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

[Bobthebuilder]

12 minutes ago, DurhamBorn said:

My rubber band silver miners in my portfolio.Panther is .........?

Number 4?

[DurhamBorn]

5 minutes ago, Lightscribe said:

No 2

No 4,Its actually the worst performer for me at a lowly 63% profit, i bought it early and missed some ladders off.Iv sold a lot of my holdings across them all though.The Mighty Panther 

[sleepwello'nights]

10 hours ago, Hancock said:

I used to watch Max Keiser when living overseas around 2010, i bought a 500GB hard drive to buy a few hundred quids worth ... but then came back to England and had to spend a bit of time somewhere with no internet access ... then totally forgot about them.

Then in late 2013 was talking to the accounts guy on a job in NZ when they got to a spiked to a few hundred $$ and thought better of it then.

A client of my accountancy practice tried to persuade me to mine some BTC like he was. Back in 2009/10 I think. 

I had other things to do so passed on the offer. Hmmm, if only..............

[Hancock]

2 minutes ago, sleepwello'nights said:

A client of my accountancy practice tried to persuade me to mine some BTC like he was. Back in 2009/10 I think. 

I had other things to do so passed on the offer. Hmmm, if only..............

 ..... but on the bright side, in 2018 DurhamBorn set us all on the path to become millionaires ten years from now!

 

[sleepwello'nights]

5 hours ago, Hancock said:

I just googled dogecoin

So basically a couple of computer geeks made up a program of sorts that they call dogecoin and put a picture of their dog as the logo, then claim these 0s and 1s are a new currency.

And people believe in this?

Now i know the current financial system is far from perfect, but fuck me this is complete and utter bollocks. Its taking the ponzi economy and stupidity to whole new absurd levels

That is more or less what my thinking was on Bitcoin. 

[macca]

15 hours ago, Lightscribe said:

Ultimate collector series. Have I introduced Dosbods to a new asset class?

The modular building sets however are the main series when retired go for extreme prices.

https://www.amazon.co.uk/LEGO-4566081-Cafe-Corner-10182/dp/B000OTF4CQ

I was getting lego for £18 a box quite a few years ago now, I got the starwars lego when Lucas sold out to Disney they sold all the old kits off cheap.. I had about 25 boxes, big kits,  i shifted for £65 a box.. they sold fast

Thought i did alright,, now i'm not so sure

[macca]

3 hours ago, Loki said:

Anyone seen the new silver Bitcoin from coininvest?  I can't help but feel they missed a trick by not having an actual Bitcoin key on there too rather than just the value in mBTC.  

Talk about a hardware wallet you can still use if the net/power goes down.

So it would cost more, hasn't stopped people piling into any other assets.

I bought 2 silver bitcoins today.. I don't own Bitcoin, but i can see those who do, would want to buy my nice silver coin for a keep sake.. A Bitcoin you can touch..

So buy, hold sell.. hopefully they wont make more and it will become valuable.. otherwise its a nice piece of silver that will hopefully do well..

[Chewing Grass]

5 minutes ago, macca said:

I bought 2 silver bitcoins today.

Cool, a proper bitcoin, are they Chinese?

[Chewing Grass]

11 minutes ago, macca said:

I bought 2 silver bitcoins today.. I don't own Bitcoin, but i can see those who do, would want to buy my nice silver coin for a keep sake.. A Bitcoin you can touch.

Just had a Brilliant Idea - Chocolate Bitcoins.

Nobody sells them on ebay...

Then found out that one place does.

They are € 29,95 per kg.

http://www.chocolatecoinshop.com/shop.html?iframe_targ=bitcoins.htm

[Noallegiance]

6 minutes ago, Chewing Grass said:

Just had a Brilliant Idea - Chocolate Bitcoins.

Nobody sells them on ebay...

Then found out that one place does.

They are € 29,95 per kg.

http://www.chocolatecoinshop.com/shop.html?iframe_targ=bitcoins.htm

So you can eat one!

BTC 1-0 Gold

[leonardratso]

7 minutes ago, Noallegiance said:

So you can eat one!

BTC 1-0 Gold

but the cavity they cause will be filled with gold.

BTC 1-1 Gold

[AWW]

Back in 2012 or 13 (can't remember exactly), I built a miner out of about three grand's worth of PC hardware. I mined something like 3 BTC and was disappointed at the returns, so I sold the miner for a small loss and lost the BTC when I formatted the HDD for sale.

D'oh.

