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

[sancho panza]

49 minutes ago, DurhamBorn said:

The only way to stop complete collapse at the end of the next cycle is to fix exchange rates and use fiscal transfers to balance allies.A stable dollar and China cut from world markets keeps China down.Is this maybe the play at the end of the cycle?.Lots of work for that yet,but interesting and one to watch.

DB can you explain that bit in bold for laymen please?

[sancho panza]

15 minutes ago, Vendetta said:

Silver about to go parabolic? 
 

1980 style would be $200 per ounce.

 

That would be good

 

 

I love these ratio's.I'm a big fan of the GS but there are so few genuine opportunities to use it.

This run up in silver was the answer to get it back belwo 100.Personally,I think peak will see sub 25

[Option5]

The word is going round in Norway that the Equinor CEO will retire after giving tomorrow's quarterly results.

[sancho panza]

Interesting to see no sign of a monthly peak in the big boys.Tiers 2s and smaller plays could have some distance left.

Have to say am tempted top slicing Anglogold and Newcrest for some more BVN/NGD/EGO

[sancho panza]

2 minutes ago, Option5 said:

The word is going round in Norway that the Equinor CEO will retire after giving tomorrow's quarterly results.

That agood or bad thing?

[Option5]

Just now, sancho panza said:

That agood or bad thing?

No idea, just an observation.

[DurhamBorn]

Ok,this is big i think.A friend iv been helping to transfer a final salary pension,today they phoned for their CETV to get things moving only to be told the trustees have introduced a 60% reduction on transfer values due to "covid" and the fund being underfunded.

I suspect although a 60% reduction is extreme a lot of pensions will do the same at maybe 30%+.In affect they are stopping people moving out while transfer values are so high.The things to take away from this are that the pensions are underfunded,and that they expect gilt yields are bottoming and want to stop people moving at the best time in the cycle.My friends is a past pension and the uplifts are limited to 2.5% a year with CPI maximum.If he cant transfer then a cycle of inflation averaging 6.5% a year as i expect and a 2.5% max uplift his pension will be cut in half at best.

[DurhamBorn]

18 minutes ago, sancho panza said:

DB can you explain that bit in bold for laymen please?

If countries cant de-value currency then they would need fiscal transfers from trading partners or their economies would implode.The US could use that to help allies and cut off China and its proxies.

[jamtomorrow]

Meanwhile, DXY at 2Y lows

[Bobthebuilder]

I put in a pension transfer request this week!

I will let you know how it goes.

[leonardratso]

just read that millenials are starting to pile into precious metals, SLV 16th on the robinhooders most popular list.

 

[Bricormortis]

This is the tihing, in the age of the internet PM''s could get hyped like bitcoin. To the moon and back.

[Errol]

Nothing to get exited about in silver really until it goes over $50 at least.

[leonardratso]

I was just rewatching some old stuff, but its still pretty relevant i suppose, if you have some time to kill these guys arent too dry at telling you what you should really know already anyway;

 

[leonardratso]

or if you like free stuff, how about a free adkins film;

https://www.youtube.com/watch?v=uu0EdsTCkrw

 

[BurntBread]

4 hours ago, DurhamBorn said:

The only way to stop complete collapse at the end of the next cycle is to fix exchange rates and use fiscal transfers to balance allies.A stable dollar and China cut from world markets keeps China down.Is this maybe the play at the end of the cycle?.Lots of work for that yet,but interesting and one to watch.

DB, I may be misreading your comment, but I thought your thesis was that governments will resist monetary discipline for as long as possible; initially because printing will let them invest to get the industrial economy moving, and later on because too many people will be dependent on government spending for their livelihood? The printing press would have to be dragged from the reluctant hands of the state, and the only thing that would make them stop would be the imminent threat of hyperinflation and the destruction of the currency.

The impression I got from your comment quoted above was that the gold standard might be adopted earlier on, and voluntarily as a tool against China. Is that what you mean, or are you still saying this will only happen at cycle end, and the "screw you, China" is just a bonus while the real motive will still be to avoid imminent collapse?

On a related point, I have been wondering whether cryptocurrencies might serve as a break on inflation much earlier in the cycle? In previous times of inflation, while it would theoretically have been possible for businesses and individuals to write contracts or receive payment in gold or other non-inflatable commodities, it would have been very inconvenient. Nowadays there is theoretically the possibility for ordinary people to reject traditional currencies - or rather to use a competing currency, Hazlett-style - to force some measure of discipline on governments, against their will.

What will make that difficult is that most cryptocurrencies are seen as get-rich-quick schemes, rather than workaday means of exchange; and the resulting wild swings in exchange rates make them pretty useless as reliable hedges against inflation. It seems to me that if "the silk road" had remained up, had really taken off and become a large part of the black economy, it could have propelled bitcoin into a crucial political as well as economic role over the coming years. That would have been an interesting story for the history books! I know someone who used TSR occasionally to obtain "recreational materials", and he thought the system worked pretty well. I haven't asked him what he uses now, but he does still mine monero.

