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


spunko

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Has anyone managed to buy Repsol through Interactive Investor (within a SIPP)?

It lets me get to the point of placing the trade then throws an ambiguous error at the last stage.

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1 hour ago, MrXxxx said:

Why isas into sipp?...you have already paid tax on this `on the way in`, by moving them to the sipp you surely will be paying tax `on the way out` as well?

As for £1m lta, don't underestimate it, a final salary pension of £25k would be worth £750k (sum x 30years?) if I have this correct...as always though someone Will be along to correct me in a moment.

Check outpension thread under `Investing` for a good discussion on pensions...

...and aa always not financial advice to DYOR.

The multiple is 20 times. So a 52.75K pension will hit the current LTA limit of £1055000. Whatever way you put money into a SIPP, you get tax relief at your marginal rate. The key is to ensure you are just a basic rate tax payer when you come to take it. You get the benefit of the tax free lump sum (currently 25%), so you effective tax rate on the pension is 75% of 20% i.e. 15%. So tax relief of 20 or 40 or 45 or 60 on way in with hopefully effectively 15% on way out (plus your personal alllowance of course). All rules are subject to government change!

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1 hour ago, stoobs said:

Has anyone managed to buy Repsol through Interactive Investor (within a SIPP)?

It lets me get to the point of placing the trade then throws an ambiguous error at the last stage.

Which version of Repsol are you buying? ii seem to have two, one traded in Madrid and the other in Frankfurt. The German one can’t be placed in an ISA.

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5 minutes ago, Castlevania said:

Which version of Repsol are you buying? ii seem to have two, one traded in Madrid and the other in Frankfurt. The German one can’t be placed in an ISA.

I'm trying to buy the German one within a SIPP.

It just blocks the trade for some reason and I can't fathom why.

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4 hours ago, DurhamBorn said:

Governments cant do anything until the CBs print.The problem with banks (and insurers and others) is a derivative unwind would be so quick pumping liquidity into the pipes wouldnt be quick enough.The Fed is forcing down rates at the long end so that junk bonds also get cheaper to re-finance for companies.However they wont force rates down forever.If your the Fed you care about AT&T being able to re-finance,but you couldnt care less about a tech with 500 employees and zero profits.Thats why the big companies are rushing to re-finance and extend maturity while the window is open.

Once tech (and other sectors) cant access capital,they equity then falls and the chain reaction starts.

Fed isnt trying to stop an unwind,its trying to stop an unwind that takes down massive US corporates because they are needed to take on China etc.

Thanks DB, these type of questions have been answered before i am sure. It's just that i sometimes find i need to sanity-check (myself!) now and again when i think other commentators are saying something at odds to this thread... i think i'll put it down to Russel Napier having a (shall i say classically?) dour Scottish perspective on things. 

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55 minutes ago, stoobs said:

I'm trying to buy the German one within a SIPP.

It just blocks the trade for some reason and I can't fathom why.

The German traded one can’t be put in a SIPP either. It’s the same share, just buy the one traded in Madrid.

Edit: apparently it can. Anyhow try buying from the Madrid exchange.

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1 minute ago, Castlevania said:

The German traded one can’t be put in a SIPP either. It’s the same share, just buy the one traded in Madrid.

Really? Fantastic. I'll give that a crack tomorrow, cheers.

I'm always nervous about multiple exchange listings. I'm never confident it's definitely the same thing, or some kind of proxy that tracks the primary listing.

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Just now, stoobs said:

Really? Fantastic. I'll give that a crack tomorrow, cheers.

I'm always nervous about multiple exchange listings. I'm never confident it's definitely the same thing, or some kind of proxy that tracks the primary listing.

Lots of companies have secondary listings on other countries exchanges. They’re the same share. You can in theory buy from one exchange and sell on another. I’d imagine the Spanish listing seeing as Repsol is a Spanish company would be more liquid, so you should receive a tighter bid offer spread.

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sancho panza
13 hours ago, Vendetta said:

Thanks @DurhamBorn for responding re. Telefonica.

Potash does indeed seem to be at the start of a significant push upwards....

Do you hold any Intrepid Potash? Up 18% yesterday? I think the whole sector will go up as one.
 

Have you any interests in the minnow potash developers and explorers? 
DAN, EML, SO4 et al.....?

WE bought a small position in Intrpeid more to gain some leverage in the sector should it really run.It was near the bottom in April and it nearly got back there recently.

