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Credit deflation and the reflation cycle to come (part 3)


spunko
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HousePriceMania
4 minutes ago, Hancock said:

 

1) Do you see the free money ending ?

No, isnt that one of the premises of this thread, they'll print but straight into infrastructure ?  The U.S. have already announced this.

2) Do you see the IRs rising significantly ?

No, if they were serious about this they'd already have started.  

3) If a collapse comes which shares would you be prepared to hold long term ?

Same as you Hancock, happy to hold.

4) If you sell out and the BKK doesnt hit, when do you buy back in ?

This one is the reason anything I have I will hold now, what I have will hopefully out perform inflation and mitigate my losses elsewhere, the dividends will be welcome in retirement.

5) Would you stop ?

No.  You'd need to be some sort of psychopath to be going down this route to begin with.

6) Do you see anything other than a currency collapse that will stop them ?

I see nothing else, even social unrest wont stop them, it would take a full blown US civil war to make these ****s change tact.

7) Is the BKK imminent ?

Last month I thought yes, this month no.

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50 minutes ago, MrXxxx said:

Fair comment regarding juniors (although there is the 'less' risky GDGB/GDX), but what about buying a few [3-5] larger miners, where you dont have the annual charge?

I held Newcrest for a long time.  Did fuck all.  Little movement up and down, little chance to trade in and out and make money unless you were watching every day.  Dividends not awesome.

I'd rather have stocks with much higher dividends, which right now does not include miners.

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Regarding BP the share price is 11% higher than the 15th January.

  • We have much more visibility with regards to Covid and the recovery
  • Loads more evidence the Green revolution is not possible on the current figures
  • An energy squeeze as predicted on here but much earlier than we realised (already affecting Nas Gas and Coal) - more proof of the theory
  • Oil price 41% higher
  • 2 extra quarters profits declared being higher and heading very high
  • The early renewable investments BP made must have already increased in value due to the energy price rise.

Clearly the share price is better value now than it was on Jan 15th.

 

Looking back at share prices is not productive, look forwards at the profits and work out whether you think it is good value or worth investing in.

I believe the PE ratio will stay low for a couple of years (currently 5!) until people accept that these are energy companies producing a huge amount of green energy. After that the PE ratio might start to rise again and the second rise in share price might happen.

BP should be called British Energy, no idea what twat came up with Beyond Petroleum (I believe this is abandoned anyway) 

 

I have clearly ignored any BK in the above but I don't think a temporary situation should affect the investment analysis (a huge long recession will obviously lower oil prices but an energy shortage is already baked into the pie which should stop the prices falling too low).

 

More importantly, when do I sell the small amount of Thungela I bought 3 days ago, it's gone crazy?

Hopefully get Petrofac news tomorrow if the courts hear the case. :)

Good luck all.

 

Edited to clean things up and make more understandable

Edited by planit
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8 minutes ago, planit said:

Regarding BP the share price is 11% higher than the 15th January.

  • We have much more visibility with regards to Covid and the recovery
  • Loads more evidence the Green revolution is not possible on the current figures
  • An energy squeeze as predicted on here but much earlier than we realised (already affecting Nas Gas and Coal) - more proof of the theory
  • Oil price 41% higher
  • 2 extra quarters profits declared being higher and heading very high
  • The early renewable investments BP made must have already increased in value due to the energy price rise.

Clearly the share price is cheaper now than it was on Jan 15th.

 

Looking back at share prices is not productive, look forwards at the profits and work out whether you think it is good value or worth investing in.

I believe the PE ratio will stay low for a couple of years (currently 5!) until people accept that these are energy companies producing a huge amount of green energy. After that the PE ratio might start to rise again and the second rise in share price might happen.

BP should be called British Energy, no idea what twat came up with Beyond Petroleum (I believe this is abandoned anyway) 

 

I have clearly ignored any BK in the above but I don't think a temporary situation should affect the investment analysis (a huge long recession will obviously lower oil prices but an energy shortage is already baked into the pie which should stop the prices falling too low).

 

More importantly, when do I sell the small amount of Thungela I bought 3 days ago, it's gone crazy?

Hopefully get Petrofac news tomorrow if the courts hear the case. :)

Good luck all.

I hold BP and would agree with your analysis. The only other factor I would add is that BP pays divis in $ so any depreciation of £ versus $ (as is currently happening) is another boost to UK based BP shareholders.

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HousePriceMania
14 minutes ago, planit said:

Regarding BP the share price is 11% higher than the 15th January.

  • We have much more visibility with regards to Covid and the recovery
  • Loads more evidence the Green revolution is not possible on the current figures
  • An energy squeeze as predicted on here but much earlier than we realised (already affecting Nas Gas and Coal) - more proof of the theory
  • Oil price 41% higher
  • 2 extra quarters profits declared being higher and heading very high
  • The early renewable investments BP made must have already increased in value due to the energy price rise.

