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


spunko

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Bobthebuilder
5 minutes ago, DurhamBorn said:

My VOD divi went into more Respol today.

Good to hear that, i bought some Rep for my SIPP today once it settled down.

Gas safe are preparing all of the whole UK domestic gas engineers to be trained in Hydrogen Going forward from now. You have to re take your gas exams every 5 years and Hydrogen is now part of that test.

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LONDON (Reuters) - Britain’s National Grid is planning a 10 million pound ($13 million) project in the north west of England to test how hydrogen could be used to heat homes and bring down greenhouse gas emissions from industry, it said on Wednesday.

Britain has a target to reach net zero emissions by 2050, which will require a huge reduction in the use of fossil fuels, such as gas, which is currently used to heat about 85% of the country’s homes.

"Sectors such as heat are difficult to decarbonise," said Antony Green, project director for hydrogen at National Grid.

"Trial projects like this are crucial if we are to deliver low-carbon energy reliably and safely," he said in a statement.

National Grid hopes construction, at a site owned by risk management and energy group DNV GL in Cumbria in the north west of England, could start in 2021, subject to approval by energy regulator Ofgem, with trials to begin in 2022.

Belgium’s gas network operator Fluxys and Britain’s Northern Gas Networks are also partnering on the project.

 

 

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Transistor Man
2 hours ago, janch said:

".....China is Apple's largest market........."

I don’t think that’s right.

It’s still the US. China is 25%, approximately.

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Looking at Fluxys website mentioned above working with the national grid

https://www.fluxys.com/en/news/fluxys-belgium/2020/200717_news_european_hydrogen_backbone

European gas infrastructure consists of pipelines with different sizes, from 20 inch in diameter to 48 inch and above. The hydrogen backbone, mainly based on converted existing pipelines, will reflect this diversity. Converted 36- and 48-inch pipelines, commonly in use for long-distance transport of gas within the EU, can transport around 7 resp. 13 GW of hydrogen per pipeline (at lower heating value1) across Europe, which provides an indication of the vast potential of the gas infrastructure to take up its role in the future zero-emission EU energy system.

290180659_Screenshot2020-08-07at17_42_02.thumb.png.464e7c2f091298030c0cbb8bafe573f9.png

 

Then came across this whilst looking at who owns all those pipe lines that they would like to convert

 

THE BIGGEST GAS COMPANIES

YOU’VE NEVER HEARD OF

Enagás (Spain), Fluxys (Belgium), GRTgaz (France) and Snam (Italy) are Europe’s four biggest gas transporters (TSOs), owning infrastructure across the continent and beyond. Together they own more than half of the EU’s LNG terminals and over 100,000km of pipeline, with new projects planned: 6,200km of pipeline and at least one more LNG terminal are under construction.

All four are run like private companies, despite being publicly-controlled. They collectively made more than €2 billion in profit in 2018 with almost three quarters paid out in dividends to shareholders such as investment funds BlackRock (GRTgaz and Snam) and Lazard (Enagás and Snam).

These little-known companies don’t have the profile of Shell, Total or BP, but are just as influential in keeping Europe dependent on gas.

 

A interesting PDF looking into these companies

https://corporateeurope.org/sites/default/files/2019-09/1_English_TSO web.pdf

from this website

https://corporateeurope.org/en/2019/09/who-owns-all-pipelines

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Bobthebuilder

@DoINeedOne

Last months issue of the Gas Safe manual stated that all existing pipework and regulators in domestic dwellings can work with Hydrogen or a mix as they are, only appliances need a upgrade.

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sancho panza
On 03/08/2020 at 19:50, Errol said:

Interesting that he seems to think that nobody is calling for or expecting a gold pull back. On the contrary, I would say that most people who matter (i.e. people who've been watching gold for decades) would entirely expect a pull back. Wouldn't surprise me at all.

Possibly the more contrarian position is to call for no pull-back. This would catch out far more people, and leave those waiting for lower prices in the dust.

In any event, I certainly wouldn't bother selling gdx or gdxj. Presumably he is a trader. Otherwise, it's all just noise. Gold is still going to $10000+ (probably more like $15000), so bickering about whether it pulls back to $1500, $1700 or even $1200 just seems pointless.

