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

[BadAlchemy]

17 minutes ago, DoINeedOne said:

Just incase anyone didn't get this email  Dear BullionVault user, ... I do need to mention your cash balance – if you hold a substantial one with BullionVault.  Of course it is held fully segregated, in trust, and at a reputable bank (Lloyds Bank or Wells Fargo) but do not forget banks are in business to lend into a world of borrowers who, taken together, are now extraordinarily indebted and unusually fragile.  This renders it impossible for anyone to assess with confidence the balance sheet of a modern bank. ...

Naturally they have a vested interest in saying that but it is true nevertheless. I remember from the GFC when everyone was queuing up outside NR to pull their money out and when Icesave went down the pan around the same sort of time. £25K of cash was out my reach and in jeopardy for a period of time. Eventually got it all out, some (the Icesave stuff) via the FSCS scheme.

I understand the people here who have cashed out and/or are not buying right now but make sure you don't have all your eggs in one basket as the saying goes. Spread it around.

[DurhamBorn]

35 minutes ago, BadAlchemy said:

Naturally they have a vested interest in saying that but it is true nevertheless. I remember from the GFC when everyone was queuing up outside NR to pull their money out and when Icesave went down the pan around the same sort of time. £25K of cash was out my reach and in jeopardy for a period of time. Eventually got it all out, some (the Icesave stuff) via the FSCS scheme.

I understand the people here who have cashed out and/or are not buying right now but make sure you don't have all your eggs in one basket as the saying goes. Spread it around.

Very true,and another reason i use road maps.For instance,on cash,it says that cash i hold will lose around 85%+ of its spending power over the next cycle before interest rate increases.With interest rate increases i expect the loss to be around 50% as rates trail inflation all the way until 2028.

Cash is a superb asset to hold as other assets fall in price against it in a low inflation/deflation period,but it is 100% certain to lose its buying power in the next cycle.The reason is the CBs will first not worry when inflation hits 4%,then feel 5% is the top,at 7% start to chase with rates at 4% and at 10%+ probably get to double digits.Just of course as inflation assets crash and the money has lost most of its buying power.

I dont think the banks as a whole will take the pain this time,i think it will be the bond markets.Its one reason why iv avoided buying any insurance company etc.They will do very well in a rising rate cycle,and are now very cheap,but they could be at huge risk on their capital holdings.

[sleepwello'nights]

9 hours ago, DurhamBorn said:

I would think the President can do that yes.What he didnt say,but what he meant was that he didnt intend to let the US oil industry go down the pan and them lose their energy independence.He knows the Russians and the Saudi's are trying to kill US shale.Amazing what you can do when you have the reserve currency.This is the sort of thing thats going to happen more and more in the next cycle.Governments injecting into the economy.Trump isnt stupid,he knows he is getting oil cheap for later,but it serves much more than that.

Once again it shows that Trump views events from a businessman's perspective rather than a politician's. A politician would instinctively try to assuage the Russians or try to form an alliance with others to neutralise or counter the effect. 

Isn't the approach Trump has adopted delicious. You're creating a glut to destroy us, it wont because we can store the bounty you're giving us.

[sleepwello'nights]

18 minutes ago, DurhamBorn said:

Very true,and another reason i use road maps.For instance,on cash,it says that cash i hold will lose around 85%+ of its spending power over the next cycle before interest rate increases.With interest rate increases i expect the loss to be around 50% as rates trail inflation all the way until 2028.

 

I dont think the banks as a whole will take the pain this time,i think it will be the bond markets.Its one reason why iv avoided buying any insurance company etc.They will do very well in a rising rate cycle,and are now very cheap,but they could be at huge risk on their capital holdings.

What are your thoughts on Gold. I'm watching it fall to around the $1520 mark on Kitco. Silver has plunged as well. 

I'm seriously considering opening an account with Bullion Vault. 

[sleepwello'nights]

 

Quote

 My employer still wants me to work for them so the lockdown gives me a trial period to see if working remotely in the UK would be an acceptable solution (assuming that the company doesn't go to the wall - it sounds like our Zurich office might be moving on to full "work from home" mode). 

and yet telecom shares continue to fall !

