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


spunko

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M S E Refugee

I have been doing a little more research into Oil Tankers and many investors are expecting a supercycle to start soon as Oil Tankers have a lifespan of 20 to 25 years, currently the vessels in service are the oldest they have ever been and very few new Tankers have been commissioned, which ought to ensure that the Oil companies chartering them will have to pay more when fewer Ships are available after they have been scrapped.

One of the stocks I have bought Frontline LTD were trading at $356 in 2008 and now they trade at $7.88 and yield around 35%.

https://www.euronav.com/media/65361/special-report-2017-eng.pdf

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9 hours ago, Cattle Prod said:

It's not a great time to buy in as they have just run up significantly. I'd wait for a pullback if I was you. I use PHAU, PHAG or SSLV for straight metal exposure, GDXJ and Merian Gold and Silver for miners, along with individual miners. DYODD as ever. Again, be aware you might easily get a 25% drop from here.

CP, Median gold and silver do look a good fund, but I do have a particular interest in finding a fund that provides good silver miner exposure. Apparently Merrian  currently allocate approx. 80% to miners. Do you know what they hold 'on average'(?) for silver miners only that would be my main reason for using them? There are no silver miner funds available to us in the UK so being able to buy this fund at 0.8% annual charge on Hargreaves Lansdown appears attractive to me. I own individual silver miners but am also looking for a fund to provide generic exposure so would be interested in understanding this fund's silver miner holdings if you do have any info.

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M S E Refugee
22 minutes ago, Loki said:

What a find @M S E Refugee thank you.  35%!!!

I can't find any financials via HL website - did you check them out or take a punt?

A few a videos started showing up on my youtube feed for Oil Tanker stocks so I checked them out,Oil Tanker stocks seem to have a niche following.

Here are more details about Frontline LTD.

https://uk.finance.yahoo.com/quote/FRO?p=FRO&.tsrc=fin-srch

I also bought Euronav but they only yield around 12%.

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11 hours ago, Cattle Prod said:

It's not a great time to buy in as they have just run up significantly. I'd wait for a pullback if I was you. I use PHAU, PHAG or SSLV for straight metal exposure, GDXJ and Merian Gold and Silver for miners, along with individual miners. DYODD as ever. Again, be aware you might easily get a 25% drop from here.

I'm going to offer a contrary view that if you like a stock (or an entire sector), you should own it. Waiting for pullbacks and trying to nail a dip is best left to professionals (i.e. traders).

GDXJ and/or SILJ look like a solid choice for those who don't want to spend too much time picking individual stocks. There's a bit of overlap between the two (PAAS, Yamana, HMY) so you get some exposure to both metals either way, it's a matter of which one you're leaning to more.

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I bought my Gold and Silver coins via Coininvest, Bullion by post and Atkinsons in 2017. Had a quick look at the Atkinsons website and notice on their front page a buy back scheme (I'm sure they all do this). All I can say is wow. Silver, not so much, but gold? Shit the bed. Not bad at all! Thanks DB. Anyone sold back to the company they bought from yet?

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30 minutes ago, harp said:

I bought my Gold and Silver coins via Coininvest, Bullion by post and Atkinsons in 2017. Had a quick look at the Atkinsons website and notice on their front page a buy back scheme (I'm sure they all do this). All I can say is wow. Silver, not so much, but gold? Shit the bed. Not bad at all! Thanks DB. Anyone sold back to the company they bought from yet?

I bought some Sovs from Goldbullion at Hockley a few years back , over the counter. Then two months ago sold four of them to Lois bullion at Hockley in Birmingham for what at the time was a nice little profit . Now that profit would have been £200 more . No quibbles from them at the time , and the owner took just a cursory look at them in their small packets to verify they were indeed gold . I think he could recognise gold a mile off.

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3 hours ago, kibuc said:

I'm going to offer a contrary view that if you like a stock (or an entire sector), you should own it. Waiting for pullbacks and trying to nail a dip is best left to professionals (i.e. traders).

GDXJ and/or SILJ look like a solid choice for those who don't want to spend too much time picking individual stocks. There's a bit of overlap between the two (PAAS, Yamana, HMY) so you get some exposure to both metals either way, it's a matter of which one you're leaning to more.

Kibuc do you hold silj in a foreign account? I'd like some, but as far as I'm aware this and other silver miner funds, are not available here (Merrrian gold silver being the exception)?