It's the same pointless discussion that people have been having since 2000 - arguing about pull backs, when they should have just been buying regularly and ignoring the noise. This still applies. Gold is still massively cheap and would be even at higher prices than now.

Interesting thesis Errol as above

It's tempting to sell for some medium term holders of PM miners given the profits from the post 2017 purchases

I've been absent a while but pondering my personal sell triggers.

1) as per previous discussion with @kibuc I think GS ratio sub 45

2) DXY sub 85

3) Oil >$80

4) UST 2 yr yield at >2.5%

Reasons not to sell

1) no sign of insto demand topping

2) PM share prices way below 2011 peaks with physical prices north of that.

3) retial participation low

4) second bit in bold is right.There's a real danger of selling now and then not buying the pull back,thereby missing the biggest bull of the next decade.

Reasons to sell

1) It's gone up a lot,

 

 

 

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Interesting company in the electric charging space.  Heard them mentioned on an Institute of Trading podcast ( the company set up by that Anton Kreil trader guy )

https://ir.blinkcharging.com

Talks about them here, from 14:55  https://youtu.be/sWFyAlqoWso?t=895

 

I've not check them out myself but added them to my watchlist.

They fit the reflation criteria, and a lot of their revenue comes from government infrastructure schemes, so they should benefit from the spending spree too.  

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sancho panza
On 03/08/2020 at 22:22, DurhamBorn said:

Delivered just as prices are moving into high gear,im hoping the sector can stay down a bit longer so i can add some more.Shell will go to new highs in the cycle,probably by a long way.That will shock everyone especially the dopey funds dumping inflation stocks at the start of an industrial cycle.

I sat there doing the maths on selling all our goldies and buying oilies when I had a brief moment a few days ago.

Swapping that capital growth for vianle long term yields is tempting.I've been catching up on the thread as Ive been away and that piece on oil @Transistor Man posted ten pages back was exactly what CP has been saying for some time.

Sadly we are loaded up to the gills with oil.....................................:(

On 04/08/2020 at 07:26, Castlevania said:

BP have cut their dividend in half

https://www.google.co.uk/amp/s/uk.mobile.reuters.com/article/amp/idUKKCN2500L9

That’s not as bad as I expected

to be expected to b honest,at these levels still pretty good.

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2 hours ago, sancho panza said:

I sat there doing the maths on selling all our goldies and buying oilies when I had a brief moment a few days ago.

Swapping that capital growth for vianle long term yields is tempting.I've been catching up on the thread as Ive been away and that piece on oil @Transistor Man posted ten pages back was exactly what CP has been saying for some time.

Sadly we are loaded up to the gills with oil.....................................:(

to be expected to b honest,at these levels still pretty good.

Why sadly?  Unless I am misunderstanding, like me you have rotated into oil and expect to do very nicely if the next decade plays out as it per TMs posts?

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9 hours ago, sancho panza said:

Interesting thesis Errol as above

It's tempting to sell for some medium term holders of PM miners given the profits from the post 2017 purchases

I've been absent a while but pondering my personal sell triggers.

1) as per previous discussion with @kibuc I think GS ratio sub 45

2) DXY sub 85

3) Oil >$80

4) UST 2 yr yield at >2.5%

Reasons not to sell

1) no sign of insto demand topping

2) PM share prices way below 2011 peaks with physical prices north of that.

3) retial participation low

4) second bit in bold is right.There's a real danger of selling now and then not buying the pull back,thereby missing the biggest bull of the next decade.

Reasons to sell

1) It's gone up a lot,

 

 

 

Its worth keeping in mind that, while precious metals cannot go bust, miners can. I'd keep an eye on mid-tierers that mismanage the current bull and start splashing cash on marginal/borderline dirt projects, as they might find themselves in a very precarious situation should there be a strong reversal in a deflationary bust. Even if they don't go under, they might get taken over at fire sale prices. Also, cost creep needs to be watched for similar reasons. With metals, buy&hold requires a lot less maintenance. 

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10 hours ago, sancho panza said:

Reasons not to sell

1) no sign of insto demand topping

2) PM share prices way below 2011 peaks with physical prices north of that.

3) retial participation low

4) second bit in bold is right.There's a real danger of selling now and then not buying the pull back,thereby missing the biggest bull of the next decade.

