Credit deflation and the reflation cycle to come.

[UnconventionalWisdom]

16 hours ago, Green Devil said:

Some interesting points in this video about the current state of the economy and how we got to where we are.

Personally, I dont agree with the goldbugs selling their gold line, and the inveitable collapse, but DYOR.

http://www.veoh.com/watch/v102298173txrYMYsH

I like the Mike maloney vids. Check out his secrets of money videos on youtube if anyone is interested in the current monetary system. He constantly pushes hold but its very interesting in explaining what's going on. 

[M.C. UK]

Many thanks for the brilliant thread.

As some around here, long time "watcher" (on the "Forum that Shall Not Be Named") and due the clues left over there, found you all here now.

Once again, many thanks.

Forgive me for my stupidity (I am trying to grasp some concepts and struggling specially with some acronyms and implicit references) and even  I've been trying some searching  on the forum with mixed results ...

Without further do, here it comes the downpour   of  "ignorant" questions:

@DurhamBorn    when you say

Quote

"I see dollar 96.5 top,down to 86,maybe even 74 ..." 

  are you referring to DXY  or something completely different?

Cheers and once again thank you all

[Bear Hug]

16 hours ago, Barnsey said:

I'm only guesstimating here, but I think the DXY will turn once we get our inverted yield curve and the Fed hints at easing off the gas, which could be as early as Q4 2018, depends on whether Q3 GDP will benefit (or not) from pre-tariff inventory build expenditure as Q2 has, and if the consumer has any remaining available credit left. At that point I'd think Gold really starts climbing, Silver too possibly.

Due to Brexit chaos I wouldn't expect to see the £ strengthen much against the dollar from here. As @DurhamBorn points out, euro and yen likely to strengthen as this unfolds (only temporarily, especially the euro), once the recession kicks in globally, the usual safe haven flight to the $ will apply and thus DXY/treasuries will strengthen considerably until the dust settles and QE printy panic starts.

Gold and Silver fall as people sell everything to try and stay afloat, and then (hopefully) we see Silver start to climb as QE gets pumped directly into a modern industrial revolution.

My very simplistic view of what may pan out, do I really know what I'm on about, not too sure 

 

16 hours ago, DurhamBorn said:

Thats exactly how i see it.The Yen,Euro later,and for now even the commod currencies like the CAD and AUS strengthen.I see dollar 96.5 top,down to 86,maybe even 74 if the full cycle played out in normal terms,if a recession turns quickly to a debt deflation then the dollar turns up then.There is a chance sterling could run higher at points.The PM complex is a coiled spring.Results slightly better than expected are seeing big moves up,and worse than expected big moves down.Once gold gets moving there should be some very big moves up in the miners.As ever a good spread is needed as where i fully expect some to 2 of even 3 x+ there will be laggards that could end up down.

 

So, Dollar up very short term, then Euro and Yen, then after a while Dollar again; Pound mainly down all the way.

Why not get some Euro or Yen equivalent of IBTL at this point?

[BadAlchemy]

2 hours ago, M.C. UK said:

@DurhamBorn

  are you referring to DXY  or something completely different?

Yes those figures are referring to DXY. 

[M.C. UK]

10 minutes ago, BadAlchemy said:

Yes those figures are referring to DXY. 

Many thanks BadAlchemy

 

[Barnsey]

7 hours ago, Bear Hug said:

 

So, Dollar up very short term, then Euro and Yen, then after a while Dollar again; Pound mainly down all the way.

Why not get some Euro or Yen equivalent of IBTL at this point?

If you're happy to trade short term then that might be a good idea, just have to be quick selling them when the next Eurozone crisis hits, they are in the weakest position despite things looking fairly positive at the moment, so the strengthening euro will possibly be quite short lived, ECB not looking to raise rates until Sep 2019 which is probably in the middle of all this kicking off, and financial distress will fuel the current tensions exponentially.