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leonardratso
1 hour ago, JMD said:

Kibuc do you hold silj in a foreign account? I'd like some, but as far as I'm aware this and other silver miner funds, are not available here (Merrrian gold silver being the exception)?

im currently 50% up on this;

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/smith-and-williamson-global-gold-and-resources-b-income

Top Holdings (31/05/2020)
Rank Largest Holdings %
1 ETFS GOLD BULLION SECURITES GBP 7.60
2 NEWMONT CORP 6.90
3 BARRICK GOLD CORP 6.80
4 AGNICO EAGLE MINES 6.50
5 SILVERCREST METALS INC 6.40
6 KINROSS GOLD CORP 4.40
7 FRANCO NEVADA CORP 4.10
8 ANGLOGOLD ASHANTI 3.80
9 ROYAL GOLD INC 3.70
10 WHEATON PRECIOUS METALS CORP 3.60
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On 23/07/2020 at 22:24, 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.

Errol, I can see why you could take that view, but don't you think perhaps that China/Russia calling the US mentally unstable is bit like the pot calling the kettle black? I know Western capitalism is in crises, but it is China/Russia who ran their 50 year devastatingly crude communist experiments upon their own people, then attempted to flip to a capitalist-communist hybrid model. The problem across all these systems - West and East - is the arrogance of the state thinking that it can run things centrally. Adam Smith would be tearing his hair out.                                                                                            But It's not all doom and gloom I think, for example I hope that block-chain tech might begin to recreate trust between the individual and institutions/democracy, etc. These types of changes are I think possible in the West, so do disagree with your prediction of US breaking up, and I actually think China is far more likely to implode. A closed feudal society, of dynasties/empires, where for thousands of years there was much internal conflict, along with several 'golden ages' each marked by cultural advance and increased living standards - but rather tellingly these isolated periods of progress all coincided with when China had allowed itself to trade with the West - so I am left wondering what will happen with the coming predicted trade reset? And we already have the muslim/christian 'education camps', which surely point to a political arrogance and type of decision making made by desperate and disfunctional regimes. 

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19 hours ago, jamtomorrow said:

That's the one I'm mulling over.

I really don't like the idea of sharing a vault with LBMA pools right now - like, if SHTF in LBMA, it's going to be very tempting to "borrow" whatever else is in the vaults to get through a crunch, property rights be damned.

I've been managing London allocation down to zero for this reason on Bullionvault. Now left with the question of estimating similar risks for Zurich and Singapore. The Swiss have a decent *reputation* for upholding property rights, but I'm also wary of falling prey to Inductivist Turkey thinking.

I think the route is likely to be, as with the Swiss banks, countries like the USA demand full lists of all their citizens who have holdings in those offshore locations from the companies involved.  Failure to comply results in massive damage and risk for the firms, so they always roll over.  Then the western gvt imposes a wealth tax on the amount there.

Add to which, I am not sure about the liquidity in times of stress of those businesses.  With my broker, there is always the chance that it goes under and does an MF Global, but I can sell in minutes and move the money the same day if I smell trouble coming...

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On 23/07/2020 at 23:38, 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.

SP, in regard to the Spectator article I think the 'political narrative' (if that's what it is) of singling out the US is wrong and dangerously short sighted. What I mean is that the social dislocation happening across America is more to do with hyper-liberalism (I think thats what philosopher John Gray calls it) which as an ideology is now pretty much spent, and now is mostly concerned with just lashing out at any who disagree with them, and cynically choosing to poison the political process along the way. I don't think it's about individual US states succeeding from the union. Although it can happen in theory, I think the stark economics would prevent it. I think it is more about the new culture wars and how individual states 'take back control' (!) from the federal government. There is a great groundswell of distrust of the federal authorities and issues like abortion forvexample are now also on the political agenda. Its not as simple as liberal states vs conservative ones, so think it incorrect to frame what's happening in terms of the break up of the US, as their political problems are also happening over here!                                                                                                                                                 For context I think the latest round of what many still call culture wars started back during the 90's, when after the fall of the USSR, and epitomised by political thinkers like in Fukuyama's book 'The end of History' - i.e. at this time the so called progressive left expected to see their ideas ascend and fly. Instead, despite there being no real opposition to their ideology, they instead found that economies, jobs, education systems, crime, trust in institutions, even happyniss indexes, all worsened. Many on the right think that after this it should have been a time for sober revaluation/realignment of values and direction. But there were no leaders ready to take on the challenge, and anyway globalisation was the dominant philosophy and so nothing apart from bigger, faster, stronger would be entertained. Ever since it has been down hill. Culminating in nihilistic concepts/political weapons such as 'identity politics' (ie low level civil war) from the left, and the recent 'backlash' appointment of Donald Trump from the right. The two ideological camps are not capable of agreement so expect things to get a lot worse before hopefully a new path forward is found.