9 hours ago, JMD said:

Thanks again SP, (excuse my follow up question, last one promise!) interesting what you say there and your analysis, but have i then perhaps totally misread Napier?... 

i.e. is Napier being 'blase' - or is it that he sees massive government interventions ahead (in fact i think he predicts particularly dark political times, which might colour his thesis), not good for us, but such measures will provide (in his opinion) the necessary banking support (crucially his perspective/bias? appears to be more about the massive historical economic shift he sees looming), so he even talks up the Swiss banking system/economy, even though he must be aware of how the Swiss have been manipulating their CB asset base/currency (re your post on Swiss banking)?

 

I'm jsut saying that in my opinion,I think he's underestimating how quickly the govt will be able to replace the CB's and commercial banks(who've created the bulk of credit over 100's of years) as the main drivers of braod moeny growth.

It's one thing to say that we'll get inflation in the pipeline,whcih is as per DB's road map(and I agree with it),and then anotehr to specifically say that the govt's will step in ,guarantee some loans and banks will happily extend said loans thereby driving broad moeny growth and that there will be credit worthy borrowers seeking credit.I think that glosses over history to some extent,which shows us it isn't that easy.

It's that sort of glossing over the detail that allows him to find sanctuary in the swissie when there are clear structural problems with the way the SNB are managing it,given the relatively small size of the swiss economy and recent problems with their euro peg.Simialrly,he makes a broad statement that equities are no good with inflation running at 4%+ which again right and wrong to a degree-some things do well,some things do badly.

I do agree with the broad brushes of his thesis eg dark poltical times/price inflation etc and welcome any questions that test my own position JMD.

9 hours ago, DurhamBorn said:

Governments cant do anything until the CBs print.The problem with banks (and insurers and others) is a derivative unwind would be so quick pumping liquidity into the pipes wouldnt be quick enough.The Fed is forcing down rates at the long end so that junk bonds also get cheaper to re-finance for companies.However they wont force rates down forever.If your the Fed you care about AT&T being able to re-finance,but you couldnt care less about a tech with 500 employees and zero profits.Thats why the big companies are rushing to re-finance and extend maturity while the window is open.

Once tech (and other sectors) cant access capital,they equity then falls and the chain reaction starts.

Fed isnt trying to stop an unwind,its trying to stop an unwind that takes down massive US corporates because they are needed to take on China etc.

 

I think that's what I was trying to say,wehn the BK hits the deflationary draft will suck a lot of demand out of the system for an unspecified period of time until govts and CB's can get the plumbing working again, and then even longer until we get credit worthy borrowers looking to get credit again.

I was chatting to my mate in Switz (he's CFO of a medium size company) and he was saying everyone's being offered credit at the mintue and mainly companies are taking it and jsut sitting on it(makes a lot of ense with rates so low).WHich is exactly the sort of behaviour that CB's can't map out,exactly like with everyone paying down credit cards in the UK in March/April/May.

This is where the second bit in bold becomes more relevant as you say,Fed couldn't really give two hoots about medium size companies but the bigger,more geo politically strategic ones are a different matter.

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sancho panza
1 hour ago, kibuc said:

All in all, it was a rather wonderful day at the beach. Lack of reception definitely a factor. 

Fascinating stuff today.Dare I suggest that the PM stocks hadn't followed the rally very much-with the odd exception,particualrly in silver,although maybe they were high to begin with.

I'm off work tmrw and will be taking the opportunity to rearrange the deck chairs so to speak and buy a little more EGO/NGD/BVN/RIO2 and selling some dour preformers like Oceana.

As I've stated before,I'd be surprised if that was the gold peak before the BK for a number of reasons and it might throw up one or two opportunities-time will tell if I'm wrong.

 

edit to add:so rare to see the underlying commodity at the bottom/top of the table.

image.thumb.png.42626fa366338f149ca2d88d39be5607.png

 

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10 hours ago, sancho panza said:

Fascinating stuff today.Dare I suggest that the PM stocks hadn't followed the rally very much-with the odd exception,particualrly in silver,although maybe they were high to begin with.

I'm off work tmrw and will be taking the opportunity to rearrange the deck chairs so to speak and buy a little more EGO/NGD/BVN/RIO2 and selling some dour preformers like Oceana.

As I've stated before,I'd be surprised if that was the gold peak before the BK for a number of reasons and it might throw up one or two opportunities-time will tell if I'm wrong.

 

edit to add:so rare to see the underlying commodity at the bottom/top of the table.

image.thumb.png.42626fa366338f149ca2d88d39be5607.png

 

This post might not age well, but it's probably better to have the correction sorted out in one day instead of a slow grind down over a couple weeks. 

Silver stocks are still undervalued relative to metal price, so markets clearly think there's some more way down to go. 

