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Credit deflation and the reflation cycle to come.


DurhamBorn

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One of the more (worrying) things about silver is its 50% PM 50% Industrial metal. If industrial consumers are cutting back on buying raw materials it doesnt bode well for the world economy.

Copper, lead, tin, aluminium, cobalt, zinc all getting clubbed over the past months.  Oil starting to fall as well?

Interestingly Steel is doing ok, although China does control that market with its SOE so the "market" price will be what the Communists set it as!

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4 hours ago, NogintheNog said:

 

Fascinating video. Thanks for sharing. It gives me a warm feeling (!) that a financial amateur like myself has been able to prepare as best as I think I can (thanks to this thread) for the 'interesting' times ahead and its quite a good visual to back up a lot of what DB has been saying about hated, undervalued stocks.

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sancho panza
On 14/08/2018 at 17:53, DurhamBorn said:

In 2001 the Vanguard Gold and precious metals fund dropped Gold from its name at the market bottom. On July 25th, Vanguard announced it would no longer offer a fund with Gold and Precious Metals in its name and planned to take it's 2.3 Billion Gold and precious metals holdings down from at least 80% of the fund to 20%. Once again they are losing confidence precisely when a major bottom should arise. At the market bottom in December 2016, DSI sentiment reached a reading of 4% retail bulls. Recently we have had an 8% and 6% reading, and another 6% yesterday. Retail sentiment has reached the pessimistic extremes last seen at the lows in Gold in 2015.

Technicals are extremely oversold. This is precisely what was needed to create the pessimism necessary to birth the optimism that will come at the peak of the next intermediate cycle, when Gold is likely to exceed 1400/1450. The dollar is overdue to print a 13 month cycle high.
That has not changed.

Gold continues to make higher highs since it's bottom in 2015. The primary uptrend is not threatened as long as 1123 remains intact as critical long term support. All breaking 1194.50 does is change the wave pattern and may alter the timing for the cycle peak. Although GDX with its large cap stocks bottomed in Jan 2016, the broader TSX Global Gold Stock Index actually bottomed in September 2015 and made its second higher low into the January 2016 low.

Normally, I pay less attention to speculators in the spot gold, weekly range. However, I noticed they reached a weekly extreme in pessimism, that exceeds the extreme last seen in December 2015. This is good news going forward. It did take a few weeks after that bottom in pessimism for GDX to bottom. This is a telling week and I am on reversal watch.

I was thinking about this post at work today as it really reminded me of why I love the game. You can have all these banks with all the research capability in the world but sometimes 'thelast thing genius learns is simplicity'The sort of things you list above are timeless indicators for the smaller players.

HUI got walloped today -6%,first tranche of Goldies is all  down on purchase price.but I'm getting quite intrigued by trying to predict how low these shares could go.

https://uk.investing.com/indices/arca-gold-bugs-components

Of note,Gold FIelds got mullered within a whisker of a 40 year low................

Barrick at the same price as 1991.

 

 Interesting times.Personally,I think these Goldies might test their 2015 lows which would allow me to pick up a few shares from the ones I'm waiting for-Sibanye, Kinross,Couer, Hecla,Pretium, Tahoe.

 

 

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8 hours ago, Yellow_Reduced_Sticker said:

"London house prices suffer largest drop in nine years"

https://uk.finance.yahoo.com/news/london-house-prices-suffer-largest-135312230.html

 

“Landlords are exiting the market in their thousands and as a result rental prices are soaring.”

Who do they sell to..?

btw. Gold may be reversing today, such a great price rejection last night :)

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3 minutes ago, BearyBear said:

“Landlords are exiting the market in their thousands and as a result rental prices are soaring.”

Who do they sell to..?

btw. Gold may be reversing today, such a great price rejection last night :)

Presumably rental prices are set by the tenants in the longer term, people can only pay so much.

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11 minutes ago, Barnsey said:

So much for those "just a Brexit blip" headlines, this is getting serious, rest of UK invincible of course 9_9

But if you look closer at the numbers the prices are going down in the most expensive areas where its global 1% money is going and rising or stagnating elsewhere ... and as low sales volume is always cited when prices are going up, it must be relevant when going the other way.

 

Just now, Option5 said:

Presumably rental prices are set by the tenants in the longer term, people can only pay so much.