For the gold bugs on here (I don't know how you do it, nerves of steel, the wild swings would give me a nervous breakdown on a daily basis ), things looking good for a turnaround soon, CFTC gold shorts have spiked, and VERY interestingly, the Vanguard Precious Metals and Mining fund will be renamed to Vanguard Global Capital Cycles fund, signifying the tail end of the PM bear market, similar thing happened back in 2000 as this tweet points out:

 

[DurhamBorn]

19 hours ago, Yellow_Reduced_Sticker said:

 

@DurhamBorn So lets say GOLD gets going and hits around $1500, would YOU DB sell ALL your mining companies at this point if they'd had a decent run-up?

 

Then once the WORLD-WIDE panic & recession starts...you'd wait for the dust to settle ...would YOU move back into the mining companies at this point? Sorry to ask again but a bit confused with the other post CHEERS!

 

BTW, nipped into tesco during the thunder-storm yesterday evening on my push-bike  lovely & cool a drop in temp for a change as we've had HEAT to 34c here!

 

Couldn't believe the amount of EU vultures queing by the reduced fridge so i mosey on over to another section AND picked up all remaining 7 boxes of PUKKA motherkind pregnancy tea reduced from £1.99 to 50p!

 

The sell by date is stamped to 2020 so obviously a lost leader and the company f**ked up on the marketing for pregnant women, but i can tell ya thia tea has numerous organic fruit herbs and is DELICIOUS!

 

 

when i went to the check-out (near reduced fridge) I could see they put the reduced food out AND it was a FREE for all as everybody was scrambling to grab stuff so i rush over to join them! I mean you would not believe this place it is HILARIOUS ...i should do a video and post it here, i mean some of these people are like mental patients! Still i expect some of them think the same about ME

 

Have a GREAT week-end folks, toodle pip...

Im not sure yet,but its very likely id sell my miners at that point,though i might keep some.I had a very good day on the reduced yesterday.I now know Asda's times as well so my partner went to Asda and i went to Tesco.She got some beef in chianti should of been £6 each for 50p, two of those.4 steak burgers 50p,extra special sausages 50p,sprouts 5p a bag,3 bags,2 packs of baby corn 10p a pack.I got a massive box of strawberries should of been £5 for £1,,two bags of pears 24p each,4 bags of green beans 20p instead of 89p,wholemeal bread 12p ,ready made mash (i dont usually get this as i get 25kg bags of spuds off the farm for £6 but it was a huge one) 50p instead of £2.25.Two ready rolled flaky pastry 10p each.

My partner said there was quite a few grabbing in Asda,but Tesco isnt so bad and i know a few who go in most of the time and we tend to get for each other and share once the scrum is over.Some nights there will be nobody there though,unlike most stores.

[DurhamBorn]

17 hours ago, Nicolas Turgeon said:

 

The results are in with Yamana up 9% over Friday and Eldorado up 1% .  New Gold fell another 12% on top of the 20% drop from the previous day.  Like you say DurhamBorn, a good spread is needed if you're buying these volatile PM's!

It looks like Sandstorm Gold and Endeavour Silver are due to declare some results late next week. The question is .... will they be doing a NGD or a YRI ?!?!?!

Yamana were my no 1 buy on my technical set up top 10 so im really pleased about them.I see $8+ on them if gold goes to $1500,maybe even $10+.Another technical set up was McEwan Mining (lots of short interest who will close out).New Gold was 6th on my rubber band top 10.Those are much more risky and if the complex doesnt turn tend to inflict more pain on a portfolio.My number one pick in the rubber band stocks is Harmony Gold,second Sibanye,third Eldorado, and several others.

I buy/bought from both sets,some with the best technical set ups,some rubber band stocks and keep the country specific risk low,so i only bought a few Sibanye for instance because i bought Harmony,both South African.If the complex does turn id expect some of my rubber band stocks to double,treble,or happened in 2016 four bag.If the complex doesnt turn id expect the rubber band stocks as a whole to maybe inflict 15%/20% losses.

