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

[MrXxxx]

1 hour ago, DoINeedOne said:

Can't remember where i heard this but with all these job cuts coming in

How many people are sitting around indoors and don't have a job to go back too, but just don't actually know that yet because they have not been told

And yet how many have not planned for such a thing, savings etc..

 

The wise ones will be looking for/applying for a new job before the `flood gates` open...but I can imagine the majority are oblivious, and just enjoying sitting in the sun in the garden/park, they will learn from this come the `severe Winter`!

[Shamone]

2 hours ago, DoINeedOne said:

Can't remember where i heard this but with all these job cuts coming in

How many people are sitting around indoors and don't have a job to go back too, but just don't actually know that yet because they have not been told

And yet how many have not planned for such a thing, savings etc..

 

My company put me on unpaid leave the Thursday of the school shutdown week. Was told last week I wouldn’t be updated but have heard nothing. If it wasn’t for my covidbucks I would have given notice by now. Have already asked my old job if I can go back as a few-paid.

[Harley]

Some great comments/emerging consensus here guys.  The "eye of the storm" really hit home.  Already was time to stow stuff away, check batteries and other stores, and tie down the rest.  Even stopped my dry stone walling to come inside from the lovely weather to focus a bit more!

[Harley]

1 hour ago, Bus Stop Boxer said:

Already sat on a pile of Baird rounds waiting for parity afer about 7 years.....

I'm going to fade out some PM ETF holdings into coins and small bars rather than buy more at these prices.  The key thing for me is that coins and small bars are not the same as ETF PM holdings, or even off site storage.  They have far more utility through their insurance/liquidity opportunity.  Hard not to compare them though, and needed so as not to pay silly premiums, but they are different.  I can't help thinking ahead to a time when I pop up to London or another city for a weekend in a posh hotel with a nice dinner and the theatre once a month/quarter to sell a coin to live off!  May have to be a horse and cart and may have to be done down some back street though! 

[Loki]

1 hour ago, Bus Stop Boxer said:

physical silver in possession due to VAT

No VAT from here for now

https://www.coininvest.com/en/silver-margin-scheme-products/

I won't have anything else but physical! Enough of my capital is 'abstract'/electronic wealth as it is.  Miners seem to be a good play 

[jamtomorrow]

1 hour ago, Bus Stop Boxer said:

Yes that appears to apply to the Global X fund. Will look at the iShares version

 

Looks like this might be the way i will go. Though its not a miner ETF as such.

I dont want to fuck about with physical silver in possession due to VAT and coming out the other side.

Already sat on a pile of Baird rounds waiting for parity afer about 7 years.....

While its nice to hold physical metal, (i do), its a bugger cashing in i feel.

https://www.hl.co.uk/shares/shares-search-results/i/ishares-physical-metals-physical-silver-etc

Considered something like BullionVault, @Bus Stop Boxer? Allocated, insured bars and you can choose from a few vaulting locations.

Been rotating out of gold into silver on BV myself last few months, all very smooth - spreads are transparent, liquidity mostly pretty good (although Singapore seemed a bit dry of late).

I like the location flexibility because it's handy for managing jurisdictional/systemic risk. Don't like the look of what's going on in LBMA vaults? No prob, just rotate out of London. 

EDIT TO ADD: other thing I like, spreads are generally pretty tight around spot. Paid £0.441/g for silver this weekend.

[kibuc]

On 06/05/2020 at 10:58, DurhamBorn said:

The silver stocks i see with the biggest beta to the silver price (so most likely to outperform in a rising silver price,but bend you over and roger you in a falling one).This is not based on fundamentals quality,reserves or anything ,just beta to silver price.

Endeavour Silver 2.46 beta

American Silver Corp 2.32

Fortuna Silver 2.30

First majestic 2.17

Avino Silver 2.09

Great Panther 1.72

Coeur Mining 1.70

 

I own them in that order.I would add they are very very risky,and if silver falls they will inflict great pain.I could take an entire wipe out from them all without worrying much, and thats the way to view silver miners.However i think at least one of the above will 20x or even 50x in the cycle ahead and a couple probably fail.If i was young and only had a small amount of capital,but was prepared to lose it all,then thats where id put it for the cycle.

Not advice DYOR etc,

My problem with those companies is that they are either 

1. Shit

2. Too big

3. Not really silver miners

4. All of the above

I'm looking at Avino and I can see that they get more then half of their revenues from copper (more like 70% in Q1 2020). Great Panther and Coeur are a pinnacle of shit management, plus Coeur has a strong zinc & lead component. Endeavour literally run out of ore in their primary mine last year etc etc. First Majestic, PAAS and Fortuna are the only ones I'd feel comfortable holiding, and Fortuna is the only one from this list I actually hold at the moment.

