sancho panza again yes yes! I posted this one a few days ago, fascinating stuff...

 

crb commidity.jpeg

And in that time world population has gone from 3.8bn to 7.8bn and a load of the commodities have been used up.

and that's before we get to dollar purcahsing power which will likely decrease some more over the next five years.

Decl-long gold,oil,potash

https://www.measuringworth.com/dollarvaluetoday/?amount=100&from=1972

image.png.5738ef7a229727d11ed354a22311748b.png

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45 minutes ago, Eventually Right said:

It is ballsy-but I guess his non-liquid wealth (property in Cayman islands/shares in Realvision/Macro Insiders etc) will be pretty substantial, so less crazy than one of us doing it!

Talk for yourself.  I have a chipper, power barrow, a full set of Stihl, a generator, waker plate, etc.  I need to diversify!

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1 hour ago, Cattle Prod said:

The difference between that graph, and now, is money printing. They tightened into the recession then and caused a depressing. Evidence over the last ten years says they will do anything to avoid that again by printing huge amounts of money, per @DurhamBorn thesis. So I don't see it playing out like that graph now. As I say, the main flaw I see in Raoul's thinking is that he's not allowing for 20 tn+ QE.

Edit: I recommend "Lords of Finance" for central banking in the 30s.

Also the world has changed.

Back in 1930s everything was done on paper, it was much much slower and more  cumbersome, it played out slow.
 

Much slower crash and much slower recovery.

A much smaller percentage of population played the stockmarket back in 1930-50 and also the population was much smaller. So accessible now with apps and instant data. 

History can be a guide - but I agree it will play out much differently. In part due to money printing, but also population and the modern day advances in  technology.

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Talking Monkey
19 minutes ago, Cattle Prod said:

Not at all, I have to review my confidence in sober Dutchmen. Maybe the were right if they buy some nice additions.

I'm better on supply than demand, and the restrictions in supply are going to be more severe than I thought possible. It's setting up a major supply squeeze early next year, if demand even partially recovers. So I'm very content with my oil sector allocation, and am increasing call options for Q1/Q2 next year. XOP Jun21 have already increased nicely. As I said, 'tank tops' have never, and never will be filled. The production will be shut in if necessary, which we are starting to see now, despite many 'analysts' saying this wouldn't be possible. There will be a certain amount of permanent supply loss around the world because of this (like the marginal fields being abandoned in the north sea I mentioned). But the permanent supply loss in the US will be huge. This is not being talked about yet, as only geoscientists really understand it, but without new wells being drilled, the 'legacy decline rate' in shale continues unchecked (I likened it to the Terminator). It is way more severe than the last time this happened in 2015-2016, and it will not be caught up again with drilling when all this is over. Using the latest EIA production data, and Baker Hughes rig count, I have legacy production currently declining at 660k barrels per month across the Permian, Niobrara, Haynesvill, Eagle Ford and Bakken plays. That is being replenished by fewer rigs drilling (down about 40% so far), so once the drill-production lag kicks in, this implies about 400k barrel per month supply loss, or ~4-5m annualised. This is the natural loss of the producing wells. If the well is shut in, the production is zero, but it arrests (most of) the natural decline, which kicks the can down the road. I very much doubt they will be shut in for long though, without major bankruptcies or a nationalisation, which may be coming. If they are produced, this is what will happen. I hope they don't get shut in for long, so that the geological decline gets baked in, and people stop wasting money on it once and for all. The rig fleet won't catch up this loss again once this is over, you would need a lot more rigs, and a lot better acreage. I really think this is game over for US shale.

So US production has probably peaked IMO, for good. US energy dominance was never really there. This will also have huge geopolitical implications, they've already started sabre rattling at Iran again. I'd expect a re-cosying up to Saudi Arabia, and some kind of olive branch/assassination to Venezuela soon.

On the demand side, there are some analyses showing that stock fills around the world imply a current demand loss of ~10mbod rather than the much quoted 20m bpd. It wouldn't be like the markets and analysts to overshoot, would it?! If that is true, OPEC alone has shut in the demand loss. The rest of the world (Norway is the latest to the party) shutting in and stopping drilling could be way over shooting. The inherent nature of boom-bust-boom in oil.

CP why is there a certain amount of permanent supply loss, wouldn't some of these shut in wells be reopened if the price of oil got high enough

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1 hour ago, Heart's Ease said:

Tl:dr Harley, dyor but I'd keep an eye on the daily price and whack a few £ in when it comes into a reasonable - to you - range.  Others will/have been along to give hardware suggestions (trezor, of course). 

Ta.  Trezor or Ledger?  Why?

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Heart's Ease
3 minutes ago, Harley said:

Ta.  Trezor or Ledger?  Why?

Because it's been around for ever and I don't think I've seen anything bad about it. Someone on preppers thread has one loaded up as part of bugout bag @ad_ceng?

 

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43 minutes ago, Heart's Ease said:

Because it's been around for ever and I don't think I've seen anything bad about it. Someone on preppers thread has one loaded up as part of bugout bag @ad_ceng?