[macca]

1 hour ago, AWW said:

Back in 2012 or 13 (can't remember exactly), I built a miner out of about three grand's worth of PC hardware. I mined something like 3 BTC and was disappointed at the returns, so I sold the miner for a small loss and lost the BTC when I formatted the HDD for sale.

D'oh.

The thing i find funny about BTC is those 3 coins you erased are gone forever, without the keys they can never be traded, they exist without an owner who can sell them.

If over time many people do that, and they already have for the same reasons, then there will be deaths, hardware failures, lost passwords, phones.. or wherever people keep their keys..

Its just a stupid idea.. As people lose keys the pot of trading coins shrinks..  Just seems ridiculous to me..

Now big investors are pumping up the price.. the argument of sound uncontrolled money seems a fast.. Its controlled by the rich, just like every other asset that exists.. Another billionaire will pop up and pump it some more, or they will sell it and crash it through the floor..

Which makes it easier to manipulate than fiat.. and even more pointless..

[wherebee]

1 hour ago, AWW said:

Back in 2012 or 13 (can't remember exactly), I built a miner out of about three grand's worth of PC hardware. I mined something like 3 BTC and was disappointed at the returns, so I sold the miner for a small loss and lost the BTC when I formatted the HDD for sale.

D'oh.

just tell the DOSBODS on tinder you mined three Bitcoins and never sold them....

[Mapper]

Surplus Energy's latest.

I haven't read the post yet, but the second paragraph is worth quoting.

A beautifully succinct summary.

Quote

In Britain and America, economic and financial policy have long had all the hallmarks of self-destructive intent. Both countries believe that it makes sense to ship value-productive industries (such as manufacturing) out to lower-cost countries overseas, whilst trying to turn themselves into low-wage economies whose main profitable activity involves moving money around. The UK has driven debt upwards relentlessly, for the sole and senseless purpose of buttressing property prices which have already been over-inflated far beyond the point of affordability. America has binged on credit in an equally self-destructive effort to replace shock-absorbing corporate equity with inflexible debt, the result being a stock market which has become nothing more than a proxy for Fed monetary largesse.

Edit:

Just read this at the end.

Quote

It seems quite clear that China, alone amongst the major currency areas, is committed to sound money.

Not sure about that

[Lightscribe]

4 hours ago, AWW said:

Back in 2012 or 13 (can't remember exactly), I built a miner out of about three grand's worth of PC hardware. I mined something like 3 BTC and was disappointed at the returns, so I sold the miner for a small loss and lost the BTC when I formatted the HDD for sale.

D'oh.

Havent still got the contact details of the person you sold it to? Just because you formatted the drive, it may still be recoverable. You would have to wipe the drive with multi-pass and zero it out to truly wipe the drive.

[Lightscribe]

2 hours ago, macca said:

The thing i find funny about BTC is those 3 coins you erased are gone forever, without the keys they can never be traded, they exist without an owner who can sell them.

If over time many people do that, and they already have for the same reasons, then there will be deaths, hardware failures, lost passwords, phones.. or wherever people keep their keys..

Its just a stupid idea.. As people lose keys the pot of trading coins shrinks..  Just seems ridiculous to me..

Now big investors are pumping up the price.. the argument of sound uncontrolled money seems a fast.. Its controlled by the rich, just like every other asset that exists.. Another billionaire will pop up and pump it some more, or they will sell it and crash it through the floor..

Which makes it easier to manipulate than fiat.. and even more pointless..

That’s why 21 million BTC will never be reached. Some will be just too impossible to mine (this is without quantum computing) some will be lost from the early days on HDDs i.e paying 10000 BTC for a pizza and not worrying about the 100 BTC change etc. Theoretically the max would be around 19 million as there’s roughly 18.5 million BTC mined so far.

Anyway I promised I wouldn’t talk about BTC on here 

[jamtomorrow]

2 hours ago, Lightscribe said:

Anyway I promised I wouldn’t talk about BTC on here 

I will also take the vow, after One More Thing Ma'am ...

Seen a few comments in this discussion along the lines of "it's just 0's and 1's" or "it has no intrinsic value". If you've come to that conclusion *without* reading and understanding Satoshi's white paper, I would *really* encourage you to give it a go - it's surprisingly accessible to anyone with a modicum of engineering/scientific/technical knowledge. The intellectual accomplishment it represents is real, and it's not wild (of course, depending how BTC unfolds from here) to imagine future generations putting it in the same bracket as Einstein's annus mirabilis papers (also: surprisingly accessible).