But the market doesn't seem to care, and when silver popped up 5% on Friday, Avino rocketed up 30%. I can scream at the sky all I want, but maybe it's better to join the dumb marker than be clever and broke.

Edit: Apologies @DurhamBorn if it came across as a criticism of your list. Not my intention. I understand that you identified those companies as having the highest beta to silver, I just struggle to find a reason why the market would assign such a high leverage to silver to them as opposed to some other miners much more focused on silver.

[BurntBread]

17 minutes ago, kibuc said:

Edit: Apologies @DurhamBorn if it came across as a criticism of your list. Not my intention. I understand that you identified those companies as having the highest beta to silver, I just struggle to find a reason why the market would assign such a high leverage to silver to them as opposed to some other miners much more focused on silver.

Maybe if a company is very close to failure (or perceived to be so), then fluctuations in the price of its product get magnified in the share price? Not saying that any of these companies are in that state, either financially or through reputed bad management, but just a thought. It also suggests a very silly and dangerous game: picking companies that are about to get rescued from insolvency by rising commodity prices.

[Majorpain]

14 minutes ago, BurntBread said:

Maybe if a company is very close to failure (or perceived to be so), then fluctuations in the price of its product get magnified in the share price? Not saying that any of these companies are in that state, either financially or through reputed bad management, but just a thought. It also suggests a very silly and dangerous game: picking companies that are about to get rescued from insolvency by rising commodity prices.

Correct, if it priced for bankruptcy and gets saved you can 10x if your lucky.  If you spread your capital equally over 5 and 4 fail, you've still doubled your money.

Ultimately its DYOR and pick your own investing style which works for you.

[Bus Stop Boxer]

BRWM ?

[Democorruptcy]

5 hours ago, Bus Stop Boxer said:

Im currently planning on buying Shell BP Conoco and prob the Wisdom Tree Crude ETF (CRUD) also Fever Tree (quinine) Pioneer Natural Resources EOG Resources  and Astra Zeneca.

If you already like Wisdom Tree re silver they have PHAG.

 

[Democorruptcy]

6 hours ago, Barnsey said:

JCB announcing the 950 job cuts the other day was a wake up call for me, if larger strong firms are taking such action even with the furlough scheme extended to October it says quite a bit about the lasting effects on the real economy. 

We’re essentially in the calm eye of the storm, we’ve been through the shock of entering, and soon comes the shock of exiting and assessing the damage. People have had at least 80% of their income guaranteed, and a 3 month payment holiday granted with ease for any credit they might have. At the moment the lack of bonuses and overtime has been offset by the inability to go on holidays or eat out. Even though I’m still on full pay, all overtime has disappeared, so loss of 20% of income. I’m sure I’m not the only one in this situation, so there goes the “extras” and delays our ability to build up our house deposit, at a time when mortgage lenders have really tightened up and need at least 25% deposits.

You're absolutely right @sancho panza about waiting on the housing front, there’s just no real pain out there yet, and now things are opening up folk think this was as bad as it gets. Over the coming months, more and more businesses will have to make permanent job reductions, and those lingering demand destruction effects will be what drags the market down. Haldane suggesting this morning that we’re looking at an unemployment % like the early 80s, worse than the 90s and GFC. And because of this, hinting at negative rates.

If you haven't seen it the RICS market survey for April has some beautiful charts in it 

My concern is lack of supply holding prices up where I might be interested. 

 

[Loki]

5 minutes ago, Democorruptcy said:

If you haven't seen it the RICS market survey for April has some beautiful charts in it 

My concern is lack of supply holding prices up where I might be interested. 

 

Nice find!

Quote

With respect to how long it will take for the market to recover after Covid-19 passes*, contributors on average envisaged sales to rebound to their previous levels in around nine months (mean) while median expectations stood at six months. Interestingly, the feedback suggests that a recovery in prices could take a little longer, with both the mean and medium expectations pointing to a recovery in eleven months. In addition, 35% of the survey participants believe that when the market reopens, prices could be left up to 4% lower, while more than 40% take the view that prices could in fact fall by more than 4%.

 

[DurhamBorn]

1 hour ago, kibuc said:

My problem with those companies is that they are either 

1. Shit

2. Too big

3. Not really silver miners

4. All of the above

I'm looking at Avino and I can see that they get more then half of their revenues from copper (more like 70% in Q1 2020). Great Panther and Coeur are a pinnacle of shit management, plus Coeur has a strong zinc & lead component. Endeavour literally run out of ore in their primary mine last year etc etc. First Majestic, PAAS and Fortuna are the only ones I'd feel comfortable holiding, and Fortuna is the only one from this list I actually hold at the moment.