 

Think they're both pretty reliable, though I don't trust the Ledger model with Bluetooth. Can't for the life of me figure out why they would need to introduce another potential weakness like that.

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Last comment on shitcoins from me xD

Bloke I was last talking to about this a few years ago said Monero was the one that all the crooks will be using because 'Monero uses an obfuscated public ledger, meaning anybody can broadcast or send transactions, but no outside observer can tell the source, amount or destination'

And talking of ledgers that's why it's all a load o shite ;) It's ok wanting to decentralize this from the central banks but joe public doesn't want to be decentralized......

When I was an IT boffin programming 'mainframes' we realised that the decentralization of IT would make it a nightmare to manage and it came to pass...Amen lol......I made a lot of money doing Windoze shit but to be fair it is completely shit and then I became a Linux geek, maybe cos at heart I'm a 'free man' :P

Another example Films and music, I get mine free using 'decentralized sharing' :ph34r: but joe public wants the ease of using Netflix. Amazon etc even if he pays for it and is controlled by the corporates....

Same goes for Banking, this decentralised shit will never catch on, look what happened to peer to peer lending, was always a con.....YMMV

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7 minutes ago, Craig said:

Ledger model with Bluetooth

Wow sounds good for the hackers, bit like electricity smart meters xD

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19 hours ago, Harley said:

Anyone see much upside the the rest of the year?  Sell in May?  Not that the fekers will be going to Henley, etc. 

Perhaps this year will be different I.e not "Sell in May, go away" but "Buy in June, lockdown [2] soon" :-)

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Democorruptcy
1 hour ago, DurhamBorn said:

Id say its a sign of good management.It will of taken them a massive amount of thinking to do this.They have a chance to pick up very very cheap assets here,the last chance before an inflation cycle.I suspect they have their eyes on a few things.As a contrarian i love seeing this divi cut.Its another signal the cycle is ending.

Tunbridge Wells will have to sell assets for income = distribution cycle.

It's made me glad to have more RDSB than BP, as long as they put my money to good use. It's big news that could ripple across the industry and produce some low hanging fruit.

It's not going to help pension deficits relying on income and could be the final nail in the coffin for some oil investors with electric cars and going green etc. 

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Yellow_Reduced_Sticker
2 hours ago, DoINeedOne said:

Bought 10 BTC when it was $100

Sold it at $130 because it was annoying me for some reason

 

Boom

giphy.gif?cid=ecf05e47d455bbf9ef41bb9177

...I say i say i say, are YOU trying to knock me of the TOP ...buying&selling (WRONG Prices) perch?!:P

 

crb commidity.jpeg

 

That chart got my moolah GREED glands going in overdrive xD brought back memories when i was interested to buy Jim Rogers international commodity index fund back in the day...
 
 
image.png.28b932a7589c090268ba67242312d7ca.png
 
Anyone here ever invest in the above fund/index, have any info on it?
 
Anyways...got to do MORE research on this fund, BUT...so busy planting my FREE wild garlic and chives in, plus just had my gas&elec bill in... bloody RIP-OFF!
 
And to rub salt into the wound... both are supplied by the stock that shall remain NAMELESS! Bloody well Feels like double whammy piss-Take!:Old:
 
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11 minutes ago, Yellow_Reduced_Sticker said:

say i say i say, are YOU trying to knock me of the TOP ...buying&selling (WRONG Prices) perch?!:P

:-) :-) :-)

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TheCountOfNowhere
19 minutes ago, Yellow_Reduced_Sticker said:

...I say i say i say, are YOU trying to knock me of the TOP ...buying&selling (WRONG Prices) perch?!:P

 

crb commidity.jpeg

 

That chart got my moolah GREED glands going in overdrive xD brought back memories when i was interested to buy Jim Rogers international commodity index fund back in the day...
 
 
image.png.28b932a7589c090268ba67242312d7ca.png
 
Anyone here ever invest in the above fund/index, have any info on it?
 
Anyways...got to do MORE research on this fund, BUT...so busy planting my FREE wild garlic and chives in, plus just had my gas&elec bill in... bloody RIP-OFF!
 
And to rub salt into the wound... both are supplied by the stock that shall remain NAMELESS! Bloody well Feels like double whammy piss-Take!:Old:
 

Let us know what you decide.

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8 minutes ago, TheCountOfNowhere said:

I knew it was all too good to be true, should have sold out yesterday  :Old:

shoulda, woulda, coulda xD

I thought something looked weird when the DAX spiked up massive overnight.....that was those in the know closing their longs and going short :P  

Notice Gold and SIlver CRASHING TOO! do you still believe these are a hedge against a crashing market!!!????? These last months tell you otherwise!!!!

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Yellow_Reduced_Sticker
8 minutes ago, MrXxxx said:

:-) :-) :-)

NICE 0NE!:D

Just been on that moneysaving site, bloody boring filling in forms to get cheaper gas&elecy...MORE FUN here on this thread!:Jumping:
 
BTW, Shell down 10% today...maybe be able to top up soon at around... £11.69?
 
image.png.2136d0f16b8237627aeb761f4f7ecf9f.png
 
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