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

[MrXxxx]

Can gold/silver via Bullion Vault or Royal Mint (vaulted bar/signature rather than delivery) be kept in an isa and is it better tax-wise?

[Errol]

43 minutes ago, DurhamBorn said:

Very easy to order a couple of extra ships and state how much must be made in the UK.

Agree completely. And all of the ships should be made in the UK (i.e. every single component part and bit).

If we can't currently make some of the bits then we should learn how to or build the things required to do so. It's absurd for an Island, seafaring nation to be unable to build ships entirely by itself.

[Yellow_Reduced_Sticker]

54 minutes ago, Loki said:

INFA may yet come good...NGD up today too

 

indeed it is, i bought more near the years low back in march, @sancho panza  was about to buy more i told him to hold off, cos I was BUYING!

 

SO i think he bought more A FEW DAYS LATER right at the VERY low!

 

anyway I'm only down 9% on my entire holding, question NOW ... do i sell when it blips up to near $2 ?....AND then ONLY to WATCH it ROCKET to $15 +  

 

46 minutes ago, Errol said:

Agree completely. And all of the ships should be made in the UK (i.e. every single component part and bit).

If we can't currently make some of the bits then we should learn how to or build the things required to do so. It's absurd for an Island, seafaring nation to be unable to build ships entirely by itself.

 

YES, and if these companies need any help with training ...THEN...I'm the man, 35 years man & boy engineering experience, conventional & CNC machining, even grinding my own cutting tool bits on an off-hand-grinder, NOT like the trow-away inserts of today!

 

...AND the ONLY payment i required is they give me SHARES in the company!

 

[DurhamBorn]

@Yellow_Reduced_Sticker i havent had a reduction since this china flu kicked off.Luckily iv still found a way to spend even less.For safety reasons we take turns going to the shop,i go when we need bread milk etc but when my partner goes i give her a big list.I used to buy 90% of the shopping,now its reversed,she hasnt cottoned on yet ,iv lifted the % by 1% though on my SIPP that she gets if i peg before 75,cant say fairer than that.

Iv also fell lucky with the self employed furlough thing.I closed my business,but i was running the 3 years needed and should get £1k a month,so i listed a few items on Ebay to look like still going and will close down once the furlough stops,recession killed it off 

[Errol]

US stocks soar on worst unemployment figures ever!

[Majorpain]

57 minutes ago, Errol said:

US stocks soar on worst unemployment figures ever!

Up is down, right is wrong comrade.

Viva la revolution!

[Nicolas Turgeon]

Sorry for the late replies all - things got temporarily busy here!

On 04/05/2020 at 21:34, Transistor Man said:

Thanks. I’m interested, but I’m worried about the number of exchanges which seem to get hacked, and that happening here.

I believe the Winklevoss Twins (Facebook, rowing) have been refused permission to set up a Bitcoin ETF by the SEC, multiple times.  And they own a huge amount of btc. 

@Transistor Man I guess the SEC has different requirements to the Swedish regulator....!

On 06/05/2020 at 23:50, JMD said:

Nicolas Turgeon, do you own the xbt bitcoin eft in a sipp? Only I can't find it in my ii sipp. It would be a great option if you can hold it in sipp/ISA.

@JMD Yes mate, I have it in my Hargreaves Lansdwon  SIPP. You might be allowed to set up with more than one SIPP provider. And maybe even pay into them both each tax year? That's if ii can't find it for you. You might need to contact them or maybe it's only available on the phone. It's for 'spohisticated' investors only with HL (i.e. you have to take a short online test to qualify!)

On 07/05/2020 at 11:00, Harley said:

@Nicolas Turgeon I did look at BIT at the time.  Stopped when I saw an old article about it's parent company having issues with the SEC in the US.  Personally, I might possibly consider such a thing for say trading but IMO it does seem different from actually owning bitcoin (e.g. getting more outside the "system").  I'd also have to study the prospectus to understand how it works in detail as ETFs can be more complicated and risky than first seems (having once actually read a Gold ETF prospectus!).  Caveat Empor!

PS: On your exchange hacking comment, I'm still learning but understand rule #1 is to use a hardware wallet rather than leave your coins on the exchange.