[sleepwello'nights]

4 hours ago, DurhamBorn said:

The things to take away from this are that the pensions are underfunded, and that they expect gilt yields are bottoming and want to stop people moving at the best time in the cycle.

Am i understanding you correctly, "gilt yields are bottoming". Are you saying they are expected to start to increase?

My Vanguard UK index linked gilts are showing IRRs of 20% +. Quite satisfied with their performance, would be reassuring if my understanding of your comment is that their performance is expected to improve.

[DurhamBorn]

https://www.repsol.com/imagenes/global/en/ORI23072020_2q20_webcast_presentation_slides_tcm14-197500.pdf

Repsols results,whats interesting is page 9 where they show a hydrogen project they are building.I think this is the area that big oil will control for lots of reasons and i think Repsol is probably ahead of everyone so far.

23 minutes ago, sleepwello'nights said:

Am i understanding you correctly, "gilt yields are bottoming". Are you saying they are expected to start to increase?

My Vanguard UK index linked gilts are showing IRRs of 20% +. Quite satisfied with their performance, would be reassuring if my understanding of your comment is that their performance is expected to improve.

yields bottoming,the price of the gilts will fall,maybe not yet though.

[DurhamBorn]

1 hour ago, BurntBread said:

DB, I may be misreading your comment, but I thought your thesis was that governments will resist monetary discipline for as long as possible; initially because printing will let them invest to get the industrial economy moving, and later on because too many people will be dependent on government spending for their livelihood? The printing press would have to be dragged from the reluctant hands of the state, and the only thing that would make them stop would be the imminent threat of hyperinflation and the destruction of the currency.

The impression I got from your comment quoted above was that the gold standard might be adopted earlier on, and voluntarily as a tool against China. Is that what you mean, or are you still saying this will only happen at cycle end, and the "screw you, China" is just a bonus while the real motive will still be to avoid imminent collapse?

On a related point, I have been wondering whether cryptocurrencies might serve as a break on inflation much earlier in the cycle? In previous times of inflation, while it would theoretically have been possible for businesses and individuals to write contracts or receive payment in gold or other non-inflatable commodities, it would have been very inconvenient. Nowadays there is theoretically the possibility for ordinary people to reject traditional currencies - or rather to use a competing currency, Hazlett-style - to force some measure of discipline on governments, against their will.

What will make that difficult is that most cryptocurrencies are seen as get-rich-quick schemes, rather than workaday means of exchange; and the resulting wild swings in exchange rates make them pretty useless as reliable hedges against inflation. It seems to me that if "the silk road" had remained up, had really taken off and become a large part of the black economy, it could have propelled bitcoin into a crucial political as well as economic role over the coming years. That would have been an interesting story for the history books! I know someone who used TSR occasionally to obtain "recreational materials", and he thought the system worked pretty well. I haven't asked him what he uses now, but he does still mine monero.

By the end of the cycle i mean in 10 years,we are already in a new cycle,the last has already ended,only 0.001% of the population understand that yet.Printing will be out of the question at the end of the next cycle,thats why systemic collapse is certain,unless they find a way to lock away the debt.

China will be faced on many fronts.

[Loki]

11 minutes ago, DurhamBorn said:

unless they find a way to lock away the debt

As in a much higher gold price, or war, or none of these? 

[Errol]

China being 'cut off' will never happen. More likely to be the US cut off as their behaviour becomes increasingly unhinged. The latest meeting between the Russian and Chinese Foreign Ministers effectively stated that they view the US as dangerously mentally unstable now.

Europe will swing to join Russia, China and the silk road. Germany will lead the way (eventually).

I think there is a strong possibility that America breaks up. It is essentially preparing to go through a USSR-style collapse.

[sancho panza]

1 hour ago, Errol said:

China being 'cut off' will never happen. More likely to be the US cut off as their behaviour becomes increasingly unhinged. The latest meeting between the Russian and Chinese Foreign Ministers effectively stated that they view the US as dangerously mentally unstable now.

Europe will swing to join Russia, China and the silk road. Germany will lead the way (eventually).

I think there is a strong possibility that America breaks up. It is essentially preparing to go through a USSR-style collapse.

You're possibly ahead of your time there Errol,thought provoking post.You can see the Dem controlled coastal areas trying first.

https://spectator.us/american-breakup/

The states with the most active secession movements are progressive and want to escape from a federal government they think too conservative

The United States is ripe for secession. Across the world, established states have divided in two or are staring down secession movements.

We’re less united today than we’ve been at any time since the Civil War, divided by politics, religion and culture. In all the ways that matter, save for the naked force of the law, we are already divided into two nations just as much as in 1861.The contempt for opponents, the Twitter mobs, online shaming and no-platforming, the growing tolerance of violence — it all suggests we’d be happier in separate countries.