Im very happy with how my portfolio is doing as i move it over to reflation areas.Even BT putting on 10%.I feel the PM complex is a coiled spring with massive upside potential.The risk/reward is hugely positive.If it didnt come off im happy to sit in those stocks and wait.Even if they ended up down 30%,those can evaporate in a week when the complex turns.People should always have a good spread,and shouldnt ever buy the complex if they cant take huge hits sometimes.Its a specialist area.

[DurhamBorn]

8 hours ago, Bear Hug said:

 

So, Dollar up very short term, then Euro and Yen, then after a while Dollar again; Pound mainly down all the way.

Why not get some Euro or Yen equivalent of IBTL at this point?

I mainly try to plot out a road map of where we are going.If im right and the Yen will rally then gold will also and the miners will run much higher.I see that as likely.Im moving my portfolio though mostly over to stocks i think are at generation low prices due to the long dis-inflation,and that will gain from the next cycle.Im not trying to time things on that.I buy in a staircase.Usually 4 times (if a share keeps falling),and if it turns il of stabbed the bottom,even if not a full holding.My aim isnt to get everything right,its to protect and grow my capital,and protect and grow the income creating potential of it.I pretty much retired at 39,and although i dont take any income yet due to a very small business,i keep in position where i can take all income if needed.Id prefer to compound up for another 3-5 years though,hence keeping the little business going.

[DurhamBorn]

41 minutes ago, Barnsey said:

If you're happy to trade short term then that might be a good idea, just have to be quick selling them when the next Eurozone crisis hits, they are in the weakest position despite things looking fairly positive at the moment, so the strengthening euro will possibly be quite short lived, ECB not looking to raise rates until Sep 2019 which is probably in the middle of all this kicking off, and financial distress will fuel the current tensions exponentially.

For the gold bugs on here (I don't know how you do it, nerves of steel, the wild swings would give me a nervous breakdown on a daily basis ), things looking good for a turnaround soon, CFTC gold shorts have spiked, and VERY interestingly, the Vanguard Precious Metals and Mining fund will be renamed to Vanguard Global Capital Cycles fund, signifying the tail end of the PM bear market, similar thing happened back in 2000 as this tweet points out:

 

I use 9 indicators on the PM sector.All 9 are flashing extreme end green.Iv never seen that before.One of the indicators is a "fear" indicator.Its at extreme as well.My RSI indicator is also at extremes where substantial up-trends can begin.These calls arent perfect,but risk/reward looks to be hugely in favour,and thats good enough for me.

Agree on the Euro as well.Europe is very badly placed once this kicks off.The UK needs to hope we are out of the EU in time,though it will probably break up anyway.

[Errol]

Hedge fund shorts of gold are also at all-time record highs.

[sleepwello'nights]

44 minutes ago, Errol said:

Hedge fund shorts of gold are also at all-time record highs.

Yes, that's troubling me. If the rumour that UK interest rates will rise this week is true then I would expect the price of gold to fall. It's around the lows for the year now in Dollar terms, the sterling price is masked by exchange rates.

Just a heads up btw, I bought some VOD, so expect a sharp fall . 

[NogintheNog]

1 hour ago, sleepwello'nights said:

Yes, that's troubling me. If the rumour that UK interest rates will rise this week is true then I would expect the price of gold to fall. It's around the lows for the year now in Dollar terms, the sterling price is masked by exchange rates.

Just a heads up btw, I bought some VOD, so expect a sharp fall . 

I think a rate rise in the UK is priced in to some degree, so any action is going to be very muted. To think of it from a different angle, just think how hard it has been for the BofE to get to the position where they 'may' raise rates by 25bpts. How hard will the next increase be?

As you say sleepwello'nights the currency masks £ weakness. We'll find out this week if they have any balls for this when that Carney makes yet another bshit speech.

[NogintheNog]

PS. I'm down on VOD. But it's a keeper for me.....

[NogintheNog]

5 hours ago, Barnsey said:

For the gold bugs on here (I don't know how you do it, nerves of steel, the wild swings would give me a nervous breakdown on a daily basis )

That depends really on how much of your portfolio is in gold. If you have a £200,000 portfolio, with £190,000 in gold/equities it would be like riding the hulk.....