@Harley Normally it's the European regulators that are stricter than the US ones!! (see ETF restrictions )

Good point about using it for short-term trades. I think it's very suitable for that. For longer term you're maybe getting into a case of how far you want to go down the road of getting outside the system as you mention. At one extreme you have the paper wallet or hardware wallet. Like they say "no keys, no coins". Don't lose the keys though!

Then you have the coins stored in a software wallet on your PC. Or coins stored on an exchange (some I think have insurance). Then you get into trusting a compnay to hold them for you - how they hold them and insurance are possible issues here. There are some great articles about the legths companies go to in generating and securing the wallets/keys to hold coins.

I guess the longer you want to hold, the more secure you want to get, and the less you want all your eggs in one basket. Same for gold. You might have stashed your stack of bars in the Hatton Garden vault! Or get robbed at gunpoint in your house for your stash under the floorbaords.

[Nicolas Turgeon]

17 hours ago, leonardratso said:

i hope so, i wouldnt mind selling out now, been in since £5400, if that falls and the LTC-BTC/BCH-BTC ratios improve ill swap em all out back into BTC for a take off again in the future. its like 2018 all over again, but on a much smaller scale.

 

We're all hoping it will be like 2017/2018 run up all over again!!!

The bitcoin price is very volatile, it swings a lot when whales make big moves, and the proportion of coins actually available for day to day trading is quite small I understand. But the day-to-day picture is a distrcation. There is an obvious graph to the price going back to the start. And going back, historically after every halving (4 yearly ish??) there has been a long term run up in price for the following year or 2. Like a 10x run up. This is what i want to get a piece of.

See the stock-to-flow model by Plan B he's on twitter and also explains the scarcity / S2F model here:

https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25

There is a lot of hype around the halving and if bitcoin starts to rise a lot and starts to get a mention on the news like in 2017 that will only help pump the price up. When to sell then becomes your biggest 'problem'.

What I want to watch out for is that there was a big drop in bitcoin price in feb/mar in line with the general stock market falls. Investors were dumping their bitcoins just as they were dumping alltheir other assets - stocks, gold, etc. So if there is another leg down in the general stock market later this year as suggested by Dave Hunter I want to be able to ditch my bitcoin ETF holdings before they possible fall again, then buy back in at the bottom (now where's my crystal ball!!!)

 

[Errol]

By Bitcoin etf do you mean GBTC? I looked for this on ii but it doesn't seem to be tradeable.

[jamtomorrow]

Hello from a long-time lurker and first poster. Been following and enjoying this thread, both here and in its previous incarnation on TOS, for god-knows-how-long (years?), and to the extent of integrating the ideas and themes that resonated with me into my own investment approach, especially of late. A belated thank you to all who have contributed/enlightened/entertained over the years.

I’ve popped up because I’m interested (and vested: SSE) in the discussion about opportunities for players in the energy sector - specifically, the possible opportunity for hydrogen to capture night-time generation from offshore wind and sell it back to the grid at a higher price during the day.

Posting because I see a quite different possibility coming up on the rails, where electric vehicle adoption takes off and brings about huge changes in the diurnal demand cycle, to the extent that day/night demand differences are all but wiped out. This wouldn’t just destroy the day/night arbitrage opportunity for hydrogen (or indeed, any buffering solution), it would pull the plug (pun intended) on a major structural assumption of the entire UK energy market.

I did an estimate to see if the idea basically has legs - inputs:

• Difference between night-time and day-time demand in UK: 10GW minimum (summer), 20GW maximum (winter).
  (Sources: http://www.ukpowergeneration.info/site/hourly, http://www.ukpowergeneration.info/site/hourly)
• Typical EV economy: 4 miles per kwh
• Average annual passenger car mileage: 7600 (source https://www.nimblefins.co.uk/average-car-mileage-uk)

Further assume charging demand is spread evenly over, say, 12h overnight (some owners will plug in as soon as they arrive home, some will plug in before they go to bed, and the chargers themselves will have various strategies to delay the charge time so the vehicle stands at 100% the next morning for as short a time as possible, in the interests of battery longevity).

Gives a mean overnight charging demand in the region of 0.5kw per EV.

