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Credit deflation and the reflation cycle to come.


DurhamBorn

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Chewing Grass

Just had a letter from Credit Card Co who are updating their terms and conditions, out of curiosity more than anything else I actually read what the changes were and picked up this little nugget.

'We have added a further reason for changing your minimum payment. If we think you are in persistent debt or at risk of falling into persistent debt we will increase your minimum payment to help you reduce your card balance more quickly.'  Note: Persistent debt means that over an 18 month period you have paid more in interest and charges than off your outstanding balance.

Basically that means you will need to consistently pay more than 2x what the monthly interest is or you will be labelled a persistent debtor rather than a lucrative customer.

The other vagary is what is meant by outstanding balance especially if it is rising or has appeared from a 'balance transfer' from another card.

Stable, door, bolted, where's my money..........

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6 hours ago, Chewing Grass said:

Just had a letter from Credit Card Co who are updating their terms and conditions, out of curiosity more than anything else I actually read what the changes were and picked up this little nugget.

'We have added a further reason for changing your minimum payment. If we think you are in persistent debt or at risk of falling into persistent debt we will increase your minimum payment to help you reduce your card balance more quickly.'  Note: Persistent debt means that over an 18 month period you have paid more in interest and charges than off your outstanding balance.

Basically that means you will need to consistently pay more than 2x what the monthly interest is or you will be labelled a persistent debtor rather than a lucrative customer.

The other vagary is what is meant by outstanding balance especially if it is rising or has appeared from a 'balance transfer' from another card.

Stable, door, bolted, where's my money..........

Posted similar on page 69, quite significant isn't it? The concept of being able to increase the minimum payment to "help", going to catch huge numbers out in the recession.

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12 hours ago, Talking Monkey said:

DB with the dollar going lower which currencies would this predominantly be against, could GBP get back to the 1.43 are it hit earlier in the year

If im right id expect the Yen to lead,and maybe the AUS and CAD.

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On 14/07/2018 at 09:06, DurhamBorn said:

The sector is hated and ignored,its long bear has frustrated all the weak hands.It could of course drift lower,but if im right on the dollar going down from the 96 area we could be off to the races soon.

 

Do you have a view on possible outcomes of Lonmin takeover by Sibanye?  Is it worth buying some Lonmin? 

Both companies seem to have problems, and not just pure low PM cost but strikes, fatalities.

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Inoperational Bumblebee
2 hours ago, Bear Hug said:

Do you have a view on possible outcomes of Lonmin takeover by Sibanye?  Is it worth buying some Lonmin? 

Both companies seem to have problems, and not just pure low PM cost but strikes, fatalities.

I'm on my phone so can't research well, but it appears to say you'd receive 0.967 Sibanye shares for every Lonmin one, and there looks to be a significant price differential. If you want more Sibanye then could be worthwhile?

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2 hours ago, Bear Hug said:

Do you have a view on possible outcomes of Lonmin takeover by Sibanye?  Is it worth buying some Lonmin? 

Both companies seem to have problems, and not just pure low PM cost but strikes, fatalities.

I think platinum is about to enter a multi year bull market,but i havent got much exposure to it.The reason for that is i hold Harmony Gold and some Anglogold and as i didnt want anymore exposure to SA iv taken only a small position in Sibanye.I wouldnt buy Lonmin.If Sibanye pulled out of the deal for any reason Lonmin would go under i think.

I think Sibanye is the way to play platinum within a PM portfolio,but it does have a lot of risk.The main one being the debt levels.If the rand price of gold goes down (or even stays where it is) they are going to have to do a streaming deal or something.If the Rand price of gold got back over 580k a kg Sibanye would be good to go.

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sancho panza
On 13/07/2018 at 22:00, Democorruptcy said:

MMR is toothless without a maximum mortgage term. Banks can keep lengthening the mortgage term until the computer says the monthly payments are affordable.

However, we will reach that point where people themselves opt out of longer term mortgages.WHich is what nomally starts a debt deflation ie aggregate demand drop leading to credit demand down leading to aggregate demand down.

On 14/07/2018 at 09:06, DurhamBorn said:

The signals i use on this sector are probably in the best range iv ever seen to buy.Sometimes those calls fail of course,but im fine with that because probability is in my favour.Some of these stocks have 40 million oz in the ground and valued at $1billion probably 1/5th of their mid cycle price,1/10 or even 1/15+ of a top of cycle price.Those risk rewards suit me fine.Platinum has the lowest commercial net short EVER.Commercials are people who buy the metal and use it,they buy shorts to cover themselves from when they buy the metal until they sell it/use it and sell to end customer.When net shorts get this low it means commercials arent bothering to protect with shorts and that means the people in the business see little downside.That is running alongside numbers like 7% retail bulls on the PMs,some of the lowest ever.

The sector is hated and ignored,its long bear has frustrated all the weak hands.It could of course drift lower,but if im right on the dollar going down from the 96 area we could be off to the races soon.

 

Thanks for that bit of info.

23 hours ago, Chewing Grass said:

Just had a letter from Credit Card Co who are updating their terms and conditions, out of curiosity more than anything else I actually read what the changes were and picked up this little nugget.

'We have added a further reason for changing your minimum payment. If we think you are in persistent debt or at risk of falling into persistent debt we will increase your minimum payment to help you reduce your card balance more quickly.'  Note: Persistent debt means that over an 18 month period you have paid more in interest and charges than off your outstanding balance.

Basically that means you will need to consistently pay more than 2x what the monthly interest is or you will be labelled a persistent debtor rather than a lucrative customer.

The other vagary is what is meant by outstanding balance especially if it is rising or has appeared from a 'balance transfer' from another card.

Stable, door, bolted, where's my money..........

Prepping for a race to the bottom in any language but plain English.Watch what they do not what they say

1 hour ago, DurhamBorn said:

I think platinum is about to enter a multi year bull market,but i havent got much exposure to it.The reason for that is i hold Harmony Gold and some Anglogold and as i didnt want anymore exposure to SA iv taken only a small position in Sibanye.I wouldnt buy Lonmin.If Sibanye pulled out of the deal for any reason Lonmin would go under i think.

I think Sibanye is the way to play platinum within a PM portfolio,but it does have a lot of risk.The main one being the debt levels.If the rand price of gold goes down (or even stays where it is) they are going to have to do a streaming deal or something.If the Rand price of gold got back over 580k a kg Sibanye would be good to go.

Impala and Amplats are dirt cheap but I haven't got any exposure yet.

 

As you allude when you go through the figures,a lot of the big PM miners throw off all sorts of decent hard commodities as a result of digging the yellow stuff.

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Democorruptcy
43 minutes ago, sancho panza said:

However, we will reach that point where people themselves opt out of longer term mortgages.WHich is what nomally starts a debt deflation ie aggregate demand drop leading to credit demand down leading to aggregate demand down.

 

I'd like them to go back to 3x Main plus 1x Second Income as well.

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Chewing Grass
25 minutes ago, Democorruptcy said:

I'd like them to go back to 3x Main plus 1x Second Income as well.

In my home town the average wage is £23918 and the average house is £201070.

That is 8.4 x Single Wage.

30 years ago (1987) the average wage was £202.1 per week (shows how most were paid weekly then) or £10509 and the average house cost £32000

Call it 3.2x

By 1988 it became a means to print money based on using two incomes to put a roof over your head and de-regulation of mortgages to fund it.

Boom - the U.K. is now minted/booming/successful courtesy of the stroke of a regulatory pen.

Loads of interesting numbers below:-

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/adhocs/006810newearningssurveynesagegroupgrossweeklyandhourlyexcludingovertimedata

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Yellow_Reduced_Sticker
On 12/07/2018 at 14:33, DurhamBorn said:

Yes,iv actually been looking at the dollar a lot mainly due to the mining complex.Iv now deployed all capital into that sector that is going in.I do see down to 86 likely,but i also see a picture of the dollar falling to the 74 area in late 2019.Thats not a given at all,but i am going to keep a close eye on things as it will have a huge affect on if/when i sell my PM miners.94% bulls on the dollar last week,7% bulls on silver.Commercial net short on gold below 100k contracts.An inflection point should be very close as those sorts of numbers are at extremes.