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jamtomorrow
4 hours ago, wherebee said:

I think the route is likely to be, as with the Swiss banks, countries like the USA demand full lists of all their citizens who have holdings in those offshore locations from the companies involved.  Failure to comply results in massive damage and risk for the firms, so they always roll over.  Then the western gvt imposes a wealth tax on the amount there.

Add to which, I am not sure about the liquidity in times of stress of those businesses.  With my broker, there is always the chance that it goes under and does an MF Global, but I can sell in minutes and move the money the same day if I smell trouble coming...

That's exactly the food for thought I'm looking for, thanks @wherebee

I'm now wondering whether I missed a trick by not setting up my BV account via my shell company in the Cayman Islands :D

Related: we've discussed deglobalization and "decomplex" trades quite a bit here, but has anyone else been pondering how this applies to jurisdictional risk?

A basic assumption of this thread is international mobility of capital. We buy shares in this US miner, that European telco, some other Russian oily, and we assume the mechanics of beneficial ownership will be the same 5 years from now as they are today. What if that changes?

Or maybe nobody's assuming that at all, and we've all got our capital-controls bug-out bags packed and ready to go?

What *can* we say about today's levels of capital mobility? Is it historically abberational that a Joe Schmo like me can flit my capital around the world at the touch of a button? If so, are we due a reversion?

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42 minutes ago, jamtomorrow said:

That's exactly the food for thought I'm looking for, thanks @wherebee

I'm now wondering whether I missed a trick by not setting up my BV account via my shell company in the Cayman Islands :D

Related: we've discussed deglobalization and "decomplex" trades quite a bit here, but has anyone else been pondering how this applies to jurisdictional risk?

A basic assumption of this thread is international mobility of capital. We buy shares in this US miner, that European telco, some other Russian oily, and we assume the mechanics of beneficial ownership will be the same 5 years from now as they are today. What if that changes?

Or maybe nobody's assuming that at all, and we've all got our capital-controls bug-out bags packed and ready to go?

What *can* we say about today's levels of capital mobility? Is it historically abberational that a Joe Schmo like me can flit my capital around the world at the touch of a button? If so, are we due a reversion?

Its something i never consider past a little glance when i buy.It simply cant be known.The defence is to as always have assets spread.I dont think common equity has much risk of being snatched during a dis-inflation,simply because the CBs have unlimited printing power.Its only late in the cycle when governments cant enjoy printed money,or rising taxes that those things need considering.

The only risk i would see with equity is maybe a capital control on the dividends or selling and getting the money out,but that is very unlikely in a modern western economy.

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2 minutes ago, ThoughtCriminal said:

https://www.bbc.co.uk/news/business-53201204
 

4.5 million new accounts between just four brokers in a few months. People piling into day trading etc like there’s no tomorrow. “I cant lose. Why wouldn’t I get an account? I’d be stupid not to.”

 

Read that article and tell me you’re not worried. 

Im not worried,im really really pleased.Reading the article as well some of them werent buying shares,they were trading on margin.Almost certain to lose.

Obvious mostly they will be buying tech names etc and the next big thing.Its a shame they couldnt latch onto the share that cannot be named though to give us an exit on it xD

 

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10 hours ago, JMD said:

Kibuc do you hold silj in a foreign account? I'd like some, but as far as I'm aware this and other silver miner funds, are not available here (Merrrian gold silver being the exception)?

I don't hold SILJ, I'm trying to beat it with my mixture of promising developers and struggling producers :) GDX & GDXJ are easily available on HL so I assumed SILJ woulnd't be a problem either. Shame if it's not the case.

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jamtomorrow
1 hour ago, DurhamBorn said:

The only risk i would see with equity is maybe a capital control on the dividends or selling and getting the money out,but that is very unlikely in a modern western economy.

Yeah, that's essentially what I'm wondering - is it possible that what we've come to think of as a modern western economy is actually just another phase in the cycle? Specifically: if we are indeed moving into a government-driven industrial cycle, is free movement of capital necessary or even helpful? Whatever we might think of Bretton Woods, the world managed to convince itself that capital account controls were needed last time round, for a time at least.

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4 hours ago, ThoughtCriminal said:

Read that article and tell me you’re not worried

Not worried at all, I will just buy when the Lemmings sell...my only concern is that the government will step in with a tax payer funded ARSE (Amateur Retail Stock Experts) compensation scheme!