But the market doesn't seem to care, and when silver popped up 5% on Friday, Avino rocketed up 30%. I can scream at the sky all I want, but maybe it's better to join the dumb marker than be clever and broke.

Edit: Apologies @DurhamBorn if it came across as a criticism of your list. Not my intention. I understand that you identified those companies as having the highest beta to silver, I just struggle to find a reason why the market would assign such a high leverage to silver to them as opposed to some other miners much more focused on silver.

I agree,all have problems,its just based on past moves compared to silver iv tracked them all for years and thats the beta up until now.I just assume there is a reason the market goes for them,probably because it feels they are battered down for all the bad reasons.I actually think HOC is very undervalued and will be adding that as well.Silver is difficult to target  through the miners and is a terrible sector,until we are in a bull.

[M S E Refugee]

http://www.goldchartsrus.com/chartstemp/UKHousePrices01.php

Not sure if this site has been linked before.

[Bus Stop Boxer]

59 minutes ago, M S E Refugee said:

http://www.goldchartsrus.com/chartstemp/UKHousePrices01.php

Not sure if this site has been linked before.

Bring me the head of Gordon Brown.

[MrXxxx]

Whilst we have a PM theme going at the moment I have a few questions, as I know several of you I.e @Errol are quite knowledgeable.

1. Looking at the OCF of most physical/allocated gold ETC they range 0.19-0.39% but BV with it minimum charge for storage only hits this at £20k +, and then you have a buy/sell of 0.5% and spread...is it really worth having bullion in storage given a) the higher OCF, and b) although theoretically you could collect, realistically in a SHTF scenario it would be unlikely?

2. ETF miners big and small (GDGB & GJGB) - given the risk with juniors, does it make more sense to buy the GDGB for a more `secure` exposure to the market, and pick/lucky dip on a few individual juniors?...I am assuming that the GJGB is likely to have a greater number of `lemons` and so not perform as reliabily/ well as GDGB.

3. Anyone have any thoughts on streamers they would like to share?

4. Finally, can't seem to find silver equivalent ETFs of the above (allocated physical, miners)..am I missing something?

Note, nothing you say will be taken as financial advice, this is simply for educational purposes only.

Thanks.

[nirvana]

@Yellow_Reduced_Sticker I need to raise you that skinny Japanese bird with a couple of 'mask suppliers' I've recently come into contact with 

 

[nirvana]

All you folks keeping your silver and gold stash in a bank or other 'safe place' aren't you worried the government might decide to 'confiscate' it???

Think of all the German gold that the Yankees nicked at the end of the war......and the Germans just got it back recently I think

[nirvana]

1 hour ago, Bus Stop Boxer said:

Bring me the head of Gordon Brown.

the stuff he sold wasn't too bad compared to the drop from 2500 tonnes in 1960 to 690 tonnes in 1971......bandits!!! where'd it go? 

source https://en.wikipedia.org/wiki/Gold_reserves_of_the_United_Kingdom

[Thorn]

Sweet Baby Jesus thinner bases was the answer.

No Soggy Bottoms And the finest pizzas this side of Italy itself.

and finally the long awaited action on our pm miners. Game on.

best place on the Internet by A Mile.

Grazie, DB😎

[Option5]

8 minutes ago, 5min OCD speculator said:

the stuff he sold wasn't too bad compared to the drop from 2500 tonnes in 1960 to 690 tonnes in 1971......bandits!!! where'd it go? 

Supporting the pound from 1964 to 1967 when we eventually devalued.

[Bricormortis]

1 hour ago, 5min OCD speculator said:

All you folks keeping your silver and gold stash in a bank or other 'safe place' aren't you worried the government might decide to 'confiscate' it???

Think of all the German gold that the Yankees nicked at the end of the war......and the Germans just got it back recently I think

They have other means of taking peoples wealth.

[Hardhat]

2 hours ago, MrXxxx said:

2. ETF miners big and small (GDGB & GJGB) - given the risk with juniors, does it make more sense to buy the GDGB for a more `secure` exposure to the market, and pick/lucky dip on a few individual juniors?...I am assuming that the GJGB is likely to have a greater number of `lemons` and so not perform as reliabily/ well as GDGB.

It's at your own risk, but I've held both for years and haven't noticed massively more volatility in GJGB than GDGB. If you compare the five year charts you'll see they roughly move in the same way. The volatility comes from the gold price rather than the risk of individual companies really.

[Barnsey]

5 hours ago, Democorruptcy said:

If you haven't seen it the RICS market survey for April has some beautiful charts in it 

My concern is lack of supply holding prices up where I might be interested. 

 

Thanks for the link @Democorruptcy! Let’s see what the May survey looks like 

5 hours ago, Democorruptcy said: