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


spunko

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11 hours ago, kibuc said:

Your comment just tanked the silver market. 

I just had a look at the price after I made this comment and you were right, by $2 oz!....sorry guys but I had to have my chance to get in this week after missing it last week by being on holiday :-)......I note @Harley made the additional comment about other industrial metals, but it doesn't help my understanding with my initial question I.e why when demand is going to be dropping?

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10 hours ago, wherebee said:

and GDXJ.

I sold a bunch at 62.  Someone timed the top to perfection when they bought off me.  betcha it was a robinhooder...

Hence my comment yesterday regarding gold price and Radio 4!

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9 hours ago, DoINeedOne said:

We currently can't buy that, maybe try again once corona stuff has calmed down"

I have noticed that this appears to be the new `Brexit` excuse, with banks, post office and council offices running shortened hours "due to Coronavirus"

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Transistor Man
2 hours ago, Transistor Man said:

Superconductors and Magnets, and superalloys. Very useful.

I’m quite a good all-around engineer. Semis, electronics, materials, nuclear, a bit of structural. 

A decade ago, My employer sent me to France to do a consultancy job. On arrival, I was immediately whisked into a meeting, where a guy gets up and says: “the man from England has arrived to design the superconducting magnet feeder....”.

The what? 

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Been following an auction of 4 sovereigns on ebay. Sold for £1,650 equating to £412.50 each.

Silver Britannias going for £26 to £27 each.

Pretty hefty numbers.

Postage costs on top.

 

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1 hour ago, MrXxxx said:

I just had a look at the price after I made this comment and you were right, by $2 oz!....sorry guys but I had to have my chance to get in this week after missing it last week by being on holiday :-)......I note @Harley made the additional comment about other industrial metals, but it doesn't help my understanding with my initial question I.e why when demand is going to be dropping?

I think like all things it is the interaction between supply and demand. You're correct in that a substantial demand for silver is industrial but on the other side of the scales is the fact that most silver production is as a byproduct from other industrial metals such as zinc and copper. So as those mines stop producing the supply of silver can fall faster than the demand for it. 

Couple this with the currently small market for investment silver and it doesn't need much of the bond or main equity market money to head into silver for the price to shoot up.

If the move towards green energy picks up then this would boost the industrial demand substantially just as the supply was falling leading to the hoped for (by me at least) leap in the silver price.

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2 hours ago, Transistor Man said:

A decade ago, My employer sent me to France to do a consultancy job.

I trust as a seasoned consultant faced with such a challenge, you persuaded them they actually needed something more amenable.  Or at least that it was not the design that was crucial but the change management required!  

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3 hours ago, MrXxxx said:

I note @Harley made the additional comment about other industrial metals, but it doesn't help my understanding with my initial question I.e why when demand is going to be dropping?

For the avoidance of doubt, I haven't an effing clue why.  Some things go up and some things go down.  Some you make enough to pay the rent, others make you live in a tent.  All very curious and mysterious, just like cement. :)

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Bricks & Mortar
3 hours ago, MrXxxx said:

.....I note @Harley made the additional comment about other industrial metals, but it doesn't help my understanding with my initial question I.e why when demand is going to be dropping?

My speculation: 

Industrial metals rising - being bought by people who believe in a V-shaped industrial recovery, powered by printed money and governnment promises to point the printed money at industry.


Precious metals rising - being bought by people who see future inflation caused by the money printing.

Within both commodity classes, there are investors who expect a deflationary collapse, but are putting their money in for now, hoping to get out closer to the top.  And there are investors who think it's an inflationary stairway to heaven from here, and are putting their money in for the longer term.

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35 minutes ago, Bricks & Mortar said:

My speculation: 

Industrial metals rising - being bought by people who believe in a V-shaped industrial recovery, powered by printed money and governnment promises to point the printed money at industry.


Precious metals rising - being bought by people who see future inflation caused by the money printing.

Within both commodity classes, there are investors who expect a deflationary collapse, but are putting their money in for now, hoping to get out closer to the top.  And there are investors who think it's an inflationary stairway to heaven from here, and are putting their money in for the longer term.

So the question unanswered then is who is against industrial and precious metals?  What's the picture they are seeing?

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sancho panza
16 hours ago, DurhamBorn said:

Silver is still heading higher i think,its hardly owned and pull backs simply give entry points to people who know they have no silver.Iv been selling miners slowly into the jump,but will hold the rest now until the rally returns.I was tempted to sell my sons physical when it went over my $24 target as it would mean he could cut his mortgage in half and be down to 37% LTV,a few months after buying,but have decided not to.

Juat floating ideas for sell signals on PM's and was saying to someone earlier might be worth looking for some weakness in UST's/bottoming in DXY....UST's still very elevated.

I'm introigued that whislt DXY has sold off from 100 on 15/5/20,5 yr yield is actually down........interested on any theories why lower DXY hasn't translated into higher yields.....flight to safety....??

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sancho panza
14 hours ago, Cattle Prod said:

Not much reaction in the miners to a c. 15% swing in the silver price, a lot of buyers there :D

Interesting price action,big spike,big dump.,recovery to new normal.

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jamtomorrow
2 hours ago, sancho panza said:

Juat floating ideas for sell signals on PM's and was saying to someone earlier might be worth looking for some weakness in UST's/bottoming in DXY....UST's still very elevated.

I like this idea. Could recent PM action be *the* inflection point where Mr. Market finally wakes up to what's happening with "safe haven" asset classes? This sort of thing:

 

2 hours ago, sancho panza said:

interested on any theories why lower DXY hasn't translated into higher yields.....flight to safety....??

"Expectations"? As in, market believes YCC cometh?

Edit to add: and if YCC indeed cometh, we'll be waiting a long time for that PM sell signal

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16 hours ago, AWW said:

.....I've got a monster box of 2020 Brits on the way (ordered Friday) to sell to them when they do.

I'm looking to buy coin or bars (swap out my ETFs).  Any current info on the best places for gold/silver please?  I've looked at Chards, Coininvest, Bullion By Post (funny Ireland seems cheaper) , and gold.co.uk.  Gold coin premiums vary from 4% up but silver seems more like 25-30%?!

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M S E Refugee
2 minutes ago, Harley said:

I'm looking to buy coin or bars (swap out my ETFs).  Any current info on the best places for gold/silver please?  I've looked at Chards, Coininvest, Bullion By Post (funny Ireland seems cheaper) , and gold.co.uk.  Gold coin premiums vary from 4% up but silver seems more like 25-30%?!

As I have said a few times Physical Silver Bullion is a complete non starter in the UK due to the premiums and VAT.

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4 minutes ago, Harley said:

I'm looking to buy coin or bars (swap out my ETFs).  Any current info on the best places for gold/silver please?  I've looked at Chards, Coininvest, Bullion By Post (funny Ireland seems cheaper) , and gold.co.uk.  Gold coin premiums vary from 4% up but silver seems more like 25-30%?!

Celtic Gold for VAT free silver. With gold, I usually just buy from the cheapest big dealer. Have used Atkinsons and Chards without issue. 

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31 minutes ago, jamtomorrow said:

Could recent PM action be *the* inflection point where Mr. Market finally wakes up to what's happening with "safe haven" asset classes?

I think possibly so.  In portfolio allocation terms, maybe PMs are the new bonds in terms of their negative correlation with equities (once the selling is over to cover equity margin calls!).  Certainly bonds aren't and the idea PMs pay no yield is a bit rubbish when compared to bonds (and some equity atm!).  So the many other advantages of PMs kick in.  I'm sure smart retail and family offices have been buying and continue to do so.  But if the institutions move in then the prices could go mad given their size relative to the PM market.  The best thing to me about physical PMs atm is they're not based on credit or leverage.  Only open to people with real money (again, looking through the mirror at the physical world!).