Clearly the share price is better value now than it was on Jan 15th.

 

Looking back at share prices is not productive, look forwards at the profits and work out whether you think it is good value or worth investing in.

I believe the PE ratio will stay low for a couple of years (currently 5!) until people accept that these are energy companies producing a huge amount of green energy. After that the PE ratio might start to rise again and the second rise in share price might happen.

BP should be called British Energy, no idea what twat came up with Beyond Petroleum (I believe this is abandoned anyway) 

 

I have clearly ignored any BK in the above but I don't think a temporary situation should affect the investment analysis (a huge long recession will obviously lower oil prices but an energy shortage is already baked into the pie which should stop the prices falling too low).

 

More importantly, when do I sell the small amount of Thungela I bought 3 days ago, it's gone crazy?

Hopefully get Petrofac news tomorrow if the courts hear the case. :)

Good luck all.

 

Edited to clean things up and make more understandable

That's a fair summary, when the BKK hits I'll buy more, the world has too many people now and the whole world is based on oil.

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31 minutes ago, moneyscam said:

I hold BP and would agree with your analysis. The only other factor I would add is that BP pays divis in $ so any depreciation of £ versus $ (as is currently happening) is another boost to UK based BP shareholders.

Yes and the reason BAT and Imperial are fantastic holdings when the pound slides.A lot of South Africans hold gold and BAT shares as currency hedges.

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3 hours ago, MrXxxx said:

I don't want to derail your focus @JMD, but why do people buy silver/gold paper ETF's with not return and running costs of ~ 0.3-0.6% per annum, when they can get exposure to the same commodities through silver/gold miners and get a dividend return of ~2-3%+?

No problem, and no derailment at all. In fact i have always divulged my plans on here, in expectation/hope of extra comment/learning from the experienced investment fraternity we have on the thread.

I am not a trader, so its all long term 'prosaic investing' for me... mainly this means investing like a crocodile, i.e. setting a price i'm happy with and then waiting (lurking in the weeds!) for the market (prey!) to come to me. This has worked well for me with the PM's, energy and telecoms. I am now waiting patiently for the BK. However, this still allows me to try the basics, as mentioned often on here, such as laddering in/out, taking profits and pivoting/compounding, oh and 'arbitrage' (see below).  

But to answer your question - my 'physical silver' ETF plan was to buy 'big', sell half and take profit. Then let the remainder ride, but pivot into gold as/when the GSR was in my favor. I bought at approx. 100/1 GSR, so in theory if i can sell at a much lower average GSR (i will ladder out), i could 'collect 3x the gold' (compared to just buying the gold from the outset). Ok, perhaps this is not a pure arbitrage play, but it will suffice for me.

Btw, I have also got those pm miners you mention, as i am very addicted to divis!

 

Edited by JMD
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2 hours ago, wherebee said:

because, take GDXJ as an example, you get a bucket of small miners which spreads risk.  Small miners do go bust.  If you buy each one, you pay a fee for each purchase.  If you buy one small miner, you might lose everything.

GDXJ means that if gold goes to da moon, you profit across all of those.  I bought GDXJ years ago as a bit of an insurance, sold 70% of holdings at around 45 in 2020, from memory, and had bought at 25.  That's a nice return, and had all that insurance as well for the period.  If the collapse had come when we were out of Australia, we could have seen GDXJ up to 100 or more, in my view.  They also gave small dividends on the way.

I also hold PSLV, which is showing a loss, because they hold real silver and help with the silver squeeze on the rigged market.

I agree 100% with what you say.

But alongside my pm miners, i also have a 'physical silver' etf strategy - where i will attempt to play the GSR, and so 'pivot across' from my 100/1 (personal buy point) silver gsr, to say 33/1 (personal average sell point) silver gsr, if/when it ever gets to those lower ratios.

I set this trade up couple years back, so not sure if this strategy is that relevant/possible to do today, as the gsr is not as high now. 

 

Edited by JMD
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Just a thought but the silver price action and some of the drop in miners ie POLY could be China related.

 

There are huge dislocations with regards to power and also Evergrande. 

There could be a drop in silver demand if factories are shutting down and all the companies surrounding the industry might have taken positions that need unwinding if they change outlook.

With regards to Evergrande the fallout seems mainly hidden at present, wouldn't be surprised if there were margin calls with companies [in China] that own POLY stock etc.

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12 minutes ago, planit said:

Just a thought but the silver price action and some of the drop in miners ie POLY could be China related.

 

There are huge dislocations with regards to power and also Evergrande. 

