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

[Alex]

14 minutes ago, Talking Monkey said:

What were the main factors which swung it for you Alex

In rural NZ it would have been easy to be self-sufficient in terms of food, etc., but the location wasn't easily defensible so scumbags with shotguns could have driven up and taken everything (burglaries and sheep thefts were common even before this all kicked off). It's also exceedingly dull, although even under home curfew we'd have had plenty of outdoors exercise (although it's heading towards autumn/winter soon).

In Berlin we have much less space but this is such a symbolic city that the Germans won't willingly let it fall into chaos. It also helps dramatically that there's a culture here of making do and helping each other out, partly but not solely because of the history of East Germany. Kiwis are pleasant to an extent, but Germans are more likely to follow social rules and to look after each other. Also, we live in a fairly Jewish area in Berlin and I suspect they'll be protected from any rioting and looting due to history.

Like I said, there wasn't much in it. Either location could have been made to work but I sleep better here than I would there.

[Errol]

Central Bank of Russia added 12.44 metric tonnes in February, bringing total to 2,289.2 metric tonnes

[Errol]

Further updates  re. gold:

• Royal Canadian Mint closed for 2 weeks.
• U.S. Mint backordered a month in advance.
• Brinks JFK on half shifts (gold can't move).
• Brinks Utah recovering from earthquake.
• European refiners can't ship to U.S. (travel restrictions).

[TheCountOfNowhere]

John Lewis Partnership has taken the “difficult decision” to temporarily close all 50 John Lewis shops at close of business on Monday AND LET THE TAX PAYER PAY THEIR WAGE BILL as a result of the impact of coronavirus, the retailer has announced.

 

https://www.standard.co.uk/news/health/coronavirus-uk-live-updates-covid-19-a4393741.html

 

 

Concern over profiteering 

Environment Secretary George Eustice said the Government keeps “a close eye” on profiteering amid concerns some products have been sold online for inflated prices.

 

Will they be watching the bankers !!!

[TheCountOfNowhere]

https://www.ft.com/content/d184a0af-3fcd-3e94-8779-575379b8116d

 

Adam Samson 19 MINUTES AGO Number of confirmed infections in America rises above 20,000 Steve Bernard writes: The number of cases in the US has risen above 20,000 as the outbreak worsens in the sprawling country. The case count has risen to 21,682, an increase of 2,582 on Friday. The death toll rose 23 to 279.

 

 

The Dow is going to 10,000

 

[Bobthebuilder]

21 minutes ago, Cattle Prod said:

Taxpayer won't be paying. Your savings will be.

I am thinking of taking a few years early retirement with some of my cash savings, worry about it later. Its not gonna be worth a lot in future at this rate. I am self employed and if im on my own while everyone else is getting helicopter dosh they can jump if they think im gonna pay taxes for it as well as inflating me away.

[onlyme]

13 minutes ago, Bobthebuilder said:

I am thinking of taking a few years early retirement with some of my cash savings, worry about it later. Its not gonna be worth a lot in future at this rate. I am self employed and if im on my own while everyone else is getting helicopter dosh they can jump if they think im gonna pay taxes for it as well as inflating me away.

There will be a good time to get into the market for a very decent run, maybe worth waiting a bit for that once in a decade opportunity to boost that cash sum. Think there will be many more making similar early  retirement decisions. Personally will look not to retire but just do the work I want to do, when I want, and stay under tax thresholds. Would get too bored otherwise. 

[Bobthebuilder]

5 minutes ago, sam1994 said:

Silver is sold out at European Mint

Was eyeing up 10oz britannias, they sold out. Now the 1ozs have sold out too. 

One poster about a year ago said about buying silver spoons, trays, etc off ebay. Is that still an option?

[Errol]

32 minutes ago, sam1994 said:

Silver is sold out at European Mint

Was eyeing up 10oz britannias, they sold out. Now the 1ozs have sold out too. 

Coininvest has been sold out of most stuff for a while.

[spygirl]

Germany is to run 10% deficit.

https://mobile.twitter.com/fwred/status/1241370767230730245

Inflation will go nuts. The over leveraged will be wiped out due to much higher interest rates.

[M S E Refugee]

1 hour ago, sam1994 said:

Silver is sold out at European Mint

Was eyeing up 10oz britannias, they sold out. Now the 1ozs have sold out too. 

It is far easier to buy an ETF than messing about with physical Silver and I know it is heresy to say such a thing amongst Gold and Silver bugs but it is a right pain in the arse to store and liquidate when you come to sell it. 

[Loki]

6 minutes ago, M S E Refugee said:

It is far easier to buy an ETF than messing about with physical Silver and I know it is heresy to say such a thing amongst Gold and Silver bugs but it is a right pain in the arse to store and liquidate when you come to sell it. 