Happily, the white paper has proliferated in recent weeks after the community responded to the arse Craig Wright's attempt to assert copyright e.g. https://www.miamigov.com/Government/City-Officials/Mayor-Francis-Suarez/Bitcoin-White-Paper

[AWW]

2 hours ago, Lightscribe said:

Havent still got the contact details of the person you sold it to? Just because you formatted the drive, it may still be recoverable. You would have to wipe the drive with multi-pass and zero it out to truly wipe the drive.

I don't.

[Harley]

51 minutes ago, jamtomorrow said:

I will also take the vow, after One More Thing Ma'am ...

Seen a few comments in this discussion along the lines of "it's just 0's and 1's" or "it has no intrinsic value". If you've come to that conclusion *without* reading and understanding Satoshi's white paper, I would *really* encourage you to give it a go - it's surprisingly accessible to anyone with a modicum of engineering/scientific/technical knowledge. The intellectual accomplishment it represents is real, and it's not wild (of course, depending how BTC unfolds from gere) to imagine future generations putting it in the same bracket as Einstein's annus mirabilis papers (also: surprisingly accessible).

Happily, the white paper has proliferated in recent weeks after the community responded to the arse Craig Wright's attempt to assert copyright e.g. https://www.miamigov.com/Government/City-Officials/Mayor-Francis-Suarez/Bitcoin-White-Paper

9 pages.  9 pages including references.  Billions and only 9 effing pages!

[arrow]

The main stream media, Telegraph, is now writing about the coming commodity supercycle, as promoted by Goldman Sachs and JP Morgan. It talks about major fiscal sepnding, infrastructure investments, commodities demand. Though, instead of crude supply no longer being able to cope with demand, the author does mistakenly believe that "oil prices have tripled since last year’s nadir with Brent crude close to $60 per barrel as demand hopes rise and Opec holds back supply".

 

"Is the world on the brink of a metals supercycle?
Major infrastructure spending and the drive for green cars and appliances could fuel a years-long boom in demand for commodities
Jetting into the richest country in the world can feel a little like arriving in the past. Visitors to America are often greeted by outdated airports, crumbling roads and poor public transport as its infrastructure is leapfrogged by big investment elsewhere.
“American infrastructure absolutely has fallen behind the stuff being built in China and certainly in the Middle East, and it’s time the West caught up, frankly,” says John Meyer, mining analyst at SP Angel. “Governments have not wanted to spend public money on infrastructure… it’s as if the West was waiting for an excuse to do this sort of thing.”
The need to upgrade the country’s ageing infrastructure has become a rare common goal on both sides of the aisle in Washington. Joe Biden has set his sights on an investment spree that he hopes can simultaneously upgrade America, fuel the recovery and drive his green ambitions. But that will need metals, and a lot of them.
Meyer and top Wall Street analysts believe a global post-Covid investment boom will herald a new commodities “supercycle” – a multi-year and even decade-long surge in prices that is well above normal trends. Others remain sceptical, believing 2021 will prove to be the peak.
The commodities market ended 2020 on the front foot after the outlook was brightened by vaccine rollouts and government stimulus nearing $20 trillion globally. China, a key driver of demand, has bounced back from Covid, and was the only major economy to grow in 2020.
The S&P/TSX Global Base Metals Index – a broad measure of metals such as copper and iron ore – climbed by almost 30pc last year, hitting its highest level since 2011.
Copper gained 25pc and steel-making ingredient iron ore jumped almost 70pc. Meanwhile, oil prices have tripled since last year’s nadir with Brent crude close to $60 per barrel as demand hopes rise and Opec holds back supply.
The rise of the BRIC economies – Brazil, Russia, India and crucially China – triggered the last commodities supercycle in the 2000s. The emergence of the metals-hungry developing economies fuelled the commodities market, with the value of copper rocketing five-fold.
The next supercycle may be driven more by the West. The two greatest threats to the global economy – Covid and climate change – could herald the arrival of a metals boom.
The response of governments to the financial crisis was to tighten belts and clamp down on public spending. Monetary rather than fiscal policy rode to the global economy’s rescue, but roles have reversed during the pandemic. With central banks now operating with depleted ammunition on monetary policy, governments have had to rely on fiscal firepower to prop up their economies.
Plans for spending on infrastructure and green investment in particular are being drawn up. Infrastructure spending is widely seen as one of the quicker and most effective ways of boosting economies.
Boris Johnson has promised an infrastructure revolution to power his climate and levelling up pledges. Meanwhile, Biden has pledged that trillions of dollars will be pumped into America’s crumbling infrastructure, particularly on green initiatives.
Goldman Sachs analyst Jeffrey Currie argues the start of a commodities bull market has many similarities to the 2000s boom.
He says green spending could be “as big as BRIC’s investment 20 years ago” with under-investment in supply of “almost all commodities” and a weak dollar also echoing the price surge of the 2000s.
Metals driving the boom in green technologies – such as nickel, cobalt, lithium, copper and rare-earth metals – were seeing rising demand even before the pandemic. But governments are now stepping up plans to combine their climate and stimulus ambitions, especially ahead of the COP26 summit.
“It’s not just the fact that we’ve got stimulus projects coming along, but we’re all converting to renewable energy and electric vehicles,” Meyer says.
“These would be massive drivers on their own... I just think the world is going to struggle to produce enough metal, particularly for the new electric economy.”
He says the demand for metals used in the electric revolution will create “deficit situations across the board” as supply fails to meet fervent appetite.
“The fact is, the world doesn’t produce enough commodities. It doesn’t produce enough copper, nickel, tin, zinc.”
Meyer expects copper, currently at just below $8,000 a tonne, to reach $10,000 in the next two years while he says nickel could breach the $20,000 a tonne mark this year, a $2,000 increase.
A man walks with a roll of copper tubing at a store in Shanghai, China
Chinese infrastructure and construction accounts for 30pc of global copper demand CREDIT: Bloomberg
Some analysts remain supercycle sceptics, however. Daniel Major from UBS expects most commodity prices to peak in 2021.
“We acknowledge that the demand base is much larger now than it was 10 years ago, but we expect demand growth to be materially lower over next one to two years than in the ‘supercycle’ years and supply is set to recover from Covid disruption.”
He says the metals used for electric batteries will “experience transformational demand growth”, but says the driver from the green push needs to be put in context.
Chinese infrastructure and construction accounts for 30pc of global copper demand but these sectors will “plateau and contract over the next 10 years”, Major argues. Electric vehicles and renewables currently account for just 5pc of demand.
If the supercycle advocates are right, demand in China will become less important to metal markets in the post-pandemic recovery. The world’s second-largest economy accounts for at least half of the consumption of key base metals, including copper, aluminium and nickel, but analysts are shifting their focus.
Citigroup’s Oliver Nugent believes “the market will pay more attention to the world ex-China demand than it has arguably done for the past decade”.
High demand for consumer goods such as washing machines and fridges outside of China will push the copper market into a deficit later this year, he argues.