With 32 million cars on UK roads, it would take 50% EV adoption to increase overnight electricity demand by 8GW. That’s almost all of the summer day/night difference, and 50% adoption doesn’t seem to me like a mad number for, say, “by the time the decade’s out”.

The question I’m struggling with: if something like this does come to pass, how do you play it as an investor? Who with a position in UK electricity industry could take advantage of the slow death of diurnal demand? Some half-arsed ideas:

• Better match between peak and average grid demand -> good for the grid
• Bad for generators who exist primarily to match demand peaks and troughs -> ???
• Good for baseload generators -> come back nuclear?
   

[deathfunk]

https://seekingalpha.com/article/4344085-second-wave

"A stock market that is falling sharply because of rapidly deteriorating fundamentals and virtually no true visibility associated with the fundamental outlook is distressing.

But a stock market that is steadily rising despite rapidly deteriorating fundamentals and virtually no true visibility associated with the fundamental outlook is effectively broken."

[DurhamBorn]

@jamtomorrow welcome to the thread (contributing).I dont think EV will win in cars,though at the moment thats the contrarian in me.I also base that on the fact the people who will have the capital in the transition cycle are the big oilies and for them hydrogen means they still have a big business,EV means they dont.If EV did win out youd expect the big wind power owners to do well and people who balance the grid etc to lose out slightly.The problem with investing for the transition,is that its almost certain its big companies who will gain and it could be they only slightly gain.Trying to find smaller companies who might multi bag is a different story.I also dont really see the point in trying to find any IF indeed we are heading into a reflation.Its so much easier simply to buy big energy,and small silver miners.

[jamtomorrow]

14 minutes ago, DurhamBorn said:

@jamtomorrow welcome to the thread (contributing).I dont think EV will win in cars,though at the moment thats the contrarian in me.I also base that on the fact the people who will have the capital in the transition cycle are the big oilies and for them hydrogen means they still have a big business,EV means they dont.If EV did win out youd expect the big wind power owners to do well and people who balance the grid etc to lose out slightly.The problem with investing for the transition,is that its almost certain its big companies who will gain and it could be they only slightly gain.Trying to find smaller companies who might multi bag is a different story.I also dont really see the point in trying to find any IF indeed we are heading into a reflation.Its so much easier simply to buy big energy,and small silver miners.

Makes sense.

And FWIW, I think there *will* a role for hydrogen on the grid come-what-may - I just think there's a chance the diurnal opportunity won't exist in 10 years time (depending on how EVs play out). There's certainly going to be an ongoing need for minute-to-minute demand matching. If gov policy continues to try and drive out hyrdrocarbons, you can see how hydrogen might fill that fast-start/stop hole nicely - will be interesting to see how it competes on cost with pumped storage.

Other end of the spectrum, there's going to be a need for weeks-scale demand matching to cope with when the wind don't blow, sun don't shine etc. At that end, I expect hyrdogen will be up against next-gen nuclear, and I expect it will boil down to whether enormous quantities of hydrogen can be stored for long periods at a price that lets it compete.  

[SillyBilly]

1 hour ago, jamtomorrow said:

Hello from a long-time lurker and first poster. Been following and enjoying this thread, both here and in its previous incarnation on TOS, for god-knows-how-long (years?), and to the extent of integrating the ideas and themes that resonated with me into my own investment approach, especially of late. A belated thank you to all who have contributed/enlightened/entertained over the years.

I’ve popped up because I’m interested (and vested: SSE) in the discussion about opportunities for players in the energy sector - specifically, the possible opportunity for hydrogen to capture night-time generation from offshore wind and sell it back to the grid at a higher price during the day.

Posting because I see a quite different possibility coming up on the rails, where electric vehicle adoption takes off and brings about huge changes in the diurnal demand cycle, to the extent that day/night demand differences are all but wiped out. This wouldn’t just destroy the day/night arbitrage opportunity for hydrogen (or indeed, any buffering solution), it would pull the plug (pun intended) on a major structural assumption of the entire UK energy market.

