Credit deflation and the reflation cycle to come.

[Cosmic]

5 hours ago, sancho panza said:

 

15 minutes ago, Gordie Lastchance said:

Not knowing much about the miners, but eager to ask the silly question - is Kinross a share for a widow or orphan (or tight, scaredy-cat like me)? Cheers SP.  

Look at that chart... does it look like a share for widows and orphans?

[leonardratso]

maybe its a bitcoin chart but over a longer period. (years instead of hours).

go on, stick a couple hundred in, whats the worst that could happen ? - you lose a couple of hundred, wont even buy a decent pair of tyres on your mountain bike.

[Cosmic]

8 minutes ago, leonardratso said:

maybe its a bitcoin chart but over a longer period. (years instead of hours).

go on, stick a couple hundred in, whats the worst that could happen ? - you lose a couple of hundred, wont even buy a decent pair of tyres on your mountain bike.

At these prices, there is probably very little possible downside left... but you'd still not call them an investment suitable for the risk averse  We could be sitting here in 10 years time thinking what the hell happened as the miners sink in to nothing like last weeks FOTM alt-coin! Its a strange world out there (seen as you bought it up - see Bitcoin!).

[leonardratso]

4 minutes ago, Cosmic Apple said:

At these prices, there is probably very little possible downside left... but you'd still not call them an investment suitable for the risk averse  We could be sitting here in 10 years time thinking what the hell happened as the miners sink in to nothing like last weeks FOTM alt-coin! Its a strange world out there (seen as you bought it up - see Bitcoin!).

aye, crypto is looking decidedly poorly lately, ive got very little left but even they are worth practically shag all compared to say a week or 2 ago. No matter, its not money i desperately need, it can sit there for years until it either diasppears up its own fundamentals (of which there are none) or blasts to the moon.

[Gordie Lastchance]

33 minutes ago, Cosmic Apple said:

 

Look at that chart... does it look like a share for widows and orphans?

Well, using my little investment knowledge and terminology, the chart had some nice pointy bits signifying there'd been money to be made in the past!

Seriously though, I remember from ToS comments about gold being used as a currency/method of trade (or barter should that be?) for thousands of years. If the future's looking as bleak as people fear, is it not a safety blanket? Something that people will flock to?

Or maybe I should spend the money on visiting the pretty rollercoaster??????

[Cosmic]

4 minutes ago, Gordie Lastchance said:

Well, using my little investment knowledge and terminology, the chart had some nice pointy bits signifying there'd been money to be made in the past!

And money lost by those unable to get out near the peaks! For widows and orphans implies that you want a nice, safe, stable investment... Gold miners are NOT that. As part of a portfolio though... weighted depending on your end goals, risk profile, age, future plans etc. definitely!

[Thorn]

2 hours ago, Majorpain said:

They cant raise rates, the economy would fall to bits.  Its too dependent on cheap credit and the MPC knows it, house prices, PCP cars, 0% credit cards, BTL and HTB for starters.

If it was up to me i would rather raise rates and take the slim chance that things work out, keeping them at 0.5% when the fed is heading 2%+ is a guaranteed one way ticket to pissing off anyone who wants to buy essentials when sterling tanks.

I disagree. I've been doing a lot of reading and I think this thought comes from the assumption that Central Banks control lending rates.

I don't think they do. They have to compete for money from the market same as stocks do.

They have to compete and offer enough back to match the returns people would get elsewhere or nobody will buy their government bonds.

The follow the market rather than lead.

[Gordie Lastchance]

1 minute ago, Cosmic Apple said:

And money lost by those unable to get out near the peaks! For widows and orphans implies that you want a nice, safe, stable investment... Gold miners are NOT that. As part of a portfolio though... weighted depending on your end goals, risk profile, age, future plans etc. definitely!

You folks are so cool! I could have been laughed out of court, but you all take the time to get me to understand what this investment thing's all about. And I am genuinely grateful to everyone. For me, "investing" so far has been like trying to get a duvet into its cover without humps the size of the Alps in the middle... 

[Cosmic]

13 minutes ago, Gordie Lastchance said:

Well, using my little investment knowledge and terminology, the chart had some nice pointy bits signifying there'd been money to be made in the past!

Seriously though, I remember from ToS comments about gold being used as a currency/method of trade (or barter should that be?) for thousands of years. If the future's looking as bleak as people fear, is it not a safety blanket? Something that people will flock to?

Or maybe I should spend the money on visiting the pretty rollercoaster??????

Also worth a look at the ETF 'GDX', which holds most of those listed above and more (there was some discussion on GDX and GDXJ (juniors - more risk, more reward?) on ToS).

https://www.vaneck.com/etf/equity/gdx/holdings/

DYOR etc.