There could be a drop in silver demand if factories are shutting down and all the companies surrounding the industry might have taken positions that need unwinding if they change outlook.

With regards to Evergrande the fallout seems mainly hidden at present, wouldn't be surprised if there were margin calls with companies [in China] that own POLY stock etc.

Link 1

Link 2

 

There was a big seller regarding Poly, my guess maybe Blackrock? I think it has now ended? But it is Div day so it may resume tomorrow. I have a few bob awaiting 1140p, but its been relentless. Not for the faint hearted.

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33 minutes ago, JMD said:

No problem, and no derailment at all. In fact i have always divulged my plans on here, in expectation/hope of extra comment/learning from the experienced investment fraternity we have on the thread.

I am not a trader, so its all long term 'prosaic investing' for me... mainly this means investing like a crocodile, i.e. setting a price i'm happy with and then waiting (lurking in the weeds!) for the market (prey!) to come to me. This has worked well for me with the PM's, energy and telecoms. I am now waiting patiently for the BK. However, this still allows me to try the basics, as mentioned often on here, such as laddering in/out, taking profits and pivoting/compounding, oh and 'arbitrage' (see below).  

But to answer your question - my 'physical silver' ETF plan was to buy 'big', sell half and take profit. Then let the remainder ride, but pivot into gold as/when the GSR was in my favor. I bought at approx. 100/1 GSR, so in theory if i can sell at a much lower average GSR (i will ladder out), i could 'collect 3x the gold' (compared to just buying the gold from the outset). Ok, perhaps this is not a pure arbitrage play, but it will suffice for me.

Btw, I have also got those pm miners you mention, as i am very addicted to divis!

 

Thanks, I can understand the arbitrage approach you are taking on the GSR, but would you not be better doing the same thing by buying individual gold and silver miners and doing the same?...I know some mine both but most have a major bias in their mining.

I ask this question[of all] not to challenge your approach perse, but to see if I can get a counter opinion to my own. I have gone through the 'arguments' of physical 'in hand' vs 'physical' ETF, gold/silver vs gold/silver miners etc, and settled on the best way to get exposure to PM's was larger [no junior] individual miners for the reasons given in my initial post i.e. getting a divi/return rather than having to pay a OCF/TER...happy for anyone to 'pull' this apart and get me thinking again [I think!]. :-)

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9 minutes ago, MrXxxx said:

Thanks, I can understand the arbitrage approach you are taking on the GSR, but would you not be better doing the same thing by buying individual gold and silver miners and doing the same?...I know some mine both but most have a major bias in their mining.

I ask this question[of all] not to challenge your approach perse, but to see if I can get a counter opinion to my own. I have gone through the 'arguments' of physical 'in hand' vs 'physical' ETF, gold/silver vs gold/silver miners etc, and settled on the best way to get exposure to PM's was larger [no junior] individual miners for the reasons given in my initial post i.e. getting a divi/return rather than having to pay a OCF/TER...happy for anyone to 'pull' this apart and get me thinking again [I think!]. :-)

I would be interested in others opinion and answers to your question.

My take is that you are probably correct about choosing the pm miners (i believe $1-5bn cap is the current sweet spot?), along with their leverage etc, they should give the better return compared to the physical underlying precious metal. However it is higher risk (which miners to select?), and more work (when do you sell, etc?). 

So being just an amateur, i decided to split investment 50/50 between the miners and the physical.  

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6 minutes ago, Noallegiance said:

No apology needed. This is a necessary forum for me. It helps sift through the noise.

 

China on the up militarily whist inside their borders implodes.

Global shortages (guess what happens when you shut the world for a year?).

America now seemingly completely lost it's identity.

Energy crises worldwide.

Volcanoes.

Protests worldwide.

Formerly glorious football clubs in disarray and going under.

Car dealerships selling from stock.

Cost of living soaring.

House prices ................ what comes after nosebleed levels?

 

There's nowhere to look that isn't FUBAR.

 

I hope everyone here has a solid family/friends unit.

 

I love the smell of napalm in the morning.

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4 minutes ago, Noallegiance said:

I hope everyone here has a solid family/friends unit.

Most people forget about this. I was looking at buying woodland etc but made friends with someone who has as I can make beer, lots of it, very quickly ;-)

Covid and my personal vax stance has had some impact with friends but most dont give a shit now, particularly as they have welcomed me teaching their kids how to cook on a campfire in the garden.

I spent a fair bit of time during lockdown saying hello and talking to neighbours and getting to know who will be useful and who wont. (cant beleive I typed that out IRL - thats what reading Dimitri Orlovs five stages of collapse will get you).