+ Geopolitical risk is going sky high right now, my Gut feel and research is pointing to China's economy and food supply being seriously strained from flooding and lack of western demand.  A cornered CCP tiger, running out of options and time, is highly likely to lash out and cause some serious damage with their new toys, although i've been pondering how big and where that's likely to occur (beside the obvious "renegade province" Taiwan) for a while now.  

I don't think they have actually gone up that much considering where PM prices are, IMO the miners are 25% past price which is going onto the balance sheet and 75% future price which will directly affect profitability in the weeks/months/years ahead.  The market doesn't seem to think that its going to remain at these elevated level for long, however it was wrong earlier in the year with Hoc/Fres that are now properly motoring, so it can and does happen.  I noticed this year the Canadian/US/UK miners don't always synchronise time wise which could make for some interesting trading opportunities if i wasn't so busy!

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50 minutes ago, Majorpain said:

+ Geopolitical risk is going sky high right now, my Gut feel and research is pointing to China's economy and food supply being seriously strained from flooding and lack of western demand.  A cornered CCP tiger, running out of options and time, is highly likely to lash out and cause some serious damage with their new toys, although i've been pondering how big and where that's likely to occur (beside the obvious "renegade province" Taiwan) for a while now.  

I don't think they have actually gone up that much considering where PM prices are, IMO the miners are 25% past price which is going onto the balance sheet and 75% future price which will directly affect profitability in the weeks/months/years ahead.  The market doesn't seem to think that its going to remain at these elevated level for long, however it was wrong earlier in the year with Hoc/Fres that are now properly motoring, so it can and does happen.  I noticed this year the Canadian/US/UK miners don't always synchronise time wise which could make for some interesting trading opportunities if i wasn't so busy!

Yes.

We do know from history that governments often generate an external enemy in time of internal crisis.  If Trump loses the election, I would not be that surprised to see an invasion of Taiwan (as Biden and the Dem crime gang would do fuck all).

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On 06/08/2020 at 09:07, M S E Refugee said:

https://seanews.co.uk/news/financial/euronav-announces-q2-and-h1-2020-results/

Euronav post some good results.

Dividend of 47c per share payable in August, unfortunately I believe the Belgian withholding tax is 30%.

Yes, it is 30%. Risen from 20% to 25% to 30% over the last decade. While their neighbours France and the Netherlands have been reducing theirs.

There's no CGT on shares though (though that doesn't help you guys in the UK). Bizarro situation. Every Belgian I've tried to engage on the subject doesn't seem to mind - maybe they just like paying taxes, might explain why their taxes are the highest in the world. This guy used to try and do high-yield investing, I guess he's finally thrown in the towel now. https://www.nomorewaffles.com/2015/03/why-you-should-enjoy-paying-taxes-like-i-do/

Er, sorry for the random digression. Germany's WHT put me off investing in things like TUI, though in hindsight thank God I didn't put any cash money there.

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Interesting to see how things are developing.When profits are taken etc is a personal choice.Myself iv been taking silver profits because in cash terms they are a lot of money,about 4 years salary in a few months.I also think areas like potash will do maybe as well or even better than silver,or perhaps only half as well,but when the miners ran hard i ended up with 6x the amount in silver miners than potash.Thats now 2.5x and the same for telcos,i was 4.5x in silver thats now about 2x

My aim is to outperform inflation over the cycle.Thats it.Mainly because iv reached the level i can retire so inflation is the enemy (and systemic collapse).For younger people they will be aiming for higher growth etc.Iv actually gone back into employment again for a while,mainly as its a hugely important project for a lot of good paid jobs in my local area and so im able to re-invest all dividends again,up my SIPP etc.

Real assets are going to outperform for a cycle,thats clear,the aim should be to keep balancing a portfolio across all those asset classes depending on age,aims,risk profile etc.

 

 

 

47392447-15966432460830002.png

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I had a few k in China funds. Sold the lot and bought some bp shell repsol and Telefonica this week. Was hoping mosaic to go down a bit but hey ho did manage to get a grand or so on k+S in may. 

Also for jolly phoned my local gold shop yesterday to see what they were paying for silver coins. Didn’t seem to understand the concept of spot price. Bullshit detector on overdrive. Anyway they will pay 16 squid for an ounce and sell it on for 20. Utter utter cunts . Beware chaps!