[Lockedout]

Hello all, I’ve come over from ToS - been waiting to have a post cleared by moderators for about four weeks now. I give up. Thanks for all the discussion, time and info. I’ve got started - drip feeding money into a Vanguard ISA. Just wondering what people thought of Vanguard Precious Metals and Mining fund? 

[InLikeFlynn]

25 minutes ago, Cosmic Apple said:

And money lost by those unable to get out near the peaks! For widows and orphans implies that you want a nice, safe, stable investment... Gold miners are NOT that. As part of a portfolio though... weighted depending on your end goals, risk profile, age, future plans etc. definitely!

Quite. Novice investors should not start by "investing" all their money in two gold miners as stated upthread, unless they are genuinely happy to lose it all. Highly speculative and could go horribly wrong. Nothing wrong with a nice diversified investment trust paying a decent dividend, bought in a SIPP or ISA.

 

 

[Majorpain]

1 hour ago, DurhamBorn said:

Remember they only control the overnight rates,they have no control over the longer end of the curve.The market decides that.Even the Fed cant control the longer end for very long. 

They may not have to, just rig the inflation stats to say what you want and bingo!  Worked for UK CPI anyway, who lives in a house.... 

16 minutes ago, Thorn said:

I disagree. I've been doing a lot of reading and I think this thought comes from the assumption that Central Banks control lending rates.

I don't think they do. They have to compete for money from the market same as stocks do.

They have to compete and offer enough back to match the returns people would get elsewhere or nobody will buy their government bonds.

The follow the market rather than lead. 

In theory the central bank rate is the "risk free" price of money, and everything else risk wise gets priced off that.  Its the government competes with other market p

[Inoperational Bumblebee]

55 minutes ago, InLikeFlynn said:

Quite. Novice investors should not start by "investing" all their money in two gold miners as stated upthread, unless they are genuinely happy to lose it all. Highly speculative and could go horribly wrong. Nothing wrong with a nice diversified investment trust paying a decent dividend, bought in a SIPP or ISA.

Indeed; a global tracker like SWDA would be my personal choice for a reasonable chunk if you want to get involved. Drip feed small amounts in over time is what I'm doing for my two year old. When it becomes sizeable enough, I might add something higher risk. But he's always got Daddy's portfolio in the background, which, quite frankly, is a bit of a bonkers mix of miners, bonds, PMs, cash and crypto. It's a bit of a modern take on the Permanent Portfolio tbh.

As always, DYOR, TINA...

[sancho panza]

6 hours ago, DurhamBorn said:

@sancho panza those goldies are all smashed down,but the charts look good to me.Im glad you reminded me of Kinross,they did a rotten deal in Africa at the top of the last cycle,but i think il add a few of them.Gold looks very similar to the 1999 - 2001 pattern before it has a long bull run.It (and the goldies) look like a rounded bottom and id expect the opposite,a rounded top in the equity markets to form.Harmony have 30 million ounces in the ground (at least) and are valued less than $1 billion.Gold at $1350 and the rand where it is now would give them $300 million free cashflow roughly.$1550 would give them $550mill free cash,or a PE of 2.

Thats a sector that nobody owns.

 

Kinross has a chunk of US assets which is one of the reasons I'm drawn to them.$4 is my buy limit so we're well under.

When I have time later in the week I'll be having another look at the goldies.Thought it was fascinating that the SA miners had such low market cap/revenue ratios .......

 

4 hours ago, Wheeler said:

Many thanks SP. I did look at M2 as well but thought that M1 would be more relevant to consumption than M2 which has an element of saving in the time deposits. I read somewhere (but can't remember where) something about when there is an increasing propensity to save then M2 would increase relative to M1 as more funds went into time deposits. 

I do find myself falling into the trap of looking for some simple numbers/graphs to explain everything when if it were that simple everyone would already know about it!

 

 

I think you raise an interesting point.I would still favour the broader measure as a proxy for consumption

One thing when I commented on your post was that I wondered to what extent QE/Zirp had distorted the import of M2 given deposits attracted such low IR's.

It also raises the question of whether the sort of people in possession of savings would bother chasing higher IR's so actively when it's not worth the bother.

To get an idea of the changes post QE/Zirp

M1 rose from $383bn in May 1980 to $1394bn May 08 to $3643bn in may 2018

M2                    $1663bn                          $7687bn                   $13998bn

Piccie paints a 1000 words and you can see the clear lift off in M1 post 2008 vs M2.Which shows how the hopes of the fed got dashed as higher M1 failed to lift off M2

https://fred.stlouisfed.org/series/M1

Just change M1 to 2 on the link

2 hours ago, Gordie Lastchance said:

Not knowing much about the miners, but eager to ask the silly question - is Kinross a share for a widow or orphan (or tight, scaredy-cat like me)? Cheers SP.  