So far, it looks like metals have been moving in opposite direction to real rates, which makes sense. Garrett Goggin on twitter predicted those recent moves up and down rather well just by looking at rates movements leading metals by a few days. It's interesting how David Hunter can see rates bouncing up to 1.50% range and metals going high at the same time.

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31 minutes ago, kibuc said:

This post might not age well, but it's probably better to have the correction sorted out in one day instead of a slow grind down over a couple weeks. 

Silver stocks are still undervalued relative to metal price, so markets clearly think there's some more way down to go. 

So far, it looks like metals have been moving in opposite direction to real rates, which makes sense. Garrett Goggin on twitter predicted those recent moves up and down rather well just by looking at rates movements leading metals by a few days. It's interesting how David Hunter can see rates bouncing up to 1.50% range and metals going high at the same time.

Yup.. looks like what they call a "liquidation break".. a sudden quick correction in a bull market to clear out weak hands and make way for another move up.

Of course I might be wrong, but I'm comfortable holding our neutral/bullish short options positions here, and slowly starting to ease back into gold/silver after closing out all of WvR's PM ISA positions last Thursday.

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24 minutes ago, MvR said:

Yup.. looks like what they call a "liquidation break".. a sudden quick correction in a bull market to clear out weak hands and make way for another move up.

Of course I might be wrong, but I'm comfortable holding our neutral/bullish short options positions here, and slowly starting to ease back into gold/silver after closing out all of WvR's PM ISA positions last Thursday.

A healthy correction - may strengthen the bull market. Silver up A66CCD73-4871-42D4-A70B-ACA279E1C630.thumb.jpeg.2f6bf52a4f5002e2fbcc42bb5af84052.jpeg13% in the last 4 hours.

As you say it could just be a dead cat bounce - however history has shown that the significant surging part of a PM bull runs lasts 12 months approx... 

Expect many more pull backs and corrections on the way up.

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sancho panza
51 minutes ago, kibuc said:

This post might not age well, but it's probably better to have the correction sorted out in one day instead of a slow grind down over a couple weeks. 

Silver stocks are still undervalued relative to metal price, so markets clearly think there's some more way down to go. 

So far, it looks like metals have been moving in opposite direction to real rates, which makes sense. Garrett Goggin on twitter predicted those recent moves up and down rather well just by looking at rates movements leading metals by a few days. It's interesting how David Hunter can see rates bouncing up to 1.50% range and metals going high at the same time.

It's a risk :ph34r:

 

As I've said,if I see the chance to pick the dollar bottom then I'll trade out into UST's,otherwise Plan B kicks in and I hold PM's to mid 2020's.There are some excellent traders on here,and I'm not one of themB|.We got first ladder in kinross at $3 and the rest under $4-30 and it's currently on a P/E of 13.EGO too.Last column

image.png.66fad58747cb17bb1f9b913e0d924a91.png

We've had a 50% or so run up in both gold and silver from last years average price,which was enough to signal the market top in 08,but even that bottom was a pullback in the bull to april 2011.

Looking at the fundamentals of metals demand,rumours from a relaible source are saying big institutions are taking physical delivery from GLD...............which is the first time I've heard that.All in all,I'm not seeing compelling reasons to sell up yet.

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sancho panza
50 minutes ago, MvR said:

Yup.. looks like what they call a "liquidation break".. a sudden quick correction in a bull market to clear out weak hands and make way for another move up.

Of course I might be wrong, but I'm comfortable holding our neutral/bullish short options positions here, and slowly starting to ease back into gold/silver after closing out all of WvR's PM ISA positions last Thursday.

Super timing M.Super.I was tempted to top slice a chunky anglogold position but that was the extent of my attempts to sell the rally some.

Ref call options,still sat on our Alcoa/XOM/FCX/MOS/NTR,need to flog up soon.

Macro voices has Jim Bianco on,well worht a listen

https://www.macrovoices.com/874-macrovoices-231-jim-bianco-coronavirus-mmt-u-s-dollar-all-leads-to-gold

Fed going to be buying ETF's/UST's/Corporate bonds.MMTers are going to create inflation.Fed has no way out once it starts interfering like this.Inflation to return in a big way-> IR's going up.

Man on the street prefers free money strategies compared to hard choices/austerity.

54 mins-US Dollar days as reserve currency numbered-Luke Gromen-USD to follow same downward path as GBP when it lost reserve status.Bianco says not yet as no viable alternatives-Euro/Yen/GBP/Yuan.All fiats are going down against gold/crypto long term.

65 mins-gold going higher,a way to get your money out of the financial system.Fear inflation/deflation/financial crisis/money printing.Signs of speculation subdued in gold futures markets.