[DurhamBorn]

25 minutes ago, sleepwello'nights said:

Once again it shows that Trump views events from a businessman's perspective rather than a politician's. A politician would instinctively try to assuage the Russians or try to form an alliance with others to neutralise or counter the effect. 

Isn't the approach Trump has adopted delicious. You're creating a glut to destroy us, it wont because we can store the bounty you're giving us.

Superb really and like you say businesman thinking.They have the reserve currency,they have the currency oil is bought in.I noticed rates have gone up for the large oil tankers.Obvious the likes of Shell will be buying and storing as well.

Trump is as determined as Russia and Saudi,the difference if he has the oil currency,and the Fed are injecting liquidity across the curve.

19 minutes ago, sleepwello'nights said:

What are your thoughts on Gold. I'm watching it fall to around the $1520 mark on Kitco. Silver has plunged as well. 

I'm seriously considering opening an account with Bullion Vault. 

I think silver will be over $20 soon.Im probably going to add to my silver holdings this week.

[Boon]

I feel I do not have the risk tolerance for individual companies.

Is holding a metal better (like at Bullion Vault) or do ETF's deliver the same result?

[UnconventionalWisdom]

16 minutes ago, Boon said:

I feel I do not have the risk tolerance for individual companies.

Is holding a metal better (like at Bullion Vault) or do ETF's deliver the same result?

I would reccommend a combination of physical and minor ETFs. Physical in Bullion vault is good but only if you have enough to make the fees count. I've always been sceptical about ETFs that are meant to correlate with the price of a commodity. In a freak event, you can't be sure what will happen. Holding gold is somewhat of insurance against freak events. I have GDX and GDXJ as ETFs as the miners have better liquidity and should stand to gain if people lose faith in current monetary policy. 

[Boon]

OK thanks man. Something like IShares physical gold would surely track the gold price? Their charges seem like 0.19%.

A question for @DurhamBorn , if asset prices are due to go up due to the coming printing of money would this not include property as well? Thinking of adding in some homebuilder shares as a hedge, as I do not own a property.

[Yellow_Reduced_Sticker]

"Scientists close to developing coronavirus vaccine after tests on mice"

 

 

I reckon with this GOOD NEWS about the virus, stocks will ROCKET come Monday ...boy I'm i glad I've been buying during the carnage, ONLY made possible by the CARRY ON team, yep that clip below made be keep clam and keep PULLING the TRIGGER!

 

 

@DurhamBorn THANKS for all the info in this thread, however can i ask ya...Once ya get fully allocated with ya stocks for the new cycle PLEASE do pop in from time to time and let me know if ya still getting yellow sticker REDUCTIONS! Cheers!

 

BTW, the 2 Young girl shop assistants that work at my towns Holland and Barrett store, call me Mr RED Sticker, as you can guess I'm in there once every week scanning their red sticker reductions, and I've got to know these girls very well and even they are saying NOT many bargains since this virus, BUT I'm sure this will be temporary!

 

[DurhamBorn]

1 minute ago, Boon said:

OK thanks man. Something like IShares physical gold would surely track the gold price? Their charges seem like 0.19%.

A question for @DurhamBorn , if asset prices are due to go up due to the coming printing of money would this not include property as well? Thinking of adding in some homebuilder shares as a hedge, as I do not own a property.

Not in nominal terms no because houses are bought with debt mostly and as inflation increases so do rates.The cost of driving to work doubling,the food shop doubling,cost of a car etc shooting up,tax up,.The reason houses have gone up so much is due to rates topping out in 1982 ,thats going to reverse in the next cycle.Some parts of the country will do ok,i expect where i am in the north to hold up because we are the cheapest in the country and the cycle will favour the north.Southern prices will be hit very very hard against inflation,maybe 60% falls or more inflation adjusted.

[DurhamBorn]

5 minutes ago, Yellow_Reduced_Sticker said:

"Scientists close to developing coronavirus vaccine after tests on mice"

 

 

I reckon with this GOOD NEWS about the virus, stocks will ROCKET come Monday ...boy I'm i glad I've been buying during the carnage, ONLY made possible by the CARRY ON team, yep that clip below made be keep clam and keep PULLING the TRIGGER!

 

 

@DurhamBorn THANKS for all the info in this thread, however can i ask ya...Once ya get fully allocated with ya stocks for the new cycle PLEASE do pop in from time to time and let me know if ya still getting yellow sticker REDUCTIONS! Cheers!