I did an estimate to see if the idea basically has legs - inputs:

• Difference between night-time and day-time demand in UK: 10GW minimum (summer), 20GW maximum (winter).
  (Sources: http://www.ukpowergeneration.info/site/hourly, http://www.ukpowergeneration.info/site/hourly)
• Typical EV economy: 4 miles per kwh
• Average annual passenger car mileage: 7600 (source https://www.nimblefins.co.uk/average-car-mileage-uk)

Further assume charging demand is spread evenly over, say, 12h overnight (some owners will plug in as soon as they arrive home, some will plug in before they go to bed, and the chargers themselves will have various strategies to delay the charge time so the vehicle stands at 100% the next morning for as short a time as possible, in the interests of battery longevity).

Gives a mean overnight charging demand in the region of 0.5kw per EV.

With 32 million cars on UK roads, it would take 50% EV adoption to increase overnight electricity demand by 8GW. That’s almost all of the summer day/night difference, and 50% adoption doesn’t seem to me like a mad number for, say, “by the time the decade’s out”.

The question I’m struggling with: if something like this does come to pass, how do you play it as an investor? Who with a position in UK electricity industry could take advantage of the slow death of diurnal demand? Some half-arsed ideas:

• Better match between peak and average grid demand -> good for the grid
• Bad for generators who exist primarily to match demand peaks and troughs -> ???
• Good for baseload generators -> come back nuclear?
   

I think all the major energy players will start investing in storage very shortly and we'll then see who is best place, all behind the curve a little IMO but can move quickly. Not seeing any compelling story from any one company that suggests "market leader" to me as yet in this area.

Even with mass electrical car usage we're going to be using less electricity in the future than we are using now so an interesting time for the grid. 15% less demand in the last 10 years and still plenty of efficiency to come. Just converting our factory over to fully LED now, nice savings. Storage will become far better.

[DurhamBorn]

BP looking to make Hydrogen in Australia

https://www.reuters.com/article/us-bp-hydrogen-australia/australia-backs-bps-study-to-produce-hydrogen-from-wind-solar-idUSKBN22K0IC

 

Its looking like US shale companies only have around 2% of production hedged ,ie they are knackered.I think for oil production to equal demand then prices need to double within 12 months.That is they need to double to keep enough production at the likely demand level a year out.It looks like it will take 8 months to run down the extra production in the system.

I think oil will go $35 (risk of back down to $15 after that) then $60 ,then $200.

[Transistor Man]

12 hours ago, DurhamBorn said:

 

Very easy to order a couple of extra ships and state how much must be made in the UK.

.

 

BAE’s Tempest — new fighter, capable of flying unmanned and in collaborative swarms — will be interesting to watch. 

I guess it’s certain to gets masses of funding. 

[sancho panza]

On 28/04/2020 at 16:31, 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. 

We ended up selling the Guyana and (also selling Superiror Gold) redeploying into Minera/BVN even weight and then a holding of Impact.As ever,always appreciate your knowledge of the PM space and you taking the time to offer an opinon K.dyor etc...

Already had a decent chunk in Minera and BVN.Impact is a new purcahse and is the second entry on our 6th line alongside POG.

On 07/05/2020 at 17:34, Castlevania said:

Where is that? The U.K.?

US CV.Sorry I missed this yesterday

14 hours ago, MrXxxx said:

It's snippets like this that for me make this forum so worthwhile, the final piece of the `jigsaw` (that I didn't even realize was in the box) that helps me `see the picture`

Whilst 90% of me is thinking price inflation/credit deflation in the line of DB's thesis and David Rosenberg's thesis,,there's still 10% poitning out that Japan has had a sustained deflation for 30 years.I'm thinking about thsi a lot at the mo when I'm strolling around the place marshalling the kids on their bikes.

I'll do some research and post more when I've reasoned it through some more.

 

[sancho panza]

5 hours ago, DurhamBorn said:

BP looking to make Hydrogen in Australia

https://www.reuters.com/article/us-bp-hydrogen-australia/australia-backs-bps-study-to-produce-hydrogen-from-wind-solar-idUSKBN22K0IC

 

Its looking like US shale companies only have around 2% of production hedged ,ie they are knackered.I think for oil production to equal demand then prices need to double within 12 months.That is they need to double to keep enough production at the likely demand level a year out.It looks like it will take 8 months to run down the extra production in the system.

I think oil will go $35 (risk of back down to $15 after that) then $60 ,then $200.

Thats a hell of a blow out there DB.2%hedged,theyr'e going to struggle.