Physical is for insurance purposes 

[Bricks & Mortar]

1 hour ago, sam1994 said:

Silver is sold out at European Mint

I bought some Signature Silver at Royal Mint today.   It's like a slice of a bar they hold for you.
A long time ago, the thread had a discussion about different ways to own silver, and some thought there were better ways, some preferring physical, ETF's,  Bullionvault,  yada yada.
If you're new around here, one of the best uses of an enforced stay at home, would be go back to the start, on the other site if you can, (or just to the part 1 thread on this site if not), and read the entire thing.

Anyway - you can still get it.  Price earlier today was £11.64 / oz to buy.  £10.25/oz to sell.

[M S E Refugee]

1 minute ago, Loki said:

Physical is for insurance purposes 

Gold fair enough but not Silver far too bulky to store if you have a decent amount, and selling it is a nightmare in the UK.

If I lived in the US I would probably own some as it is easier to buy and sell over there.

[Alifelessbinary]

Buying physical gold and silver is incredibly restrictive at the moment. The usual silver bullion dealers have absolutely no incentive to sell at this price, especially when demand has exploded. It does show there is a complete disconnect between physical and paper and that is why I’m wary of ETFs. I completely agree with MSE’s comments under normal market conditions, but I’m wary on whether silver ETFs can perform as required. 

The premium on physical silver as well as VAT (unless you buy from Europe)has always limited the appeal of silver as an investment, saying that I’m still glad I’ve got some.

Im starting to see the availability of Sovereigns improving, as some people have liquidated their stack. 

This thread has been invaluable making me think about how I diversify my investment and make sure I have the correct allocation early even if that means I have to take a loss in the short/medium term. The markets of the last week have shown you need to have things in place before the market turns not during the event.Things move so quickly that retail investors are usually locked out.

 

[DurhamBorn]

2 hours ago, spygirl said:

Germany is to run 10% deficit.

https://mobile.twitter.com/fwred/status/1241370767230730245

Inflation will go nuts. The over leveraged will be wiped out due to much higher interest rates.

Just roll the interest rate graph back to 1982.We are in a massive deflation so they have no choice but to print,and they arent scared of inflation as that isnt the problem right now.The big problems come at the end of the inflation cycle when things collapse.They cant print then when inflation is 12%+ and will be in a corner.

Fed is nowhere near  where it needs to be though on printing.If they dont all increase quickly then we are on the edge of a systemic collapse.Im talking every single large bank etc rolling over.

Until the $ starts to fall hard then we are going to collapse.Hopefully the lawyer Powell wakes up quickly to the risk.

[Loki]

5 minutes ago, DurhamBorn said:

Just roll the interest rate graph back to 1982.We are in a massive deflation so they have no choice but to print,and they arent scared of inflation as that isnt the problem right now.The big problems come at the end of the inflation cycle when things collapse.They cant print then when inflation is 12%+ and will be in a corner.

Fed is nowhere near  where it needs to be though on printing.If they dont all increase quickly then we are on the edge of a systemic collapse.Im talking every single large bank etc rolling over.

Until the $ starts to fall hard then we are going to collapse.Hopefully the lawyer Powell wakes up quickly to the risk.

What would the DXY have to fall to for it to indicate the collapse has been avoided?

[DurhamBorn]

15 minutes ago, Loki said:

What would the DXY have to fall to for it to indicate the collapse has been avoided?

It would show less demand for $ abroad so pressures dropping on the system.

[sancho panza]

12 hours ago, MrXxxx said:

SP, what's the point you are making here (im a novice so genuine Q).

There's been some highly unusual trade patterns in the PM mining sector.Chart effectively shwoing that for a brief moment a week or so back you could buy the GDXJ ETF at a 20% discount to it's net asset value at that moment.I providied the 5 year chart for context.I think that was hte day Kinross yoyoed 40% on the day bottom to top.

17 hours ago, Castlevania said:

I agree. I live in the centre of a large city in Europe. It’s very built up and all the bars, cafes, restaurants, cinemas etc have been closed since last weekend. I’ve been forced to work from home since then too and I’m lucky that I have a roof terrace so do have a little bit of outside space, but there’s not much to do. At times like this living in the middle of nowhere where you can simply go for a walk surrounded by greenery is very appealing.

Anywhere nice CV?

[Loki]

10 minutes ago, DurhamBorn said:

It would show less demand for $ abroad so pressures dropping on the system.

Thanks - Am I right in thinking the DXY would indicate that, or do you use other measurements?

I get the feeling from your recent posts they are days away from running out of time.