 

 
 
@DurhamBorn I a bit confused with the bit I've bolded in your post, a couple of questions if I may SIR...
 
Lets say the dollar falls to the 74 area in late 2019. AND ya miners have say for arguments sake doubled from your buying points, would you sell them?
 
Basically what sort of window of time are you looking at holding the miners?
 
Cos I always thought your thinking was that some of these miners could be 100 bagging & you see a huge bull market in PMs, so really what i am getting at is the "window of time" ...do you think the leverage you predict will be fast and short say 1 year to 18months ? OR could we have a PM bull market lasting as long as the previous dot com boom?
 
CHEERS!:)
 
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2 hours ago, Yellow_Reduced_Sticker said:
 
 
@DurhamBorn I a bit confused with the bit I've bolded in your post, a couple of questions if I may SIR...
 
Lets say the dollar falls to the 74 area in late 2019. AND ya miners have say for arguments sake doubled from your buying points, would you sell them?
 
Basically what sort of window of time are you looking at holding the miners?
 
Cos I always thought your thinking was that some of these miners could be 100 bagging & you see a huge bull market in PMs, so really what i am getting at is the "window of time" ...do you think the leverage you predict will be fast and short say 1 year to 18months ? OR could we have a PM bull market lasting as long as the previous dot com boom?
 
CHEERS!:)
 

The truth is i dont know.Im very happy to buy the miners i have at the prices im paying and go from there.I do see a debt deflation as near certain,and its highly likely i will sell my miners if gold hits the $1450 to $1580 range.I wont sell my miners until gold is at least $1450.I think a very nice run in the miners is close and $1450 is my minimum target in gold.What i do know is im very happy to buy the miners i have at the price iv paid.

Im also very happy with the Stagecoach buy.I mentioned the transports were best bought when depreciation dipped below 1.0,and at the results it had dipped from 1.38 to 0.88.I bought at £1.28 on that basis and they are up 25%.

This is also a very interesting area for the tranports.

http://www.route-one.net/articles/PickMeUp_beats_expectations_in_its_first_10_days_on_the_road

This sort of thing is going to be massive.The reflation i see ahead has public transport as a big winner.Car cost will rise just as these sort of services are rolled out in cities and large urban areas.As green energy takes over and these services become available many more people will leave the car at home,go from 2 cars to 1 etc.Alongside telcos and some energy companies like Drax and Centrica the markets have handed some fantastic bargains lately.They are looking backwards instead of forwards at key inflection points.Companies that have had to run upwards against a downwards escalator are about to get a much easier ride.

 

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leonardratso
5 minutes ago, DurhamBorn said:

The truth is i dont know.Im very happy to buy the miners i have at the prices im paying and go from there.I do see a debt deflation as near certain,and its highly likely i will sell my miners if gold hits the $1450 to $1580 range.I wont sell my miners until gold is at least $1450.I think a very nice run in the miners is close and $1450 is my minimum target in gold.What i do know is im very happy to buy the miners i have at the price iv paid.

Im also very happy with the Stagecoach buy.I mentioned the transports were best bought when depreciation dipped below 1.0,and at the results it had dipped from 1.38 to 0.88.I bought at £1.28 on that basis and they are up 25%.

This is also a very interesting area for the tranports.

http://www.route-one.net/articles/PickMeUp_beats_expectations_in_its_first_10_days_on_the_road

This sort of thing is going to be massive.The reflation i see ahead has public transport as a big winner.Car cost will rise just as these sort of services are rolled out in cities and large urban areas.As green energy takes over and these services become available many more people will leave the car at home,go from 2 cars to 1 etc.Alongside telcos and some energy companies like Drax and Centrica the markets have handed some fantastic bargains lately.They are looking backwards instead of forwards at key inflection points.Companies that have had to run upwards against a downwards escalator are about to get a much easier ride.

 

hmm that looks pretty good if theres constant demand, i also like the dual purposing of the double deckers here;

http://www.route-one.net/articles/Stagecoach_double_decker__ploughs_into_a_field_

nice one. hahha.

