Credit deflation and the reflation cycle to come (part 5)

[MrXxxx]

15 hours ago, Talking Monkey said:

Fuck it, I'll give it a go, its just dressing up in lasses' clothes, if i get some free money off the back of it then result.

Who knows, you may even find that you enjoy it...win, win eh?!

[No One]

25 minutes ago, DurhamBorn said:

Yes,and your not really retired in the way 99.9% of people do it,they stop earning and then start taking 4% drawdowns mostly with IFA fees on top.Just this year they would of needed over 15% returns when instead they likely got -10%+ ones.Of course over most periods you then get a run of years where they make 8% and withdraw 4% plus fees,but a few years at the start with inflation adjusted 15% down pa the retirement and pension is destroyed over 3 years with no way back.There is a very real risk,most pensions that went into drawdown from just before Covid onwards will run out of money in under a decade.

The point is the average pension holder is having their lifetimes savings stolen,and at a very fast pace.This isnt 1% a year.The only thing that really saved my familys wealth was getting the cycle turn right,that has proved critical,so really simply getting out of the way,then getting way out in front.I see things now as trying to grow with inflation at worst because outperforming in the middle of the cycle wont be easy.We should manage it,but its far from a given.Like you say spending management will likely be critical for those in drawdown etc.

I need to do a bit or research about this, I'm way off from retirement but just started thinking about it.

, say I have a SIPP and its invested in stocks that pay dividends of say, I don't know 6% or , can I drawdown the money that is paid as dividends and live off of that without having to liquidiate my shares?

 

How does drawdown work?

[RJT1979]

Can anyone clarify if you die before 75 the nominees can cash out and walk away completely tax free. No inheritance. No income tax?

 

 

 

 

 

[Pip321]

38 minutes ago, Plan-b said:

They're likely to be in trouble.. 

 https://www.marketwatch.com/story/scotgold-resources-shares-fall-on-going-concern-uncertainty-7f403968

Have been thinking about this because I also have some miners. I think I am going to stick with gold mining 'funds' or 'EFTs' for the larger part....because I believe overall they will do well, however as individual businesses they all have some risk of running out of cash before they get the stuff out of the ground. 

Will stick with Fres but its only a relatively small amount....but the rest is Blackrock Gold (because its the only option in my SIPP) and GJGB in the ISA. 

However been thinking more and more about a physical Gold Fund. There are a few out there....and I am not hugely worried about cost (well, depending on how much it is of course) but more reassurance that my money is being backed by something other than just fiat. I see these type of physical funds as a hedge for a sizeable amount of money not really as a mad max scenario....I would have reassessed and probably own baked beans before we got there. 

• Aberdeen Standard Physical Gold Shares ETF [SGOL] ...
• VanEck Merk Gold Trust [OUNZ] ...
• SPDR Gold Shares [GLD] ...

Any thoughts re physical funds?

[MrXxxx]

12 hours ago, Plan-b said:

Nearly yes, not the house though in the UK they are denominated in pounds, they're falling in value in 2 ways, by value and by currency and they cost in upkeep..

..and make you a 'Sitting duck' for taxation by stealth.

[Plan-b]

15 minutes ago, Pip321 said:

Have been thinking about this because I also have some miners. I think I am going to stick with gold mining 'funds' or 'EFTs' for the larger part....because I believe overall they will do well, however as individual businesses they all have some risk of running out of cash before they get the stuff out of the ground. 

Will stick with Fres but its only a relatively small amount....but the rest is Blackrock Gold (because its the only option in my SIPP) and GJGB in the ISA. 

However been thinking more and more about a physical Gold Fund. There are a few out there....and I am not hugely worried about cost (well, depending on how much it is of course) but more reassurance that my money is being backed by something other than just fiat. I see these type of physical funds as a hedge for a sizeable amount of money not really as a mad max scenario....I would have reassessed and probably own baked beans before we got there. 

• Aberdeen Standard Physical Gold Shares ETF [SGOL] ...
• VanEck Merk Gold Trust [OUNZ] ...
• SPDR Gold Shares [GLD] ...

Any thoughts re physical funds?