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17 hours ago, Animal Spirits said:

TIC data shows Mainland China US treasury holdings generally falling since Feb but picking up again in July, this also coincides with the peak in yields on a number of long term government bond yields during Spring (which as already mentioned are on the rise again).

https://ticdata.treasury.gov/Publish/mfh.txt

China's holdings have been in a down trend since 2013. Depending on your viewpoint this could be for geopolitical reasons or a reflection of a deflationary trend in trade (maybe both).

A simplified example of USD/China money flow:

USD > Chinese commerical banks >  PBOC (Swap USD for Reserve asset) > China US treasury holdings increase

WOlf St has a good update on UST holdings once in a while.Last one here 17 Aug 21

https://wolfstreet.com/2021/08/17/who-bought-the-5-trillion-piled-on-top-of-the-monstrous-us-national-debt-in-15-months/

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16 hours ago, Bobthebuilder said:

I bought BP too early, bought a couple more chunks during 2020, but my timing was bad. I am just about evens here with them as of today. Some others here caught the bottom and will be well in the green.

Just hold em Bob,our first ladder was £4.90 in BP or something like that from late 2019 as we were seeking yield.Ave price circa £3(I'm not particualrly sure) and I'm well Happy with that.If you'd offered our current protfolio + entry prices five years ago,I'd have bitten your hand off.

It's more realistic to measure performance by the FTSE 100/pension funds rather than the more switched on traders on here,who let's be honest,are very switched on and not afraid to buy big red days when the pros in teh city are flapping like crows.

Edited by sancho panza
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22 minutes ago, Noallegiance said:

No apology needed. This is a necessary forum for me. It helps sift through the noise.

 

China on the up militarily whist inside their borders implodes.

Global shortages (guess what happens when you shut the world for a year?).

America now seemingly completely lost it's identity.

Energy crises worldwide.

Volcanoes.

Protests worldwide.

Formerly glorious football clubs in disarray and going under.

Car dealerships selling from stock.

Cost of living soaring.

House prices ................ what comes after nosebleed levels?

 

There's nowhere to look that isn't FUBAR.

 

I hope everyone here has a solid family/friends unit.

 

And yet we still wait for the `Black Swan` event to trigger a BK...don't those who control world finances consider any of these good enough then, or are they going for `The mother of all` crashes?!

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3 hours ago, planit said:

 

  • We have much more visibility with regards to Covid and the recovery

Do we? The visibility of the government in direction is about as clear as a Victorian pea-souper from where I’m standing. U-turns are becoming a weekly occurrence.

https://www.gov.uk/government/publications/proposal-for-mandatory-covid-certification-in-a-plan-b-scenario/proposal-for-mandatory-covid-certification-in-a-plan-b-scenario
 

Far more shit to come with underhanded movements going on behind the scenes. I’ve taken my profits and am watching from the sidelines.

 

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9E2CDB0C-295E-4359-846C-584B8DB09CEE.thumb.jpeg.4b51afd688697c3c0d0af8134b7ea70f.jpeg

Edited by Lightscribe
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3 minutes ago, MrXxxx said:

And yet we still wait for the `Black Swan` event to trigger a BK...don't those who control world finances consider any of these good enough then, or are they going for `The mother of all` crashes?!

Perhaps Black Swan is more the straw that broke the camel's back, or the last snowflake to fall and set off the avalanche.

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15 hours ago, Heart's Ease said:

Agree and yes in 2018 when it was well over £5 I'd have snatched your hand off. Also see WICAO buying Shell at £26 in c.2014. If I'd had the money I'd have done that too 

He'd have had some exposure to FANG stocks that would have compensated alongsdie the £7 in dividends that would have flowed to 2020.

iirc he was a passive investor and they're still doing well as long as they have S&P 500 exposure.

2 hours ago, moneyscam said:

I hold BP and would agree with your analysis. The only other factor I would add is that BP pays divis in $ so any depreciation of £ versus $ (as is currently happening) is another boost to UK based BP shareholders.

This is a key aspect MS for me.

Vod/BATS/BP/RDSB/Glaxo etc etc are all effectively $ hedges with interantional sales to cover for the UK/£ tanking.

Within an ISA you get the income tax free.......

1 hour ago, planit said:

Nice example of costs inflation predicted by DB - shipping, raw materials, labour all rising faster than retail prices.

 

Fast-fashion retailer Boohoo warns on profit margins as costs jump

Capital spending to be higher than forecast as UK group works on a new US distribution centre

 

image.thumb.png.27aae2e91b68118d8ee91b8e847bfbff.png

I'm going to go all Karl Deninniger here but margin compression is the only result of rising costs for retailers.

Private Equity will rinse a few before they go under and leave banks/bond holders with teh losses but for the equity holders,I just can't see the upside here.

btw keep the psots coming.I come on here as it like a news aggregator and saves me a lot of time.

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