The floor is set by the govt. via housing benefit

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Yellow_Reduced_Sticker

 

Folks, the REAL party hasn't even started yet... YOU need to have cool head in volatile markets & collapses ...SO

 

aaa642af3086fa54bdfebab71bacc954.jpg

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10 hours ago, sancho panza said:

I was thinking about this post at work today as it really reminded me of why I love the game. You can have all these banks with all the research capability in the world but sometimes 'thelast thing genius learns is simplicity'The sort of things you list above are timeless indicators for the smaller players.

HUI got walloped today -6%,first tranche of Goldies is all  down on purchase price.but I'm getting quite intrigued by trying to predict how low these shares could go.

https://uk.investing.com/indices/arca-gold-bugs-components

Of note,Gold FIelds got mullered within a whisker of a 40 year low................

Barrick at the same price as 1991.

 

 Interesting times.Personally,I think these Goldies might test their 2015 lows which would allow me to pick up a few shares from the ones I'm waiting for-Sibanye, Kinross,Couer, Hecla,Pretium, Tahoe.

 

 

I must admit SP i love these times in the markets.Im a brutal contrarian investor and i use my indicators 100% to drive my entries and ignore everything else.My miners are showing -12% across the board,some are actually up quite a bit from purchase.Gold Fields was hit hard due to South Deep needing more lay offs,not one i own.The ANC isnt happy.The market thinks the ANC will ban lay offs etc.So we have SA miners being the most hated in the sector within a sector being the most hated in the market.I have no doubt over time il 5 bag or maybe 10 bag on some of them.What will likely happen is the industry and government will sit down and work out a way to expand mining,expand jobs and also make the mines more profitable.The narrative is that all the mines are loss making.They arent,with the Rand and gold at todays prices almost all of Harmony's mines are profitable (some very profitable).Frank Abbott their long time CFO will be locking in these Rand prices with futures,zero cost collars etc.That will mean even with gold at $1175 they will have about an 18% margin.With currency hedges in place (most of their costs are RAND based) if gold then turns id expect $300 million profits next year on an $800 million market cap.

As for the dollar my target was 96.5 and we are there now and i think the follow through might see it hit 97.6.We have a 36 month bullish extreme on the dollar.The 9 day sentiment reading is at 91% bullish,and the numbers i run are exactly where they were when the dollar topped at 103.That is the kind of sentiment you see in a cycle rebound,thats all this is.Everyone wants to be bullish on the dollar,but that will prove very un-profitable from here i think.I expect the dollar to turn lower,a lot lower.

The miners could tag lower,but a turn is imminent and i think the Global gold index will end up going to around the 340 area from the 158 area it at now though of course maybe not in a straight move.

Iv also sold some of my US treasury holdings.They have been nicely profitable.

https://stockcharts.com/freecharts/gallery.html?$sptgd

 

 

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20 minutes ago, DurhamBorn said:

As for the dollar my target was 96.5 and we are there now and i think the follow through might see it hit 97.6.We have a 36 month bullish extreme on the dollar.The 9 day sentiment reading is at 91% bullish,and the numbers i run are exactly where they were when the dollar topped at 103.That is the kind of sentiment you see in a cycle rebound,thats all this is.Everyone wants to be bullish on the dollar,but that will prove very un-profitable from here i think.I expect the dollar to turn lower,a lot lower.

This may help turn things around for DXY

https://www.bloomberg.com/news/articles/2018-08-14/fed-may-end-taper-this-year-amid-regime-rethink-pozsar-says

Quote

America’s growing debt pile may force the Federal Reserve to stop shrinking its balance sheet before the year is out, according to Credit Suisse Group AG analyst Zoltan Pozsar.

With bank reserves at the Fed being pared, the U.S. central bank will soon have to make a choice between activating an overnight facility for repurchase agreements or halting its balance-sheet reduction earlier than many market participants expect, the former U.S. Treasury adviser wrote in a note Monday.

He indicates that policy makers are unlikely to pursue the option of a new facility until alternatives have been exhausted, meaning a premature end to the taper is the most likely outcome. Royal Bank of Canada analysts said last month the balance-sheet runoff could end as early as 2019, while Goldman Sachs strategists in May said they’re assuming an end around April 2020.

And as a reminder, next Wednesday, 22nd August, marks the point at which the US stock bull market becomes longest ever on record, brace yourselves!