 

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21 minutes ago, sancho panza said:

Super timing M.Super.I was tempted to top slice a chunky anglogold position but that was the extent of my attempts to sell the rally some.

Ref call options,still sat on our Alcoa/XOM/FCX/MOS/NTR,need to flog up soon.

Thanks SP :)..  My thinking at the time was that we'd had a good run up, we were within 10% of David Hunter's target 2200-2400 + target range, and the Robin Hood crowd were piling into silver.  I figured it would be about 3 days after hearing about SLV trending on Robin Hood before they shook the tree..  1 day for the news to spread, 1-2 days to suck in more novices, and then a correction. 

Re: the options, as you know I'm generally a seller, not a buyer, but when I do buy options I buy them a good few months out at least ( aiming to double David Hunter's predicted timing since he often calls things a bit early ), and then sell near term options to capture some positive theta and neutralise the negative theta ( daily time decay ) of the long option. 

I did have 3  In-the-money March 2021 GLD calls, 170, 175 and 180 strikes, against which I sold 3 185 strike calls two weeks out at the same time I closed WvR's ISA positions. They helped a lot during the correction yesterday, and I closed these short calls out, along with one of the long call options, leaving me with 2 long March just-in-the-money calls.  I'll sell more calls against these, as GLD recovers. 

My MOS position is my old favourite, the Big Lizard ( short a call and put at the same strike, long a call at a slightly high strike) , rolled over each week to generate small returns with the odds in my favour, since I've no feel for timing in this sector.

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On 11/08/2020 at 04:44, Harley said:

Part of the excellent "The End Game" series of podcasts, episode 6 has the exceptional Lacy Hunt who, as Grant says towards the end is a really smart and well trained and read economist!  One for the macro economically minded amongst us.

https://mcdn.podbean.com/mf/web/5u6heu/TEG_0006.mp3

Hats off to Bill and Grant for their excellent podcasts.  Charming, relevant, and very clever!

Harley, that was a great listen. And agree Lacey Hunt is an intelligent (dare i say 'legitimate/real') economist, so few around these days; but ironically todays world is 'overpopulated' with so many 'experts' (am i being hateful to say it reminds me of Douglas Adams' Heart of Gold starship solution in Hitchhikers Guide... please google if not familiar).

Hunt still sees deflation locked in for the future. But he acknowledges certain triggers may spoil his thesis, tech. advancement, helicopter money. This is interesting because Russel Napier recently changed his mind about deflation because he now detects the causes for inflation creeping in all around.

But what i didn't understand - and found the most intriguing - was Hunt's (near/full?) dismissal of the supplemental question at the end of the podcast concerning the 'Fed cheques for households' policy. He seems to reject the political variables to easily, yet at the same time his response appeared kinda schizophrenic, because he also posited that such a move would bring in crypto-dollars. ...Or have i misread this? Really be fascinated to hear views from others more knowledgable than me.

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Meanwhile, in the "real economy", I just had a slap-up breakfast for 3 in Tesco for £4.30. That wouldn't have covered the tea order 6 months ago. Can't see these price expectations magically floating back upwards once Rishi pulls the meal deal, whole nation is going to be clamped fast on the tit before long. Not good

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2 hours ago, MvR said:

Yup.. looks like what they call a "liquidation break".. a sudden quick correction in a bull market to clear out weak hands and make way for another move up.

Of course I might be wrong, but I'm comfortable holding our neutral/bullish short options positions here, and slowly starting to ease back into gold/silver after closing out all of WvR's PM ISA positions last Thursday.

MvR, congrats and much respect on the pm call. I wonder do you have thoughts on physical platinum, which to me does look very cheap. It is i think more of a commodity/industrial type precious metal, however i think at current price, it is also looking very attractive as a wealth-store - 'sorta positioning' between silver and gold, for those who want to buy these metals as hedge against financial repression, thesis of this thread, etc. 

(btw, why 'W'vR?, is that a subtle comment on the shape of the recovery?!)

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Democorruptcy
3 hours ago, MvR said:

Yup.. looks like what they call a "liquidation break".. a sudden quick correction in a bull market to clear out weak hands and make way for another move up.

Of course I might be wrong, but I'm comfortable holding our neutral/bullish short options positions here, and slowly starting to ease back into gold/silver after closing out all of WvR's PM ISA positions last Thursday.

I think I might have sold too early but can't resist taking profits. The direction was clear once Powell engaged reverse thrust pre-covid. Though looking at the 10 year yield in the last PM spike it's dropped a lot lower than that now but the PM prices aren't that much higher in proportion.

TYG.png

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