It's probabaly not.I'd be looking at the Vodafone/Centrica type of punt first.get used to the feel of things or an ETF of some sort.

2 hours ago, Cosmic Apple said:

And money lost by those unable to get out near the peaks! For widows and orphans implies that you want a nice, safe, stable investment... Gold miners are NOT that. As part of a portfolio though... weighted depending on your end goals, risk profile, age, future plans etc. definitely!

Good advice.

[spunko]

3 hours ago, Economic Exile said:

Very helpful response DB. Thank you very much!

Super interesting thread!

Glad it’s now on this forum too and full of a sort of mismatch of very very interesting and many knowledgeable people.

Indeed! Thanks to all who have signed up in recent days.

I know that the other site tended to be a forum of 2 halves - Off Topic and House prices - with not much overlap,  don't know if it'll be the same here but hope not! 

As ever,  if anyone has any suggestions of what to add  remove or change, for this subforum or the rest of the site, please  do share in the Feedback subforum (at the bottom of the forum list). 

[Agent ZigZag]

With SIL no longer available under a SIPP or ISA what are your top or favourite silver mining companies. I have a feeling that silver will lead gold first and is showing early signs of a breakout

For those of you looking at investing in precious metals My opinion is buy physical or use the miners under a SIPP or ISA. If any use to anyone don’t use Standard life gold SIPP as they have very high management charges that have cost me dearly.

 

 

 

 

 

[Solzhenitsyn]

15 hours ago, sancho panza said:

Looking for the unloved....

Any ideas gratefully welcomed.

Wheat & Uranium are things I’ve been adding to recently. Also, OSTK - very interesting (and successful) internet retail company which is looking at developing/implementing Blockchain tech. But unloved at present with all the negativity of the crypto bubble etc but could well be a major growth company. We’re still going to be buying things - even if the deflationary bust happens. Retailers that can be efficient will be the winners.

[Democorruptcy]

Interesting that after raising the rate again last night, The Fed has said it will hold a press conference after every meeting starting in January. They had only held one after every alternate meeting and it was only when they had a press conference that they raised rates. Now they can change rates at any meeting, which might add to volatility.

[Cosmic]

9 hours ago, sancho panza said:

When I have time later in the week I'll be having another look at the goldies.Thought it was fascinating that the SA miners had such low market cap/revenue ratios .......

Unloved sector and crazy political situation - could be a hell of a buying opportunity or the whole operation could go up in flames... 

[Gordie Lastchance]

8 hours ago, sancho panza said:

Kinross has a chunk of US assets which is one of the reasons I'm drawn to them.$4 is my buy limit so we're well under.

When I have time later in the week I'll be having another look at the goldies.Thought it was fascinating that the SA miners had such low market cap/revenue ratios .......

 

I think you raise an interesting point.I would still favour the broader measure as a proxy for consumption

One thing when I commented on your post was that I wondered to what extent QE/Zirp had distorted the import of M2 given deposits attracted such low IR's.

It also raises the question of whether the sort of people in possession of savings would bother chasing higher IR's so actively when it's not worth the bother.

To get an idea of the changes post QE/Zirp

M1 rose from $383bn in May 1980 to $1394bn May 08 to $3643bn in may 2018

M2                    $1663bn                          $7687bn                   $13998bn

Piccie paints a 1000 words and you can see the clear lift off in M1 post 2008 vs M2.Which shows how the hopes of the fed got dashed as higher M1 failed to lift off M2

https://fred.stlouisfed.org/series/M1

Just change M1 to 2 on the link

It's probabaly not.I'd be looking at the Vodafone/Centrica type of punt first.get used to the feel of things or an ETF of some sort.

Good advice.

To everyone who has taken the time to save me from myself - a big thank you. I'm getting to a point now where I can focus on the likes of a trust or a fund or one of the more stable shares out there. I've got a bit of direction now, you've all helped to cut through the fog. You've all understood where I'm coming from in terms of my past disasters that have frightened the life out of me and put me off investing for too many years. Lost years. I've no excuse now - I've been given some excellent resources to look at and your experience to learn from. Time to get back on that horse!!!

 

[DurhamBorn]

8 hours ago, spunko2010 said:

Indeed! Thanks to all who have signed up in recent days.

I know that the other site tended to be a forum of 2 halves - Off Topic and House prices - with not much overlap,  don't know if it'll be the same here but hope not! 

As ever,  if anyone has any suggestions of what to add  remove or change, for this subforum or the rest of the site, please  do share in the Feedback subforum (at the bottom of the forum list). 