Yes thats my take, mining is an inherently risky business there's lots of scope for trouble down the hole as well as on the surface together with jurisdictional and government risks, also In these climate/ESG times its a frowned upon industry .

Spreading the risk using ETFs is a good idea IMHO.

I'm not sure on and don't own any physical funds, I always thought 'Physical' as just that - to mitigate counter party risk; the tired old saying comes to mind "If you don't hold it you don't own it"

[JMD]

10 hours ago, Axeman123 said:

In practice there would likely be multiple ways for the government to direct/ration credit, and a patchwork of carrots and sticks might be employed to that end.

So for example credit gaurantees would eliminate or reduce default risk associated with lending to priority areas of the economy, whereas conditional CB funding would reduce or eliminate the associated cost of funding for lending to those areas. On the other hand regulation could force a minimum percentage of lending to be for those priority areas, and perhaps impose punitive cost of borrowing from the CB for excess leding to low priority areas of the economy (eg consumption/trampolines etc).

 

I agree there are multiple ways for government to restrict/manipulate credit. Its just that for me Nappier's macro thesis encompasses many other interesting elements, including the credit guarantee, so it's easy (and conveniently lazy for me!) to monitor Nappier's thoughts/pathway and it helps me judge risk accordingly.

So Tbc i am only using potential government policy trends (like the cbdc/currency reset topic) as part of my personal risk gauge - not using as specific predictions - but just following proponents of a thesis (eg Clive Thompson's) to see how those ideas pan out in short/medium term, and adjust my investment strategy accordingly.

Actually the first person I heard talk about future risk of capitol restrictions was Marin Katusa, the commodity investor. That was a couple of years ago and he was warning that the oil companies would be frozen out of the credit markets due to the green pivot and government renewables strategy (he was at the time pumping green investments!?). I posted that on here as a question but @DurhamBorno  pointed out that the oillies (at least the large ones favoured here on the thread) wouldn't need access to the credit markets because they have free cash flow.  

Edited March 27, 2023 by JMD

[Lightly Toasted]

11 hours ago, JMD said:

@Yadda yadda yadda I found part 2, he talks about mortgages from the 7minute mark...

I meant to answer your comment about Thompson's perceived blasé attitude. I think it's much more a cynical attitude being shown toward how the monetary system 'rules' can be changed at will. The examples Thompson gives of previous resets, in Brazil for example, are historically interesting because they show the outrageous manipulation of the currency by Brazil government, and also shows how  accepted these money experiments are by the financial system, IMF, etc.

 

 

IMO he's taking too much comfort from what happens when a "small currency cog" defaults: counter-intuitively they can become more credit worthy. Compare lending a declared bankrupt with debts written off, vs to a drowning debtor with the adjustment still to come.

With sweeping CBDC default he's not considering a small cog, he's talking about a significant part of the machine. The credit providers who'd continue to lend to a small defaulting South American cog, are largely inside that machine. What will the impact be? Rhetorical question; I don't believe anyone can know.

He expects deficit/import countries to default while their trade partners just continue provide credit (=labour, energy or other resources), almost "business as usual" because the slate is now clean. Would any rational person do s0 , in their shoes? In limited amounts for specific purposes perhaps, but it won't be BAU.

The ramifications of locking up money/savings in inaccessible "old money" form would be profound, too. I wouldn't even be sure of dividends in a strict CBDC scenario with limited wallets (e.g. what's the impact on getting/spending dividends? How would consumption-oriented companies thrive in what would essentially be a permanent credit crunch?)

FWIW I do think he's right about running to hard assets. 

 

Edited March 27, 2023 by Lightly Toasted

[ThoughtCriminal]

Ratchet go "click"............

[MrXxxx]

43 minutes ago, No One said:

I need to do a bit or research about this, I'm way off from retirement but just started thinking about it.

, say I have a SIPP and its invested in stocks that pay dividends of say, I don't know 6% or , can I drawdown the money that is paid as dividends and live off of that without having to liquidiate my shares?

 

How does drawdown work?