 

BTW, the 2 Young girl shop assistants that work at my towns Holland and Barrett store, call me Mr RED Sticker, as you can guess I'm in there once every week scanning their red sticker reductions, and I've got to know these girls very well and even they are saying NOT many bargains since this virus, BUT I'm sure this will be temporary!

 

I bought a lot of Mosaic friday they were down 10% and i sold them before the close up 10%,20% in a few hours on the worlds biggest potash miner.The swings are insane.I have a lot of Mosaic and its now at breakeven so thought 20% on the last lot was worth it.I have about 10 US stocks and every one went up over 15%,apart from Exxon.I love that Carry on,Sidney Roughdiamond 

[DurhamBorn]

39 minutes ago, Boon said:

I feel I do not have the risk tolerance for individual companies.

Is holding a metal better (like at Bullion Vault) or do ETF's deliver the same result?

Depends really on how much etc,but 60% physical silver and 40% in GDXJ is a nice simple mix.Bullion Vault is perfect for the physical.

[Boon]

9 minutes ago, DurhamBorn said:

Depends really on how much etc,but 60% physical silver and 40% in GDXJ is a nice simple mix.Bullion Vault is perfect for the physical.

Thanks. I don't have the monies for the most efficient fees ($40,000 gold, $20,000 silver), is paying 1% effective via the ETF still reasonable or is there a cheaper alternative?

Also, would metals prices respond more to the fiscal stimulation or market sentiment? I feel that panic has yet to set in amongst the US/UK, I don't know whether this would see a reduction or increase in metals prices short-term.

[UnconventionalWisdom]

23 minutes ago, Boon said:

OK thanks man. Something like IShares physical gold would surely track the gold price? Their charges seem like 0.19%.

A question for @DurhamBorn , if asset prices are due to go up due to the coming printing of money would this not include property as well? Thinking of adding in some homebuilder shares as a hedge, as I do not own a property.

I suppose it's me being a cynic. 

Mike Maloney sells gold so you need to be careful with his message but on the whole he speaks a lot of sense.

 

[UnconventionalWisdom]

1 minute ago, Boon said:

Thanks. I don't have the monies for the most efficient fees ($40,000 gold, $20,000 silver), is paying 1% effective via the ETF still reasonable or is there a cheaper alternative?

Also, would metals prices respond more to the fiscal stimulation or market sentiment? I feel that panic has yet to set in amongst the US/UK, I don't know whether this would see a reduction or increase in metals prices short-term.

You could always take physical and store yourself if it's not a huge amount. Make sure your home insurance covers it. 

Britannias from coininvest would be my recommendation.

[UnconventionalWisdom]

Good episode of Keiser report today. Focus on oil and Fed liquidity

 

 

[UnconventionalWisdom]

Things are certainly getting interesting.

https://www.cnbc.com/2020/03/13/us-should-give-citizens-1000-a-month-amid-covid-19-crisis-analyst.html

“The concern here is what’s going to happen with the real economy,” he said. “Now I’m afraid pumping in more money to support the financial sector does absolutely nothing where the real problem is.”

Although he said it was good news to see central banks like the U.S. Federal Reserve take steps to support financial markets, Freris added that lowering interest rates would do “absolutely nothing” to address the core cause of the current economic turmoil.

[Yellow_Reduced_Sticker]

53 minutes ago, DurhamBorn said:

I bought a lot of Mosaic friday they were down 10% and i sold them before the close up 10%,20% in a few hours on the worlds biggest potash miner.The swings are insane.I have a lot of Mosaic and its now at breakeven so thought 20% on the last lot was worth it.I have about 10 US stocks and every one went up over 15%,apart from Exxon.I love that Carry on,Sidney Roughdiamond 

 

I averaged down and bought K & S AG AND Mosaic on Friday, reading ya post i went to check ...BLOODY Hell that's some GAIN i bought around 3.30pm because i had gardening work to do, didn't even bother to check prices as i never do, WHY? cos I KNOW THEY WILL BE DOWN after i buy...on this occasion ...blimey i got the intra day LOW!

 

It pays to keep watching that CARRY ON Clip!