 

[Democorruptcy]

Somebody PM if ever it turns back from being just another bitcoin thread, I cannot be bothered shifting through any more.

[arrow]

A second Telegraph article says quite wisely, I thought, that there may well be a lag and temporary disconnect between commodities rising and commodity companies share prices.  I don't think this applies to mining companies as such, but more to oil/gas companies. So, people looking to benefit may well have to wait a while and reinvest their dividends prior to the share prices catching up.
The second article mentions malinvestment by mining companies. They get carried away by fear of missing out and overpay for assets and takeovers. That shouldn't be the case with the big energy integrated majors, as from reading their strategies they're aiming for minimum returns from projects before considering them. Hopefully, this strategy will be applied to any takeovers.

 

 

"Britain’s FTSE 100 index has lagged global peers since the Great Financial Crisis sparked an implosion in the banking sector more than a decade ago. This underperformance was exacerbated by a fall in oil prices, hitting some of the largest components of the index.

But things may be about to improve. Wall Street investment banks Goldman Sachs and JP Morgan claim a new commodities super-cycle is under way, driven by the rush to clean energy. This should help boost the shares in an underperforming sector, but also has implications for the FTSE 100 itself as basic materials has a 13.5pc weighting in the index.

All of this is, of course, great news. The mining sector is very adept at digging itself into financial holes. The driver of the latest uplift in the commodity complex will be the greening of the world through investments in green energy and carbon reduction. The multi-year transition to an electrified, clean-energy global economy is likely to result in a monumental draw on metals and minerals from the world’s mines, the banks argue.

However, regular industry watchers will know that the history of the listed mining sector is littered with value destruction at times of sky-high metals prices. When the last super-cycle died around a decade ago, many mining investors were left nursing heavy losses. When share prices soar, boards can easily get dizzy with their own success and go on acquisition sprees at inflated prices that leave their businesses drowning in debt. One obvious example of the sector’s panache at value destruction was the near collapse of Rio Tinto as the financial crisis unfolded. The breakneck rise of China in the early 2000s snapped miners out of a lull that had lasted for more than a decade.