Take a look over here @No One, there are several pension thread that will probably answer all your questions, or give you a guide to what you need to think about:

https://www.dosbods.co.uk/forum/10-investing-pensions-crypto/

[MrXxxx]

38 minutes ago, RJT1979 said:

Can anyone clarify if you die before 75 the nominees can cash out and walk away completely tax free. No inheritance. No income tax?

 

 

 

 

 

That's my understanding, see here for support:

https://www.gov.uk/tax-on-pension-death-benefits

[MrXxxx]

39 minutes ago, Pip321 said:

.and I am not hugely worried about cost (well, depending on how much it is of course) but more reassurance that my money is being backed by something other than just fiat.

You should be, as a) Gold doesn't generate and income/divi, and b)the TER is eroding your holding/capital over time.

[MrXxxx]

19 minutes ago, JMD said:

That was a couple of years ago and he was warning that the oil companies would be frozen out of the credit markets due to the green pivot and government renewables strategy (he was at the time pumping green investments!?).

I think this is an issue here...there is so much content on the web that is [potentially] compromised by bias to sell a product/investment. As a result much time can be wasted watching/reading, understanding, and then evaluating before critically judging how objective the information is.

[HousePriceMania]

Santander have started offering £50 vouchers if you take an ISA bond with them....

 

 

[JMD]

1 hour ago, Pip321 said:

Have been thinking about this because I also have some miners. I think I am going to stick with gold mining 'funds' or 'EFTs' for the larger part....because I believe overall they will do well, however as individual businesses they all have some risk of running out of cash before they get the stuff out of the ground. 

Will stick with Fres but its only a relatively small amount....but the rest is Blackrock Gold (because its the only option in my SIPP) and GJGB in the ISA. 

However been thinking more and more about a physical Gold Fund. There are a few out there....and I am not hugely worried about cost (well, depending on how much it is of course) but more reassurance that my money is being backed by something other than just fiat. I see these type of physical funds as a hedge for a sizeable amount of money not really as a mad max scenario....I would have reassessed and probably own baked beans before we got there. 

• Aberdeen Standard Physical Gold Shares ETF [SGOL] ...
• VanEck Merk Gold Trust [OUNZ] ...
• SPDR Gold Shares [GLD] ...

Any thoughts re physical funds?

Other physical backed ones to perhaps consider, not sure of current charges - sgld, sgln, gbs, phgp

I recently looked at buying phpp, I was tempted because it's slightly different but haven't bought any (yet). It is physical - mostly gold but with small fund allocations to silver and platinum. It adjusts the allocations to achieve higher long term return, at least that's the theory! Has 0.44% charge. So reasonable cost if the trading strategy works, maybe even more than covers the fund charges?

Edited March 27, 2023 by JMD

[Cattle Prod]

13 hours ago, Chewing Grass said:

Note how the graph has not been updated for 10 years.

This covers the gap, growth has plateaued.

Exactly that. And things have started to break without this additional input to the system.

[Cattle Prod]

Back when oil and gas was a valued part of UK industry, Sun Oil wrote to the Queen about a field they'd discovered:

They don't make them like her any more, which is the nub of the problem really.

Incidentally, Balmoral was shut down and decommissioned after the covid crash. It was old, but it didn't have to happen.

Edited March 27, 2023 by Cattle Prod

[Plan-b]

2 minutes ago, Cattle Prod said:

Back when oil and gas was a valued part of UK industry, Sun Oil wrote to the Queen about a field they'd discovered:

They don't make them like her any more, which is the nub of the problem really.

Amazing like another world which of course it was.

The western woke ESG hatred of oil and gas is going to destroy the world we in the west live in as we know it, I'm sure the 'elites' will be fine though 

[DurhamBorn]

6 minutes ago, Cattle Prod said:

Back when oil and gas was a valued part of UK industry, Sun Oil wrote to the Queen about a field they'd discovered:

They don't make them like her any more, which is the nub of the problem really.

Incidentally, Balmoral was shut down and decommissioned after the covid crash. It was old, but it didn't have to happen.

Dont forget though they used oil and gas from the north sea to destroy coal,gas was a disaster for my community and most of Durham etc.Same playbook now,just different targets.Its sickening how they manipulate everything for their own gains,it takes you to get older to see just how corrupt the political class is.