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3 hours ago, Chewing Grass said:

In my home town the average wage is £23918 and the average house is £201070.

That is 8.4 x Single Wage.

That's interesting as thi is what I postulated a couple of pages ago..bloody hope it doesn't stay like this!

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17 minutes ago, leonardratso said:

hmm that looks pretty good if theres constant demand, i also like the dual purposing of the double deckers here;

http://www.route-one.net/articles/Stagecoach_double_decker__ploughs_into_a_field_

nice one. hahha.

There will be fits and starts and like you say the margins will depend on getting the things right.However it looks a fantastic service,and the best thing is its likely to bring in new customers rather than simply pull people from a bus.In big urban areas it should be quite easy to get the pricing right to make a decent profit.When its £3 to park in a car park for a few hours why bother if you can simply open an app and be picked up wherever you are and the same on a return journey for £5.The reflation should see more and more people give up their car,or at least use it less/give up a 2nd car.The biggest problem will be not being able to cope with peak demand and getting the right amount of assets to demand.Lots to do,but it should prove a huge market in a few years.

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On ‎08‎/‎07‎/‎2018 at 19:55, Mooping said:

Hi guys.  I've only must migrated over here from HPC.  I don't have the time to read the whole thread to see if it's been covered but I have a question for you I hope somebody can answer.  Did you find the best way of buying into Silver and Gold miners due to not being able to purchase ETF's such as SIL anymore from the UK?  Thank you.

 

I don't think anybody replied to my message. :-(

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6 minutes ago, Mooping said:

 

I don't think anybody replied to my message. :-(

Don't be lazy. Do the box set of the thread on Tos and this site for your answer.

Welcome by the way ;)

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Yellow_Reduced_Sticker
3 hours ago, DurhamBorn said:

The truth is i dont know.Im very happy to buy the miners i have at the prices im paying and go from there.I do see a debt deflation as near certain,and its highly likely i will sell my miners if gold hits the $1450 to $1580 range.I wont sell my miners until gold is at least $1450.I think a very nice run in the miners is close and $1450 is my minimum target in gold.What i do know is im very happy to buy the miners i have at the price iv paid.

Im also very happy with the Stagecoach buy.I mentioned the transports were best bought when depreciation dipped below 1.0,and at the results it had dipped from 1.38 to 0.88.I bought at £1.28 on that basis and they are up 25%.

This is also a very interesting area for the tranports.

http://www.route-one.net/articles/PickMeUp_beats_expectations_in_its_first_10_days_on_the_road

This sort of thing is going to be massive.The reflation i see ahead has public transport as a big winner.Car cost will rise just as these sort of services are rolled out in cities and large urban areas.As green energy takes over and these services become available many more people will leave the car at home,go from 2 cars to 1 etc.Alongside telcos and some energy companies like Drax and Centrica the markets have handed some fantastic bargains lately.They are looking backwards instead of forwards at key inflection points.Companies that have had to run upwards against a downwards escalator are about to get a much easier ride.

 

Thanks for that DB.
 
So basically am i right in saying you are hoping (as we all are) gold goes to around the $1500 range -- at this point you would probably sell the miners if they have shown a good run up - because at this point your expecting gold to head down to the $900 / $700 range, because you expect the global economy will be beginning a deflationary bust, a downturn worse than 2008 and the worst since the war.
 
Then once the carnage settles down ...its time to buy inflation assets?
 
Would you also buy back the miners once the carnage settles down?
 
I also remember you saying Harmony might be a really good stock to own in the next cycle...
 
SORRY for being a bit thick and the questions, I went through your entire thread at ToS and took notes, in the process I think I've got my knickers in a twist! xD
 

Thanks in advance with any info/clarification.

 

 

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14 minutes ago, Yellow_Reduced_Sticker said:
Thanks for that DB.
 
So basically am i right in saying you are hoping (as we all are) gold goes to around the $1500 range -- at this point you would probably sell the miners if they have shown a good run up - because at this point your expecting gold to head down to the $900 / $700 range, because you expect the global economy will be beginning a deflationary bust, a downturn worse than 2008 and the worst since the war.
 