Dividends were not the number one priority for boards investing for super-cycle growth. Miners also competed for assets with rivals, bidding up prices even further. The boardrooms of the world’s major miners appeared to be hit by a serious case of FOMO – the fear of missing out.

In August 2007, when the “credit crunch” was already being discussed, Rio Tinto raised a record $40bn (£29bn) to fund its acquisition of Canadian aluminium group Alcan. It was the biggest loan ever raised by a UK-listed company at that time – and the fourth largest worldwide.

The hubris-filled Alcan acquisition brought with it a mountain of debt immediately before commodity prices slumped. The collapse in equity markets over the next year was more disastrous for Rio Tinto than many of its peers, who were simply lucky with timing. Rio’s attempt to solve the issue angered its shareholders even more.

The miner agreed a near $20bn cash injection from investor Chinalco, a move that would have resulted in the Chinese state-owned group doubling its stake in Rio to 19pc from 8pc. This was abandoned swiftly as it favoured one shareholder over another and angered much of Rio’s investor base. Chinalco trousered $200m in break fees and Tom Albanese, then the Rio chief executive, launched a $15.2bn rights issue.

The big winners from the first mining mega-merger in 2001 were, as usual, the bankers. The combination of Australia’s Broken Hill Proprietary Company and Billiton was effectively reversed in 2015 when most of the remaining assets that can be traced back to Billiton were spun off into a new company, South32. BHP Billiton became BHP once more.

Gains in commodity prices do not necessarily translate in booming profits either. In 2009, gold hit a new high just shy of $2,000 an ounce. Despite the surge in gold, gold miners underperformed significantly.

Mining is a difficult business with many political and operational challenges. The quality of ore mined can be poor, dams can break catastrophically – and these businesses are also run by flesh-and-blood employees who make mistakes and misjudgments. Decision-making in the sector is made much more difficult by the lead times involved in the projects. It is usually many, many years after the final investment decision being ratified by a company’s board until a mine is fully operational. The world will almost certainly change significantly over this period.

Of course, current management at the FTSE 100’s major miners understand this well. They have streamlined and focused their operations on quality, flagship mines in plumb sectors and have boosted returns to shareholders via dividends and buy-backs.

However, no chief executive has a crystal ball. The two major market negative events of this century were largely unpredicted – the Great Financial Crisis and the Covid-19 pandemic. They were so-called Black Swan Events. The inability to predict the future is why Tom Albanese had to spend years rebuilding Rio Tinto after agreeing to a course of action that appeared to make complete sense at the time. So, even if the rush to electrify family cars, remove gas boilers and install wind turbines boosts the price of metals, these gains – although positive – won’t necessarily translate into exploding share prices in the mining sector.

There is also the dispute between Australia and China to consider, as the biggest UK-listed miners are Australian based. Reports suggest that the political tensions have resulted in a push from Beijing to source more of their commodities from Africa.

Investors need to watch how this plays out. Although these are undoubtedly positive developments for the bottom line of these businesses, super-cycle investors need to exercise caution before getting too excited about what it means for the prospects for the mining sector – and the FTSE 100, too.

And they’ll probably need that caution in spades."

 

 

[Harley]

37 minutes ago, Democorruptcy said:

Somebody PM if ever it turns back from being just another bitcoin thread, I cannot be bothered shifting through any more.

IMO this is a macro thread ("Credit deflation and the reflation cycle to come").  I tried talking macro but some people didn't bother to understand and were rude about it and/or just wanted stock tips rather than fish in the other threads, posting glib responses to thought out and invested posts.  You could just put most on ignore, except Sancho, CattleProd, DB and co who continue to do well.  A bit of off-topic is reasonable and to be expected but rather than say too much BTC (which there is), etc I've noticed a reduction in macro, thus upsetting the balance.  But TBF "macro" is a bit nebulous and BTC has it's place in the correct context (say in discussing asset allocations and trends) but deep dives, well we have other threads for such things.  A bit of a balanced judgement call.  I for one promise to refocus on macro and post less!

PS:  Not referring your your post but in this context I'm fearful I'm beginning to notice a general change of tone across many threads, maybe mirroring the general angst out there among the population.

PPS: Home made tuna pizza tonight, but I'll leave it there!

[wherebee]

36 minutes ago, Harley said:

 

PPS: Home made tuna pizza tonight, but I'll leave it there!

how do you stop the tuna burning?  It seems to go before the cheese melts enough.

and yes, it is off topic.