The barriers to a breakup are far lower than most people would think, and if the voters in a state were determined to leave the Union they could probably do so.

To begin with, we’re far more likely to let it happen today than we were in 1861.

Were secession to happen today, it would be politically correct.

[Viceroy]

On 23/07/2020 at 02:29, AWW said:

As well as holding all the miners listed previously on this topic, which are 95% up since early May, I also hold some 3SIL, which is a leveraged silver ETF - and up 150% in the same timeframe.  I like leveraged ETFs, because you don't need to maintain margin. Just throwing that into the mix as an option for others who are very bullish on silver and would like to get the effect of buying miners, but don't like to spray and pray with the individual mining stocks.

The 10Y (actually only goes back 8 years) chart makes for interesting viewing...

Interested to hear what others think of leveraged ETFs.

I found a discussion on leveraged ETFs and a paper that concluded x2 leverage is the optimum level of leverage for the best returns over the long term.
http://ddnum.com/articles/leveragedETFs.php

As an experiment I put small amounts in July 2019 into NUGT (x2 Gold) and AGQ (x2 Silver) as a set and forget.  After the crazy price action in March this year, today NUGT is down 40%, but AGQ is up 50% 

 

[Viceroy]

4 hours ago, sancho panza said:

You're possibly ahead of your time there Errol,thought provoking post.You can see the Dem controlled coastal areas trying first.

https://spectator.us/american-breakup/

The states with the most active secession movements are progressive and want to escape from a federal government they think too conservative

The United States is ripe for secession. Across the world, established states have divided in two or are staring down secession movements.

We’re less united today than we’ve been at any time since the Civil War, divided by politics, religion and culture. In all the ways that matter, save for the naked force of the law, we are already divided into two nations just as much as in 1861.The contempt for opponents, the Twitter mobs, online shaming and no-platforming, the growing tolerance of violence — it all suggests we’d be happier in separate countries.

The barriers to a breakup are far lower than most people would think, and if the voters in a state were determined to leave the Union they could probably do so.

To begin with, we’re far more likely to let it happen today than we were in 1861.

Were secession to happen today, it would be politically correct.

Back in 2013 Armstrong wrote that the States would break up on the horizon, which shook me at the time as close family members had moved there to live;

https://www.armstrongeconomics.com/uncategorized/224-collapsing-wave-structure-point-to-breakup-of-usa/

This Collapsing Wave structure that the United States appears to be in means it is a one-time-wonder and that the United States will break-up and the there will be no more “united” union. This is becoming self-evidence in the polarization of politics with tremendous differences in culture on a regional basis. The Obamacare is just one aspect revealing the undercurrent whereby one segment of society believes it has a right to force their views upon another group. So unfortunately, the USA does not appear to be destined to remain intact otherwise we would have seen and overall structured wave of 224 years. We seem to be in the Collapsing Wave with the 224 years was from birth to peak with an overall duration of 309.6 years at best. This appears to be like the Collapsing Wave in Imperial Rome itself whereas from the assassination of Julius Caesar in 44BC to the peak in the glory of Rome and population in the city took place under Marcus Aurelius that was 224 years later in 180AD. The decline that followed brought total chaos, sovereign debt crisis, massive government seizure of capital, fragmentation of the Empire, and in the end, Rome was no longer the Capitol and that became Constantinople followed by the split of East and West. We are much more akin to the this type of Collapsing Wave formation whereby society collapses and breaks apart. Now we have the Cycle of War turning in 2014 that appears to be focused within civil unrest at least initially.

https://www.armstrongeconomics.com/armstrongeconomics101/basic-concepts/us-breakup-becoming-more-mainstream/

March 2016 - At the Texas Republican Convention, state delegates met and had a heated debate over the question of seceding from the United States. Yes, you read correctly. What began as grass roots movement made it all the way to the top. The Republican state convention eventually struck a resolution from being added to the party’s platform that endorsed the once wild idea of a referendum for Texans to vote to secede from the United States. Many have been surprised that this once grassroots movement is becoming mainstream. Our computer model projects that eventually the USA will break into regions as power devolves back to where it was usurped – to state rights.

[DurhamBorn]

6 hours ago, Errol said:

China being 'cut off' will never happen. More likely to be the US cut off as their behaviour becomes increasingly unhinged. The latest meeting between the Russian and Chinese Foreign Ministers effectively stated that they view the US as dangerously mentally unstable now.

Europe will swing to join Russia, China and the silk road. Germany will lead the way (eventually).

I think there is a strong possibility that America breaks up. It is essentially preparing to go through a USSR-style collapse.

As a contrarian it is very possible.I used to be fascinated by the American civil War and unless people understand that they dont understand America.I would gladly split a country and give the other half to the left for instance.