[Cattle Prod]

1 minute ago, DurhamBorn said:

Dont forget though they used oil and gas from the north sea to destroy coal,gas was a disaster for my community and most of Durham etc.Same playbook now,just different targets.Its sickening how they manipulate everything for their own gains,it takes you to get older to see just how corrupt the political class is.

It's about progress in energy density for me, DB. I'd have no issue if they destroyed oil and gas with nuclear or something better really, thing is they are destroying it with no replacement this time.

That said, coal shouldn't have been shut down entirely like it was and I get what you're saying. Like how I burn logs for heat when I have a gas boiler available at the flick of switch. Coal should be as available as a cheap and plentiful backup to gas when the wholesale prices are high etc.

[King Penda]

4 hours ago, belfastchild said:

I didnt realise there was another round of cost of living payments going out.
https://www.bbc.co.uk/news/business-65066972

Up to 900 quid spread over spring, autumn and spring 2024. 300 quid extra for pensioners in the winter and 150 quid extra for disabled in the summer.

Im trying to think of something smart arsed or witty to say about that, or make some crack about loading up the fb marketplace and gumtree posts to try and recoup some of that but think I'll just finish my coffee and work out how to spend another 200 quid on the business to take me down to the tax threshold before the end of the financial year.

Yes but they refused to say which month it would be based on to stop people gameing the system it’s obviously March 

[Plan-b]

30 minutes ago, Cattle Prod said:

It's about progress in energy density for me, DB. I'd have no issue if they destroyed oil and gas with nuclear or something better really, thing is they are destroying it with no replacement this time.

That said, coal shouldn't have been shut down entirely like it was and I get what you're saying. Like how I burn logs for heat when I have a gas boiler available at the flick of switch. Coal should be as available as a cheap and plentiful backup to gas when the wholesale prices are high etc.

Its not just energy though, nuclear for instance will never replace the massive amount of products that are obtained from oil and gas, without these the world we live in is over. Finished.

Edit: We could probably get by without tapes and CDs, well some of us anyway..

Edited March 27, 2023 by Plan-b
tapes and CDs

[Harley]

3 hours ago, DurhamBorn said:

Yes,and your not really retired in the way 99.9% of people do it,they stop earning and then start taking 4% drawdowns mostly with IFA fees on top.Just this year they would of needed over 15% returns when instead they likely got -10%+ ones.Of course over most periods you then get a run of years where they make 8% and withdraw 4% plus fees,but a few years at the start with inflation adjusted 15% down pa the retirement and pension is destroyed over 3 years with no way back.There is a very real risk,most pensions that went into drawdown from just before Covid onwards will run out of money in under a decade.

The point is the average pension holder is having their lifetimes savings stolen,and at a very fast pace.This isnt 1% a year.The only thing that really saved my familys wealth was getting the cycle turn right,that has proved critical,so really simply getting out of the way,then getting way out in front.I see things now as trying to grow with inflation at worst because outperforming in the middle of the cycle wont be easy.We should manage it,but its far from a given.Like you say spending management will likely be critical for those in drawdown etc.

I probably agree but I personally went into full drawdown recently for some hopefully very sane reasons.  I'll add one thing - it certainly focusses the mind!

Edited March 27, 2023 by Harley

[Harley]

1 hour ago, MrXxxx said:

You should be, as a) Gold doesn't generate and income/divi, and b)the TER is eroding your holding/capital over time.

This and an asset being denominated in just any one currency - at least there are two of us to make a market! 

[Harley]

3 hours ago, DurhamBorn said:

it takes you to get older to see just how corrupt the political class is

Indeed, very much.  And the rest.  I was looking at an investment trust today.  Your average board member £500k salary, £500k annual bonus, £80k pension, £15k expenses.  And in a clothing shop having a very rare but nice retail experience until checkout and no paper bag like the old days.  I thought just another example how they have made everything miserable.  I lamented to the young person on the checkout and could read the body language.  Totally brainwashed and not even aware of that particular theft.

Edited March 27, 2023 by Harley