 

 

BTW, I forgot to buy US STEEL, looking at the chart i think they are cheaper NOW than what they were when Jesse Livermore was trading 'em in the early 1900's

 

 

DB, Are ya a buyer of US STEEL, also you called GOLD correctly TO HIT around $1700, if i remeber you said way back it could correct to $1000 area, any Thoughts? CHEERS!

 

 

 

[DurhamBorn]

12 minutes ago, Yellow_Reduced_Sticker said:

 

I averaged down and bought K & S AG AND Mosaic on Friday, reading ya post i went to check ...BLOODY Hell that's some GAIN i bought around 3.30pm because i had gardening work to do, didn't even bother to check prices as i never do, WHY? cos I KNOW THEY WILL BE DOWN after i buy...on this occasion ...blimey i got the intra day LOW!

 

It pays to keep watching that CARRY ON Clip!

 

 

BTW, I forgot to buy US STEEL, looking at the chart i think they are cheaper NOW than what they were when Jesse Livermore was trading 'em in the early 1900's

 

 

DB, Are ya a buyer of US STEEL, also you called GOLD correctly TO HIT around $1700, if i remeber you said way back it could correct to $1000 area, any Thoughts? CHEERS!

 

 

 

In steel i like SSAB steel,

https://www.ssab.com/

Il be going for bargains tonight,should be loads 

[CVG]

1 hour ago, Boon said:

Thanks. I don't have the monies for the most efficient fees ($40,000 gold, $20,000 silver), is paying 1% effective via the ETF still reasonable or is there a cheaper alternative?

Also, would metals prices respond more to the fiscal stimulation or market sentiment? I feel that panic has yet to set in amongst the US/UK, I don't know whether this would see a reduction or increase in metals prices short-term.

Diversification is key. I have 20% of my portfolio in precious metals. I split that down into

• Physical gold and silver coins at home (for going on the run!)
• Vaulted metals (in Switzerland)
• Miners - both individual stocks and Miner ETF's like GDXJ
• Metal ETF's in Gold, Silver and Platinum (allows me to rebalance portfolio back to 20% without having to sell the above)

[Talking Monkey]

1 hour ago, DurhamBorn said:

Very true,and another reason i use road maps.For instance,on cash,it says that cash i hold will lose around 85%+ of its spending power over the next cycle before interest rate increases.With interest rate increases i expect the loss to be around 50% as rates trail inflation all the way until 2028.

Cash is a superb asset to hold as other assets fall in price against it in a low inflation/deflation period,but it is 100% certain to lose its buying power in the next cycle.The reason is the CBs will first not worry when inflation hits 4%,then feel 5% is the top,at 7% start to chase with rates at 4% and at 10%+ probably get to double digits.Just of course as inflation assets crash and the money has lost most of its buying power.

I dont think the banks as a whole will take the pain this time,i think it will be the bond markets.Its one reason why iv avoided buying any insurance company etc.They will do very well in a rising rate cycle,and are now very cheap,but they could be at huge risk on their capital holdings.

So hold back adding insurance till say 2022/3 when inflationary pressures start rising and rate increases start and then gather pace

[Boon]

What about the more alternative 'assets' such as stamps/whiskey?

With rampant inflation would these hold up? 

[janch]

19 hours ago, Harley said:

Should I have gone to Specsavers?  -14.03% on LSE at the close, currently +4.38% on NYSE?

Is this because of the currency fluctuations?  I just had a look and DXY is around 98 and $/£ around 1.22 so it's changed quite a lot in just one day.  I never used to look at that but since reading this thread I've learnt it's quite important!

When the Fed prints like mad and the dollar goes down perhaps my portfolio won't look quite a s sick!

[BearyBear]

2 hours ago, UnconventionalWisdom said:

Things are certainly getting interesting.

https://www.cnbc.com/2020/03/13/us-should-give-citizens-1000-a-month-amid-covid-19-crisis-analyst.html

“The concern here is what’s going to happen with the real economy,” he said. “Now I’m afraid pumping in more money to support the financial sector does absolutely nothing where the real problem is.”

Although he said it was good news to see central banks like the U.S. Federal Reserve take steps to support financial markets, Freris added that lowering interest rates would do “absolutely nothing” to address the core cause of the current economic turmoil.

 

it gets interesting from 20:40