But who in their right mind would do that????

https://youtu.be/OsjdYQJc748

[DurhamBorn]

2 hours ago, sleepwello'nights said:

Yes, that's troubling me. If the rumour that UK interest rates will rise this week is true then I would expect the price of gold to fall. It's around the lows for the year now in Dollar terms, the sterling price is masked by exchange rates.

Just a heads up btw, I bought some VOD, so expect a sharp fall . 

Its a good thing hedge funds are short.Commercials are always net short,they are people who buy gold for selling on,use gold etc.They buy shorts to protect themselves from a big loss while they hold the gold,until they sell it.Net shorts have fallen below 100k contracts.That means commercials arent bothering to short because they dont see much downside risk.Thats just one indicator,but one that has a good record.Given the sentiment is at lows iv never seen before and all my other indicators are at extreme buy or exceptional buy levels it points to a reversal being close.The technical movement in stocks also indicates most weak hands have left the sector.Outside of company specific problems the complex is now mostly in committed hands.

VOD has pretty much upgraded its network on long term borrowing at 2-3%.In a few years the competition will have to do the same borrowing at 6%-10%.4% price increases for VOD will see 15% uplifts in free cash flow.I expect by the end of the next cycle VOD to have around £14 billion free cash flow and probably a 300% increase in share price (some maybe from share buy-backs).Unless there is an accounting scandal or something company killing.The next cycle will hugely favour asset heavy companies who can depreciate assets slower than inflation.Its been 40 years since that happened,thats why so many (almost everyone) wont spot it IMO.

[Democorruptcy]

Amerman on how US real estate prices defy models

http://danielamerman.com/va/ccc/RErb1Price.html

[sancho panza]

14 hours ago, DurhamBorn said:

Yamana were my no 1 buy on my technical set up top 10 so im really pleased about them.I see $8+ on them if gold goes to $1500,maybe even $10+.Another technical set up was McEwan Mining (lots of short interest who will close out).New Gold was 6th on my rubber band top 10.Those are much more risky and if the complex doesnt turn tend to inflict more pain on a portfolio.My number one pick in the rubber band stocks is Harmony Gold,second Sibanye,third Eldorado, and several others.

I buy/bought from both sets,some with the best technical set ups,some rubber band stocks and keep the country specific risk low,so i only bought a few Sibanye for instance because i bought Harmony,both South African.If the complex does turn id expect some of my rubber band stocks to double,treble,or happened in 2016 four bag.If the complex doesnt turn id expect the rubber band stocks as a whole to maybe inflict 15%/20% losses.

Im very happy with how my portfolio is doing as i move it over to reflation areas.Even BT putting on 10%.I feel the PM complex is a coiled spring with massive upside potential.The risk/reward is hugely positive.If it didnt come off im happy to sit in those stocks and wait.Even if they ended up down 30%,those can evaporate in a week when the complex turns.People should always have a good spread,and shouldnt ever buy the complex if they cant take huge hits sometimes.Its a specialist area.

I like the way you separate those stocks.Very thought provoking

I've been developing my short work of late looking to build into the top on Domino's pizza ,the UK builders etc (the latter going quite well).I've started running  lists based on the reasons why I'm shorting be it structural decline of a sector, overvaluation vs peers, or technical.It's really helped my thinking.

 

[sancho panza]

14 hours ago, Barnsey said:

 

For the gold bugs on here (I don't know how you do it, nerves of steel, the wild swings would give me a nervous breakdown on a daily basis ), things looking good for a turnaround soon, CFTC gold shorts have spiked, and VERY interestingly, the Vanguard Precious Metals and Mining fund will be renamed to Vanguard Global Capital Cycles fund, signifying the tail end of the PM bear market, similar thing happened back in 2000 as this tweet points out:

 

I don't consider myself a gold bug,but I think I've become one as increasingly I see fewer and fewer exit strategies for the CB's.