Then once the carnage settles down ...its time to buy inflation assets?
 
Would you also buy back the miners once the carnage settles down?
 
I also remember you saying Harmony might be a really good stock to own in the next cycle...
 
SORRY for being a bit thick and the questions, I went through your entire thread at ToS and took notes, in the process I think I've got my knickers in a twist! xD
 

Thanks in advance with any info/clarification.

 

 

Pretty much yes.Il be doing nothing until gold hits $1450 then look at things.Harmony is risky due to being mostly South African and having higher cost mines.Its margins are thin around 520k a kg gold rand price (its all in cost is about 485k kg).However it has over 70 million oz in resources.70 million with a market cap of $800 million ,less than $12 an oz.In a gold bull market people start to talk about oz in the ground rather than margins.Cost of $800 or $1150 mean less when gold is $1800.If they start to price miners at $100 an oz you see the potential.Its one of several i own,and its at the risky end,but the risk/reward suits me.

Miners arent for widows and orphans though,its a very difficult part of the market,and big losses can and do happen.They should only be considered as part of a balanced portfolio and i wouldnt want people buying into them on the strength of anything on here,DYOR/financial advice etc.

 

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45 minutes ago, Mooping said:

 

I don't think anybody replied to my message. :-(

Sorry Mooping,i put back in the thread a list of miners iv bought myself (i own a few others) and there are a few mentions of other gold miner funds.Myself im sticking to several individual stocks and some GDXJ i already own.Its made things much more difficult not being able to buy US ETFs.Another crazy EU law (unless you want to stop a flight to dollar assets for the plebs of course).

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Inoperational Bumblebee
1 hour ago, Mooping said:

I don't think anybody replied to my message. :-(

Hi and welcome! To follow on from DB, I think it's because we haven't. GDX and GDXJ are both listed in London so should still be available, as these gold miners mine more than just gold. I think it's come down to picking a few individual companies now; some higher risk, some lower.

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Yellow_Reduced_Sticker

@DurhamBorn  Thanks again for that.


RE: "Im also very happy with the Stagecoach buy.I mentioned the transports were best bought when depreciation dipped below 1.0,and at the results it had dipped from 1.38 to 0.88.I bought at £1.28 on that basis and they are up 25%"
 
VERY NICE!
 
I did tell ya they'd go UP...cos i didn't buy 'em HA-ha! xD
 

All joking aside, i checked the chart, and here's my 15 year chart watching prognosis... on a 1 year chart 1.60 is hitting a BIG support/resistance area if it breaks through this it should go higher, well lets face i don't own 'em so they SHOULD go higher!:D

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1 hour ago, BearingUp said:

What's happening with Go Ahead today?  Down about 9%.  Can't find any news on-line.  Worth topping up?

"Meanwhile, Thameslink owner Go-Ahead Group's share price dropped as much as 8.7 per cent this morning after HSBC analysts slashed the stock rating from "buy" to "hold". The price drop was not explicitly linked to the performance of GOG's train services but the broker cited "rail risks" and a cautious outlook for buses"

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whome_yesyou

Did we expect gold to be tumbling down over $100/oz for the past couple months? Just wondering what this means for the forecast, or if it is just meaningless?

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Alifelessbinary
1 hour ago, Admiral Pepe said:

"Meanwhile, Thameslink owner Go-Ahead Group's share price dropped as much as 8.7 per cent this morning after HSBC analysts slashed the stock rating from "buy" to "hold". The price drop was not explicitly linked to the performance of GOG's train services but the broker cited "rail risks" and a cautious outlook for buses"

One of the main reasons the shares have dropped so heavily is that Govia Thameslink are days away from losing their franchise due to terrible performance. 

I imagine that HSBC analysts have strong new sources and are reacting accordingly.

While the DfT is doing everything in their power to avoid another East Coast Mainline debacle, the recent timetabling fuck up has pretty much forced their hands. I give it 50/50 that they’ll lose the franchise this week or be put on notice.

 

 

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