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


spunko

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1 hour ago, MrXxxx said:

In addition to this dont forget that you can recycle £2880pa of your pension funds into another pension. The govt give you the tax on this so £3600pa actually goes in, so gifting you £720pa free...see pension recycling threads.

Yes,i see it as paying most of my council tax,assuming they dont close that loop hole.I assume you simply pay £2880 into your SIPP even when in drawdown (i assume you can pay into your SIPP in drawdown?) 

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Bricks & Mortar
12 hours ago, Cattle Prod said:

my bloody wheelbarrow rusting through today after 2 years

I go through a lot of wheelbarrows.  Usually have 4 at any one time, and use them for demolition and heavy building work.  In 2016, I bought 6 new ones.
In early 2018, I got one of these.  Heavier steel than your cheap ones, both in the frame and pan.  The U-shaped bar prevents the pan from deforming under load.  Did burst the tyre, and replaced it with a puncture proof one.  Was using it last week, and was amazed at how well its held up.  Have decided it's much better value than the cheaper ones at half the price.

https://www.mcnairs.co.uk/item/725/Tools/Invincible-120-Litre-Wheelbarrow.html

Edit - McNairs is a builders merchant serving the Glasgow area.  I got mine from a local merchant.  Difficult thing to post, so online prices are usually higher.  You'd need to shop around - or phone Walsall to ask for local stockists.



 

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This sums it up fairly well...

 

The Baltic index has been trading below 450 in February, the lowest level since March 2016 with the capesize segment falling to all-time lows amid weak demand for ships and muted activity in China, whose demand accounts for almost 40% of total dry seaborne imports. The dry bulk index, which can be an early indicator of slowing global growth, has plunged by over 83% since early September as an 18-month trade war between the US and China and the coronavirus outbreak weighed on exports and manufacturing, while higher fuel costs under the new International Maritime 2020 regulations led to a significant rise in the cost of operating cargo ships. The last time it fell by 90% in just a few months was in 2008 during the Great Recession.

 
 
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1 hour ago, DurhamBorn said:

Yes,i see it as paying most of my council tax,assuming they dont close that loop hole.I assume you simply pay £2880 into your SIPP even when in drawdown (i assume you can pay into your SIPP in drawdown?) 

According to HL (who I have my SIPP with) you can, yes!

"Can I still pay into pensions if I'm in drawdown? Yes, you can still make pension contributions. You'll still receive tax relief on personal contributions provided you're within your contribution limits and you're under 75"

They have quite a good FAQ on this area - https://www.hl.co.uk/retirement/drawdown/faqs

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Nice blog post from the BoE clearly illustrating what @DurhamBorn has been talking about around the importance of free cash flow in the next cycle. Worth a read of the full post.

https://bankunderground.co.uk/2020/02/18/all-you-need-is-cash/

"Financial crises affect firm growth not only in the short-run, but even more so in the long-run. Some firms permanently gain while others lose and cash is a crucial asset to have when the credit cycle turns. As we show in a new Staff Working Paper, having cash at hand allows firms to continue to invest during the crisis while industry rivals without cash have to divest. This gives cash-rich firms an important competitive edge that not only benefits them during the crisis but that gives them an advantage that lasts way beyond the crisis years."

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1 hour ago, Bricks & Mortar said:

In early 2018, I got one of these

Yup, finally bought a new one last year when the hole got too big!  Most out there are rubbish but some Brit ones are the DBs.  Puncture proof too, for punctures and heavy loads.  

But then I naturally have one of these sort of things too:

spacer.png

One of my better investments!

 

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1 hour ago, Barnsey said:

 

The world believing the CCP's lies is great, i've been buying up loads of stuff that will disappear from the shelves in a supply crunch.  A lot of people are about to get a big shock.

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51 minutes ago, Ma2 said:

According to HL (who I have my SIPP with) you can, yes!