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13 hours ago, leonardratso said:

im currently 50% up on this;

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/smith-and-williamson-global-gold-and-resources-b-income

Top Holdings (31/05/2020)
Rank Largest Holdings %
1 ETFS GOLD BULLION SECURITES GBP 7.60
2 NEWMONT CORP 6.90
3 BARRICK GOLD CORP 6.80
4 AGNICO EAGLE MINES 6.50
5 SILVERCREST METALS INC 6.40
6 KINROSS GOLD CORP 4.40
7 FRANCO NEVADA CORP 4.10
8 ANGLOGOLD ASHANTI 3.80
9 ROYAL GOLD INC 3.70
10 WHEATON PRECIOUS METALS CORP 3.60

Thanks Leonardratso, I plan to buy more PM's if we get a sizeable market pullback and liked the idea of getting some decent silver miner exposure through a fund setup. I think it's the only UK fund to provide this, but I also really wanted an idea of their past allocations to the silver miners. It appears that it might be relatively high at present at approx. 35%+, but for me that was really the min. average allocation I was looking for. 

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leonardratso

yeah, without individual allocations its quite hard to come by any silver tilted funds, best ive seen are still gold heavy (gdp/lon based), i did have SSLV in the past but again it was in dollars so was beholden to the FX, plus i couldnt see it moving in step with spot to any great degree, then theres the royal mint signature (stored) gold/silver/platinum, plus their extra costs on selling/buying from them, all of it was geared to you losing except on large spot rises, so i binned them off. Im not particularly bothered about holding physical metals, suppose its a good idea if you like the look of it, can store it securely etc, to me i dont really care about having something physical i cant use, even a doorstop would be of some use. Each to their own i suppose.

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6 hours ago, Cattle Prod said:

Interesting post, JMD. On this one though, do you mean the economics of the remaining USA? My experience has been that the oil regions make the loudest seccession noises: Texas, Alberta, Wyoming, North Dakota. Running in a strip just east of the Rockies (there is a geological reason for this, there used to be a seaway running through N America alongside the Rockies a long time ago, which deposited all the oil, interesting how this feature is effectively shaping politics today, but I digress). Throw in Alaska too, they would miss their gun loving oil drilling Republican brethren. I think you would have one of the richest regions in the world. Alberta, especially, is sick and tired of sending their money to Ottawa in the good times, and getting nothing but blocked pipelines in the tough times. Texas is the lone star state with an enormous economy. Wyoming wants the feds to just leave it alone. Alaskans call the rest of the USA "outside"!

Interesting times.

I think the US will stick together. It will stop being the world's policeman and instead become more transactional in its foreign policy. Focus will turn to the domestic agenda, and long standing issues like supreme court interference in the running of the states will be dealt with by big constitutional change. Securing state autonomy, something most Americans actually expect, to have, will be the outcome of a new political settlement. Not easy to achieve but state control over issues like abortion and crime are I think pretty much priced in. Your point about current unequal state funding/taxation links into this because I expect the political deal, if it is to carry,  will also mean states paying less taxes to central government. But ultimately it will also mean big winners and losers in terms of states like Texas becoming richer and states like Ottowa becoming poorer. However this needn't have devastating effects as Americans are very mobile and will continue to move to other states where there are jobs, etc. The stark economic reality I mentioned was to do with Americans realising how good they already have it in terms of their internal free trade customs union (they only need to look at the EU experiment to see how bad changing parts might be). Also the US is almost unique in having secure borders to its north and south, and having easy access to the oceans for trade. Transport costs, internal and international, are amongst the lowest in the world.                                                                                  Trust between social groups is low and going forward will be difficult to improve given the economic cycle and disparities in wealth (a frightening prospect I think). But if trust in institutions can in part be retained, I think that will at least allow countries like the US, and others in the West, to survive. People like the tech billionair Peter Thiel in the US have become vocal in recent years in terms of their future visions, and i deep thinkers like him are I think driven by moral motives. It's partly why I bang on about block chain as I think disruptive - but hopefully quick wins - in terms of re-engaging with people,  both in social and economic terms, is so crucial. Btw I see block chain as an antidote to the type of survailance state China is trying to achieve.                                                                                                                                                                  Yes interesting times, I hope I haven't rambled on to much?

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ThoughtCriminal

I never thought I’d see hubris developing here. Interesting. 

 

As for the US, if you don’t realise 1776 America is unravelling before our eyes then I have some magic beans to sell you. 

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