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56 minutes ago, DurhamBorn said:

 

47392447-15966432460830002.png

I like this graph DB - nice one. 

S&P GSCI: Goldman Sachs Commodity Index Total Return

divided by S&P 500

So basically the commodities are ‘undervalued’ and S&P ‘over valued’ 

As it returns to and overshoots the mean blue line commodity prices will be rising and general S&P will be falling. 
 

The ‘spike back’ historically has only taken 2 - 3 years maximum. 

If history is any guide - it is all about timing.
 

Time to get out of S&P and FAANG and NASDAQ and into commodities is from now onwards I think.

1st May was the turning point - but will it be hit by a ‘brief deflationary bust’? 

CA365BD9-CF0A-4F12-BFCD-0878ADCBE633.jpeg

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Castlevania

Companies with a lot of debt really aren’t very popular at the moment. Telefonica is now below it’s March pandemic low. Big Tobacco isn’t looking quite so big. What are your lot’s thoughts on tobacco stocks? I know DB’s a fan - they paid for his house. Imperial is down at £12.50 (they haven’t been this low since I was at university and I had to walk past Imperial’s massive bonded warehouses every day and inhale the sweet smell of dry tobacco); BAT below £25; Altria at $42; PMI at $77. All are paying quite chunky dividends. Are any likely to be forced to cut (I know Imperial already have)?

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1 hour ago, Shamone said:

Also for jolly phoned my local gold shop yesterday to see what they were paying for silver coins. Didn’t seem to understand the concept of spot price. Bullshit detector on overdrive. Anyway they will pay 16 squid for an ounce and sell it on for 20. Utter utter cunts . Beware chaps!

Sell them on eBay when they have a £1 final value fee offer on. That's how I've been selling tubes of Brits for a while and I've never had an issue with a scammer. I always put my direct contact details in the package and have then had people buy more off me outside eBay, saving the PayPal fee as well. I usually advertise at 3% below spot but accept offers down to about 5% below.

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On 07/08/2020 at 13:07, kibuc said:

They aren't shut down now. Besides, a lot of miners (goldies in particular) were operating at near-full capacity for most of the Q2 anyway.
 

@MrXxxx I wouldn't expect the miners to simply follow the spot movements either, I'd expect them to multiply it. Free cashflow generated at current prices is leagues above what it was at $20, especially for marginal producers. If the spot averages even $24-$25/oz over Q3,  most of those companies will be swimming in money. At $28-$30 range it gets absurdly good. Instead, they are priced as if we were heading back to $20-$22 region and staying there, at best. Who knows, maybe we are.

I'm not saying markets are wrong, I'm saying the price action in miners implies total lack of belief that current silver prices are sustainable, even at 10% reduction.

Fair point.

 

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3 hours ago, Majorpain said:

A cornered CCP tiger, running out of options and time, is highly likely to lash out and cause some serious damage with their new toys, although i've been pondering how big and where that's likely to occur (beside the obvious "renegade province" Taiwan) for a while now. 

Or liquidate some of the gold they have accumulated recently and are sitting on?

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Castlevania
11 minutes ago, AWW said:

Sell them on eBay when they have a £1 final value fee offer on. That's how I've been selling tubes of Brits for a while and I've never had an issue with a scammer. I always put my direct contact details in the package and have then had people buy more off me outside eBay, saving the PayPal fee as well. I usually advertise at 3% below spot but accept offers down to about 5% below.

eBay’s interesting in that for all the scare stories of scammers it seems to be only certain items that attract them. I’ve sold loads of retro video games over the past few years on eBay, not a problem. Selling newish releases is a no no - too much hassle from people claiming they never arrived, the game doesn’t work etc. If you’re selling download codes you have to physically write the code on a piece of paper and post it - otherwise there’s a good chance of getting scammed. Selling new technology again scammer central.

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49 minutes ago, AWW said:

Sell them on eBay when they have a £1 final value fee offer on. That's how I've been selling tubes of Brits for a while and I've never had an issue with a scammer. I always put my direct contact details in the package and have then had people buy more off me outside eBay, saving the PayPal fee as well. I usually advertise at 3% below spot but accept offers down to about 5% below.

No intention of selling, just wanted to check out local scammers. 74% of spot price, fucking joker.

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