"Can I still pay into pensions if I'm in drawdown? Yes, you can still make pension contributions. You'll still receive tax relief on personal contributions provided you're within your contribution limits and you're under 75"

They have quite a good FAQ on this area - https://www.hl.co.uk/retirement/drawdown/faqs

Even more detail?

https://techzone.adviserzone.com/anon/public/pensions/tech-guide-recycle-tax-free-cash

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19 hours ago, sancho panza said:

2020-Weak $ phase,gold up,silver up a lot more in per centage terms.

2021-G/S ratio hits sub 50 ergo we sell PM miners.Buy UST's,Big kahuna hits the beach at high tide.Sell UST's.

2022 Buy back PM miners

2025 Sell PM miners when G/S ratio goes sub 40.

That's my plan A.

Plan B is jsut to sit in PM mienrs till 2025.

My plan is strikingly similar, although I expect the initial PM rally to be sharper and come to it's conclusion mid-2020. G/S ratio of 70 would be acceptable, 60 would be fantastic. Also, I think I'd start with industrials/telecoms/infrastrucure immediately after the bust and only transition to PM miners after a couple of years. Once the miners get whacked, they tend to stay whacked and unloved for a long time so there should be ample opportunities to buy back in furhter down the road.

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1 hour ago, Ma2 said:

Nice blog post from the BoE clearly illustrating what @DurhamBorn has been talking about around the importance of free cash flow in the next cycle. Worth a read of the full post.

https://bankunderground.co.uk/2020/02/18/all-you-need-is-cash/

"Financial crises affect firm growth not only in the short-run, but even more so in the long-run. Some firms permanently gain while others lose and cash is a crucial asset to have when the credit cycle turns. As we show in a new Staff Working Paper, having cash at hand allows firms to continue to invest during the crisis while industry rivals without cash have to divest. This gives cash-rich firms an important competitive edge that not only benefits them during the crisis but that gives them an advantage that lasts way beyond the crisis years."

I suppose you can easily replace ‘firms’ with ‘people’ or ‘posters in this thread’.

:)

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HOC rebounded strongly the last few days, sold off a bit today to free up a bit of capital for oil investment. I’m keeping my main allocation of FRES and HOC as i’m not sure we’ll get a pullback this time around in PMs, as I think the virus epidemic may have added nitro and sent the roadmap consensus on here into overdrive.

I think we could even see DB’s roadmap oil drop, with China demand slump causing a lag before Cattle Prods emperor new clothes shale is called out, and sends oil rebounding into the stratosphere when the printers are switched on.

 

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M S E Refugee

After cashing out of most my investments a couple of weeks ago I am back in the game.

My new portfolio consists of Precious Metals,Healthcare,Pharma,Biotech,Consumer Staples,Utilities,some cash and small shorts in the S&P 500,FTSE 100 and the DAX30.

 

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On 20/02/2020 at 09:07, DurhamBorn said:

People wont be able to go into the specifics really as that would be 100% financial advice.So il say for myself,what im doing.

At 55 il put my SIPP (pensions) into draw down and take the 25% tax free cash.Il invest that into my ISA over time.Il then take £12.5k from my pension each year until state pension age when il then take about £4k (whatever it is that + state pension = tax allowance).From 55 until 67 while im drawing down that from my pension the income in my ISA will mostly be re-invested.£12.5k is well enough for me.

The only thing to remember is inheritance tax.If you over then it pays to leave the money in the pension as long as possible,but its a tricky choice.(pensions dont count to inheritance tax)

If your short of a few years for the state pension,if you have grand children under 12 and your son/daughter earns over £6200 a year you can claim the Specified adult childcare credit ,its for grandparents who look after grandkids.The credit comes from the child benefit so your son/daughter then dont get the ni credit but if earning over £6200 it doesnt matter as they get it of their earnings,im 2 years short and will be claiming it next year and the year after and will keep claiming it in case the government change the 35 years upwards at any time.Its free so might as well.