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7 minutes ago, M S E Refugee said:

As I have said a few times Physical Silver Bullion is a complete non starter in the UK due to the premiums and VAT.

Ah yes, I forgot about the VAT on silver.  Probably because I didn't notice Coininvest is back to charging VAT.  No hang on, they aren't but are pricing Brits (EUR28) like they are.  WTF!

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M S E Refugee
Just now, Harley said:

Ah yes, I forgot about the VAT on silver.  Probably because I didn't notice Coininvest is back to charging VAT.  No hang on, they aren't but are priced like they are.  WTF!

On Coininvest 500x1oz Kangaroo's will cost £12015 and they will buy them back for £9395.

The only place you can sell Silver and get a good price is eBay but you have to deal with Morons and Scammers on there.

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12 minutes ago, AWW said:

Celtic Gold for VAT free silver. With gold, I usually just buy from the cheapest big dealer. Have used Atkinsons and Chards without issue. 

Thanks.  Celtic Gold look interesting (new to me) but I note I have to arrange shipping (according to their FAQs, although the quoted VAT rates are for 2013!).

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jamtomorrow
10 minutes ago, Harley said:

Ah yes, I forgot about the VAT on silver.  Probably because I didn't notice Coininvest is back to charging VAT.  No hang on, they aren't but are pricing Brits (EUR28) like they are.  WTF!

The new Coininvest jingle: "No VAT to pay, but we'll gouge you ... anyway"

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17 minutes ago, Harley said:

Thanks.  Celtic Gold look interesting (new to me) but I note I have to arrange shipping (according to their FAQs, although the quoted VAT rates are for 2013!).

You do, but it's dead easy. There's a quote and checkbox at the checkout. Select that and the courier (a local one that subs out to UPS) sends you an invoice.

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Bricks & Mortar
7 hours ago, wherebee said:

So the question unanswered then is who is against industrial and precious metals?  What's the picture they are seeing?

People who believe in deflationary collapse, and think it happens soon, I guess. 

I'm using the 'deflationary collapse' term, because it's the thread title, but the individual people need not even be aware of the term - they might just be thinking in terms of whether the present environment is 'good for metal' or 'bad for metal'.  I don't imagine it's much of a stretch to be worried about all those businesses that aren't operating fully yet, or are still restricted, or are experiencing reduced sales.

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4 hours ago, sancho panza said:

Juat floating ideas for sell signals on PM's and was saying to someone earlier might be worth looking for some weakness in UST's/bottoming in DXY....UST's still very elevated.

I'm introigued that whislt DXY has sold off from 100 on 15/5/20,5 yr yield is actually down........interested on any theories why lower DXY hasn't translated into higher yields.....flight to safety....??

Fed is involved across the curve keeping it flat,dollar is falling as people are selling treasuries etc to buy commods and none US assets because they are so cheap.

 

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40 minutes ago, DurhamBorn said:

Fed is involved across the curve keeping it flat,dollar is falling as people are selling treasuries etc to buy commods and none US assets because they are so cheap.

 

As you have said before (relative to your post above) DB (@DurhamBorn )there is potential massive upside in a move to assets and commodities - Potash / fertiliser industry being a prime example. (Dash to assets).

Got myself some more MOS yesterday (after a 3.5% fall on the day).

Also into SDF (K&S AG). 
 

Anyone got thoughts on Intrepid Potash?

Also the biggest potash producers are the massive miners. They are a win not only on all the PMs, but also Potash and potential big dividends long term as an inflation shield.

 

Back to MOS - It is nice to ‘buy the dips’ - however when you look at historical price and potential upside when you get a ‘perfect storm’ a la 2007/8 a daily fall of 50c or 1$ fall is ‘small potato’....in comparison. 

I know people have commented on this graph before but it’s nice to look at a 25 year context. 

You set a price for top slicing  any silver? £30/oz ?  I need to be more disciplined and take real profits. 

‘Paper profits’ are not worth shit.....

B2860A1D-BADE-40A9-9A89-E4CE1350D803.jpeg

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