Big oilies up again nciely,XOM marches on and on.

 via Pmaplona Trader silver looks ready to run according to him.I don't really understand all this physical vs papaer stuff, I'd assume @Errol might know.Is it for real this time?

[sancho panza]

22 hours ago, JMD said:

Thanks SP. I'll take another look at a Wollf/Sherlock them. Was hoping for a UK site. Was also thinking of more content explaining fundamentals like how we got here, likely outcomes. Bit mundane but would put events into context. Perhaps a book is better suited for providing all this.

I'd start with WOlf St,he identifies the key themes and then examines them in simplish chunks.There are very few sites around of the requisite quality.Lots of apologists for the pump,print n dump CBer's.Lots of QE=good,orange man=bad type analysis out there.

AS per @Castlevania Ricarhds is fantastic but quite high brow.I think wehn you're pals on top of WOlf go there.Worth noting that Ricahrds has one of the most leanred comments sections in economcis but also one of the msot friendly.

[JMD]

17 hours ago, Castlevania said:

@JMDit’s not quite what your looking for but Sean Richard’s blog https://notayesmanseconomics.wordpress.com is very good at explaining economics and especially the workings of central banks. It’s UK focussed and written in an easy to understand entertaining manner. Well worth a read.

Thanks Castlevania, I used to read Sean Richards, and as you say he's both British and pithy, so that's great but just wish he was more concise. As I say ideally looking for a site that reinforces 'the why and the how' in regards of how we got to current economic crises, as well as being topical. (I know, I'm asking for the moon on a stick!) But I just think a beginner type would need that kind of presentation in order to spark their interest further (and over to here hopefully!). Anyway I ask only so I can more easily help spread the word and convert others away from the Dark Side! I guess a British Youtuber would also be good, if that is a web site doesn't exist, however drawing a blank there also at moment... Any recommendations would be appreciated.

[JMD]

36 minutes ago, sancho panza said:

We ended up selling the Guyana and (also selling Superiror Gold) redeploying into Minera/BVN even weight and then a holding of Impact.As ever,always appreciate your knowledge of the PM space and you taking the time to offer an opinon K.dyor etc...

Already had a decent chunk in Minera and BVN.Impact is a new purcahse and is the second entry on our 6th line alongside POG.

US CV.Sorry I missed this yesterday

Whilst 90% of me is thinking price inflation/credit deflation in the line of DB's thesis and David Rosenberg's thesis,,there's still 10% poitning out that Japan has had a sustained deflation for 30 years.I'm thinking about thsi a lot at the mo when I'm strolling around the place marshalling the kids on their bikes.

I'll do some research and post more when I've reasoned it through some more.

 

Yes, Japan's perpetual deflation worries me also. Hopefully we don't follow down the same rabbit hole. Would be interested in what your research tells you.

[ThoughtCriminal]

I don’t think it’s been noted but the BOE voted 7-2 against increasing the bond buying program by 100 billion. 
 

Im starting to wonder if the unthinkable part of DB’s two scenarios is perhaps a bit more thinkable than we’re allowing for: maybe they ARE that stupid.

 

 

[Loki]

8 minutes ago, ThoughtCriminal said:

I don’t think it’s been noted but the BOE voted 7-2 against increasing the bond buying program by 100 billion. 
 

Im starting to wonder if the unthinkable part of DB’s two scenarios is perhaps a bit more thinkable than we’re allowing for: maybe they ARE that stupid.

 

 

Combine that with @sancho panza recent thread

 

[M S E Refugee]

https://www.hl.co.uk/shares/shares-search-results/p/petroleo-braseileiro-sa-petrobras-ads

Has anybody got any thought about Petrobras?

[ThoughtCriminal]

1 hour ago, Loki said:

Combine that with @sancho panza recent thread

 

Yes, I follow SP’s counter narrative thoughts very closely on here.

 

Whilst having the greatest respect for DB (we wouldn’t be here without him) and STILL thinking he’s VERY likely to be right, I do have an uncomfortable nagging voice in my head that’s telling me the Bankers are greatly underestimating what’s happening and what’s required to get out. 
 

Has anyone any ideas which investment would be the best hedge against the Armageddon scenario? If indeed there is one.