If not go self employed,sole trader,selling on ebay.Sell a few 2nd hand bits (or put sell on Facebook and sell a couple of items easy) and put tax form in at end of year with £100 turnover youl make no profit,then elect to pay the NI class 2 credits within the tax form ,it costs you £160 for a years credit not the £780 cost of buying a year.

How you draw down assets is personal and very very tricky.

For myself i have a portfolio bigger than my needs (i need £12.5k a year) so will simply withdraw the natural yield from the investments.I pretty much do that at the moment anyway from my ISA.

For ordinary people the state pension is very important.I actually think its generous and as long as you have prepared its a fantastic base.Myself i only need about £120 a week on top of the state pension to live very well,within a couple even easier.The problem is they keep pushing it back,so the key is to make your you have enough from 55 until getting it.I would expect to go from now to then with investments intact ,but if i didnt i could still be fine if i reached state pension age with half the assets i have now.

 

Thanks for taking the time to respond DB and for how you have explained what you are doing.

I'm minded to take at least one of the two pensions at 55 taking 25% tax free and a small income c £5k and reinvest the rest.

I didn't know about the adult childcare credit (no grandkids atm but likely in the time period) and i'm 3 years short on full state pension and my wife 8 years short) so this could be really beneficial downstream. I didnt know about the sole trader option either for paying NI class 2 credits which may be an even easier route to the full state pension - thank-you I'll investigate further.

Asset utilisation really troubles me too in the period prior to receiving the state pension - in a reflation I guess sell  bonds first before the value reduces and hold the gold and reflation assets through the cycle. This kind of fits with how i've been thinking. some of these triple B bonds yield less than 3% really trouble me going forward I cant see how they can end anything but badly once inflation takes off.

 

 

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On 20/02/2020 at 09:05, CVG said:

I retired at 51. I get a small(ish) DB+AVC generated pension monthly and supplement with income drawn from my 25% Tax Free Cash. The strategy I settled on for investing the 25% TFC was based on Harry Browne's Permanent Portfolio (get the book) - 25% Cash, 25% Equity, 25% Long Term Bonds and 25% Gold. I would draw my income from the Cash element and then rebalance each year back to the 25% allocations.

I modified that a little to a Golden Butterfly Portfolio ( https://portfoliocharts.com/commentary-all/page/2/ ). I made a killing on my Long Term Gilts but finally lost my nerve and reduced that allocation to 0% temporarily. I heavily diversify within each asset allocation, e.g. Cash = Physical, Bank, Savings, Premium Bonds, Foreign Currency; Gold = Silver, Physical, Vault, Miners, ETF; etc.

Good luck.

Very interesting thanks CVG.

I like the way you diversify to provide asset protection and how you take cash and rebalance each year. I try to balance my liquid capital (25% cash, 45% shares, 15% bonds 15% gold/silver and gold/silver shares) atm. The bond part really troubles me because whilst you can always find cheap shares finding cheap bonds is much harder atm. I will try rebalancing each year with a focus on reducing bonds as a percentage each year going forward i think.

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21 hours ago, Cattle Prod said:

Thats interesting. I need to dig into that, thanks. I can't see how though, unless very expensive environmental concerns. Unless...as we all here know, the biggest mining cost is fuel. The only reason I heard about Pebble Mine in the first place is that a little dickie bird told me there is likeky a load of gas not so far away. We were looking at it the other way round "who would you sell this to? Pebble mine would take it for sure, if it goes ahead"

Yes, especially as Sprott (the company, 1st link below) and Sprott (the billionaire owner, other link below) appear to be pumping the small PM miners. The article is from last October which is same time I got the 'uneconomic...' comment from Sprott - I actually misremembered the comment - after checking back their comment in full was: 'Northern Dynasty Minerals - uneconomic, social risk, low inside ownership'

https://www.sprott.com/insights/video-sprott-ceo-says-junior-gold-miners-are-set-for-major-acquisitions-next-year/#

https://business.financialpost.com/commodities/mining/billionaire-eric-sprott-dishes-on-his-golden-investment-spree-its-like-being-at-a-table-with-a-winning-run

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