Id just like to say thankyou for providing a place where people can share their thoughts and knowledge in an open way.An open,civil debate where everyone's thoughts are encouraged and valued is hugely powerful.

 

11 hours ago, Gordie Lastchance said:

Well, using my little investment knowledge and terminology, the chart had some nice pointy bits signifying there'd been money to be made in the past!

Seriously though, I remember from ToS comments about gold being used as a currency/method of trade (or barter should that be?) for thousands of years. If the future's looking as bleak as people fear, is it not a safety blanket? Something that people will flock to?

Or maybe I should spend the money on visiting the pretty rollercoaster??????

Looking at the macro situation i dont think its a stretch to say that in the coming months and years gold and silver will be seen as the primary safe haven asset that protects wealth and avoids financial pain.

[DurhamBorn]

24 minutes ago, Democorruptcy said:

Interesting that after raising the rate again last night, The Fed has said it will hold a press conference after every meeting starting in January. They had only held one after every alternate meeting and it was only when they had a press conference that they raised rates. Now they can change rates at any meeting, which might add to volatility.

They might be cutting rates and printing by January.Interesting the Fed is doing that.I hope they are getting ready for long ones soon,they will need them.

[Lavalas]

14 minutes ago, DurhamBorn said:

Id just like to say thankyou for providing a place where people can share their thoughts and knowledge in an open way.An open,civil debate where everyone's thoughts are encouraged and valued is hugely powerful.

I agree, and thanks from me too. The original thread and latterly this one is pretty much the only thread on the entire internet that has run for 200+ pages without a single argument. Far be it from me to just turn up and say what should be happening but it’s great that this spirit of open positive contributions from all looks like continuing here. Credit to everyone.

[eek]

9 hours ago, sancho panza said:

Kinross has a chunk of US assets which is one of the reasons I'm drawn to them.$4 is my buy limit so we're well under.

When I have time later in the week I'll be having another look at the goldies.Thought it was fascinating that the SA miners had such low market cap/revenue ratios .......

 

I think you raise an interesting point.I would still favour the broader measure as a proxy for consumption

One thing when I commented on your post was that I wondered to what extent QE/Zirp had distorted the import of M2 given deposits attracted such low IR's.

It also raises the question of whether the sort of people in possession of savings would bother chasing higher IR's so actively when it's not worth the bother.

To get an idea of the changes post QE/Zirp

M1 rose from $383bn in May 1980 to $1394bn May 08 to $3643bn in may 2018

M2                    $1663bn                          $7687bn                   $13998bn

Piccie paints a 1000 words and you can see the clear lift off in M1 post 2008 vs M2.Which shows how the hopes of the fed got dashed as higher M1 failed to lift off M2

 

Inflation adjusted its even clearer

Year	CPI (for parity)	M1 (inflation adjusted)	M2 (inflation adjusted)	M2/M1 ratio
1980	77.80	492.29	2137.53	4.34
1990	127.40	622.92	2521.98	4.05
2000	168.80	671.39	2760.07	4.11
2008	211.10	660.35	3641.40	5.51
2018	247.87	1469.74	5647.38	3.84

M1 remains remarkable consist between 1980 and 2008 while M2 increased significantly between 2000 and 2008. since then the M2/M1 ratio has returned to below its typical average while M1 has skyrocketed.

So the really interesting question is not so much why M2 failed to lift off but why was M2 so high in 2008.

[NogintheNog]

1 hour ago, Gordie Lastchance said:

To everyone who has taken the time to save me from myself - a big thank you. I'm getting to a point now where I can focus on the likes of a trust or a fund or one of the more stable shares out there. I've got a bit of direction now, you've all helped to cut through the fog. You've all understood where I'm coming from in terms of my past disasters that have frightened the life out of me and put me off investing for too many years. Lost years. I've no excuse now - I've been given some excellent resources to look at and your experience to learn from. Time to get back on that horse!!!

 

I'm not sure we have saved you, at least not yet. I do think that this is probably a far more valuable resource than a Financial Adviser though! The fact is most of us think that there will be a deflationary/inflationary event at some point in the near future, and the general consensus is that governments and central banks will want to save 'capitalism'. (Not that we actually have capitalism now, but that's another discussion!)

I think one fund worth mentioning, and I'm not sure if it's been mentioned before is the Personal Assets Investment Trust LON:PNL. I think I'm right in saying they have a 10% gold holding.

https://www.telegraph.co.uk/finance/personalfinance/investing/gold/11685592/The-table-that-shows-you-should-always-hold-gold.html

http://www.hl.co.uk/news/articles/personal-assets-trust-exposure-to-shares-reduced

It's not a very exciting fund, but that is probably what you want as a starting point!