[sancho panza]

 

[Bricks & Mortar]

45 minutes ago, DurhamBorn said:

Just roll the interest rate graph back to 1982.We are in a massive deflation so they have no choice but to print,and they arent scared of inflation as that isnt the problem right now.The big problems come at the end of the inflation cycle when things collapse.They cant print then when inflation is 12%+ and will be in a corner.

Fed is nowhere near  where it needs to be though on printing.If they dont all increase quickly then we are on the edge of a systemic collapse.Im talking every single large bank etc rolling over.

Until the $ starts to fall hard then we are going to collapse.Hopefully the lawyer Powell wakes up quickly to the risk.

I'm starting to think the Fed reticence is because they want to time it for once the bad virus news is already priced in.  Be ideal if hey could get some good news too, and seen UK saying antibodies test might be days away, and a 'gamechanger', and US saying hydrowotsit drug treatment might be a 'gamechanger' and they're moving to secure supplies.
I think, if they can get good news on the virus out there, simultaneous with the Fed QE, that we might be back on with a meltup and later big kahuna.  (Big Kahuna comes after the meltup, when it wears off, with the population, in absence of what they perceive as an existencial crisis, screaming "piss off", to further QE and bailouts, possibly in the final weeks of a presidential election.)

BUT.  The above is only my view of what might happen.  I agree with DB.  If we don't get the printing, it's Goodnight, Vienna. 

And for the Fed themselves, if I was them... I'd go for the deflationary crash now, rather than later.  At least there's something to put the blame on.

But I'm still thinking there's a good chance the Fed can't see past the end of their nose.

EDIT TO ADD - Sancho Panza's previous post.  Bond Collapse.  (will warn here, that I don't believe I fully understand bond market),  But I'm thinking money flowing out of bonds  Where does it go?  Bit of good virus news and some QE, and it's melty-time.

 

[Noallegiance]

8 minutes ago, Bricks & Mortar said:

If we don't get the printing, it's Goodnight, Vienna. 

.... Which looks like what to the man on the street?

[Bricks & Mortar]

6 minutes ago, Noallegiance said:

.... Which looks like what to the man on the street?

All your investments going down in value.  Houses, bonds, stocks, the stash of gold, the car on your drive... even the wage that you earn.

EDIT TO ADD  The whole thread has been about the coming deflationary collapse.  When it comes, I think you want to have liquidated your investments at the high price, and sit in cash, or USD cash, or US treasury bonds, waiting for the bottom, to reinvest and make $$$. 

But, pinning the tail on the donkey... or in this case, on the roadmap, is the trickybit.  We might be in deflationary collapse now.  I think that's the consensus view in the thread.  I'm posting this as very much an alternate possibility, and will admit myself that I think the chances are les than 50%.
And it goes without saying that any financial decisions you make, even if influenced by random folks on t'internet, well, they're yours and yours alone.

[sancho panza]

14 minutes ago, Bricks & Mortar said:

I'm starting to think the Fed reticence is because they want to time it for once the bad virus news is already priced in.  Be ideal if hey could get some good news too, and seen UK saying antibodies test might be days away, and a 'gamechanger', and US saying hydrowotsit drug treatment might be a 'gamechanger' and they're moving to secure supplies.
I think, if they can get good news on the virus out there, simultaneous with the Fed QE, that we might be back on with a meltup and later big kahuna.  (Big Kahuna comes after the meltup, when it wears off, with the population, in absence of what they perceive as an existencial crisis, screaming "piss off", to further QE and bailouts, possibly in the final weeks of a presidential election.)

BUT.  The above is only my view of what might happen.  I agree with DB.  If we don't get the printing, it's Goodnight, Vienna. 

And for the Fed themselves, if I was them... I'd go for the deflationary crash now, rather than later.  At least there's something to put the blame on.

But I'm still thinking there's a good chance the Fed can't see past the end of their nose.

EDIT TO ADD - Sancho Panza's previous post.  Bond Collapse.  (will warn here, that I don't believe I fully understand bond market),  But I'm thinking money flowing out of bonds  Where does it go?  Bit of good virus news and some QE, and it's melty-time.

 

I think this is entirely possible.It wouldn't take much good news on the virus to reverse the latest drop given it's been one of the shrapest ever.

The Big Kahuna occurs for me when the debt deflation begins.As you outline B&M ,there's a chance they could turn this around but it has irrevocably set of the chain of actions needed to set the deflation in motion.There's variables eg if people take the moeny they save on going out to pubs/restaurants etc and spend it elsewhere or if they take savings and pay off debt then we're game on.There's a lot of CRE laon booksthat are currently looking unsellable,same with a lot of residentail loan books

Hence I'm fence sitting on the BK