14 hours ago, DurhamBorn said:

I use 9 indicators on the PM sector.All 9 are flashing extreme end green.Iv never seen that before.One of the indicators is a "fear" indicator.Its at extreme as well.My RSI indicator is also at extremes where substantial up-trends can begin.These calls arent perfect,but risk/reward looks to be hugely in favour,and thats good enough for me.

Agree on the Euro as well.Europe is very badly placed once this kicks off.The UK needs to hope we are out of the EU in time,though it will probably break up anyway.

I don't think the EU will survive the coming Italian debacle.

11 hours ago, sleepwello'nights said:

Yes, that's troubling me. If the rumour that UK interest rates will rise this week is true then I would expect the price of gold to fall. It's around the lows for the year now in Dollar terms, the sterling price is masked by exchange rates.

Just a heads up btw, I bought some VOD, so expect a sharp fall . 

The yellow stuff has many factors affecting it's movements.

[Lavalas]

15 hours ago, Barnsey said:

For the gold bugs on here (I don't know how you do it, nerves of steel, the wild swings would give me a nervous breakdown on a daily basis ), things looking good for a turnaround soon, CFTC gold shorts have spiked, and VERY interestingly, the Vanguard Precious Metals and Mining fund will be renamed to Vanguard Global Capital Cycles fund, signifying the tail end of the PM bear market, similar thing happened back in 2000 as this tweet points out:

 

I read that the fund now called Vanguard Global Capital Cycles fund has reduced its allocation of mining stocks from 80% to just 25%. Seems like quite an ironic name change and a good contrarian indicator.  

[Majorpain]

8 hours ago, Lavalas said:

I read that the fund now called Vanguard Global Capital Cycles fund has reduced its allocation of mining stocks from 80% to just 25%. Seems like quite an ironic name change and a good contrarian indicator.   

Vanguard will have a lot of consumer data on what investors are demanding when they structure their products, and its good business to give the people what they want!  That's a high quality indicator IMO.

[Barnsey]

30 minutes ago, Majorpain said:

Vanguard will have a lot of consumer data on what investors are demanding when they structure their products, and its good business to give the people what they want!  That's a high quality indicator IMO.

Absolutely this! Although if I was to park money in passive funds I would say Vanguard are one of the best, I just don't think they want another blackrock gold and general on their hands, can't blame them really as it's very much a contrarian view and Vanguard is all about wide (safe-ish) market spread and mainstream appeal.

[DurhamBorn]

10 hours ago, sancho panza said:

I like the way you separate those stocks.Very thought provoking

I've been developing my short work of late looking to build into the top on Domino's pizza ,the UK builders etc (the latter going quite well).I've started running  lists based on the reasons why I'm shorting be it structural decline of a sector, overvaluation vs peers, or technical.It's really helped my thinking.

 

It worked very well in the turn in 2016,the number 1 rubber band stock then was First Majestic,it returned over 500%.I find it lets me look at the stocks in a different way.The technical set up stocks tend to filter out the stocks that are gaining investor trust before the complex turns.Their up trends tend to quicken if the whole complex turns,are less risky,and often see a final vertical.The rubber band stocks are stocks that for whatever reason have become hated in a hated sector.They will and do continue to inflict pain if the complex doesnt turn.All my indicators are at the strongest buy levels iv seen and so i consider the risk/reward in my favour.Time will tell if the call fails or not.

[DurhamBorn]

1 hour ago, Majorpain said:

Vanguard will have a lot of consumer data on what investors are demanding when they structure their products, and its good business to give the people what they want!  That's a high quality indicator IMO.

I agree and one of my indicators is committed hands.The lack of hedge fund and institution ownership means the shareholder base is getting down to the hold at all costs section.Its a strong signal on its own.Add in all the other signals are also lined up and a trend change could be close.Insiders have been heavy buyers during the outflows.

[Barnsey]

Just released, UK unsecured annual credit growth +8.8%, credit cards +9.5%.

Here I was thinking people were being more careful because of Brexit, but the party continues! Going to make one hell of a bang when it pops, just like last time.