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3 minutes ago, Barnsey said:

Exactly as i see it,this dollar cycle our work has said 103 down to 87 (it tagged 88) back up to 96.5 (expect maybe 97.6) then down to 86,perhaps down to 74.Its the reason iv sold some of my treasuries as they made a nice return as a sterling investor and a dollar turn is very close for me.I think a lot of the miners in countries where the currency has been smashed will be hedging into this for the next 2 to 3 years while they have the chance before the dollar falls again.

 

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Yellow_Reduced_Sticker

@DurhamBorn

I got me eye on Yamana Gold...
 
Surely Yamana Gold Inc. is a Canadian-based gold producer?
 
cos AUY you get:
 
 
HL you get:
 
 
Are you buying the HL version?
 

Cheers!

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49 minutes ago, Yellow_Reduced_Sticker said:

@DurhamBorn

I got me eye on Yamana Gold...
 
Surely Yamana Gold Inc. is a Canadian-based gold producer?
 
cos AUY you get:
 
 
HL you get:
 
 
Are you buying the HL version?
 

Cheers!

It is just listed on two stock markets (Toronto or New York).  It used to be listed in London as well (cancelled in 2013 or so).  Generally speaking you should trade, if possible, at the market with the highest turnover, as that'll have the lowest spread.  The primary listing for Yamana is Toronto, so I'd imagine that'll be the best place to invest (check though).  The two mid-prices should be the same.

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sancho panza
3 hours ago, DurhamBorn said:

I must admit SP i love these times in the markets.Im a brutal contrarian investor and i use my indicators 100% to drive my entries and ignore everything else.My miners are showing -12% across the board,some are actually up quite a bit from purchase.Gold Fields was hit hard due to South Deep needing more lay offs,not one i own.The ANC isnt happy.The market thinks the ANC will ban lay offs etc.So we have SA miners being the most hated in the sector within a sector being the most hated in the market.I have no doubt over time il 5 bag or maybe 10 bag on some of them.What will likely happen is the industry and government will sit down and work out a way to expand mining,expand jobs and also make the mines more profitable.The narrative is that all the mines are loss making.They arent,with the Rand and gold at todays prices almost all of Harmony's mines are profitable (some very profitable).Frank Abbott their long time CFO will be locking in these Rand prices with futures,zero cost collars etc.That will mean even with gold at $1175 they will have about an 18% margin.With currency hedges in place (most of their costs are RAND based) if gold then turns id expect $300 million profits next year on an $800 million market cap.

As for the dollar my target was 96.5 and we are there now and i think the follow through might see it hit 97.6.We have a 36 month bullish extreme on the dollar.The 9 day sentiment reading is at 91% bullish,and the numbers i run are exactly where they were when the dollar topped at 103.That is the kind of sentiment you see in a cycle rebound,thats all this is.Everyone wants to be bullish on the dollar,but that will prove very un-profitable from here i think.I expect the dollar to turn lower,a lot lower.

The miners could tag lower,but a turn is imminent and i think the Global gold index will end up going to around the 340 area from the 158 area it at now though of course maybe not in a straight move.

Iv also sold some of my US treasury holdings.They have been nicely profitable.

https://stockcharts.com/freecharts/gallery.html?$sptgd

 

 

Lots to think about DB.

With my shorting, I have set criteria for each sector that I'm following that allow for entry.Currently, up on the 5 running although a couple are on the cusp (best is Travis Perkins down 17%,ITV,BDEV-again-,Taylor Wimpey,), 2 already shut down Barratts for a 12% gain and Reckitt B for a 7% loss).Looking to add more as the whole construction sector looks to be rolling over to be honest-just slowly but as the weeks progress more and more indicators are lining up for the 30+ companies I'm watching although admittedly,many of that 30 aren't construction related eg ITV/WH Smith.

 

With the long side,I have more trouble as I tend to look at the financials much more which obviously,brings a lot more variables into play.My Goldies,as I said are all down,some substantially so-50%+ ElDorado/New Gold although they're small holdings.However,I've been in the game a long time and some of my greatest ever trades,started life as a 50%+ running loss.I'm wary of my limitations and after putting what I call my 'blocking bets' on ie if it runs up from purchase price I won't add more, we're left with plenty to spare.When you look at the long term charts and then you look at the market cap to revenue of some of the big blue chip miners,it's amazing how low they've come and could possibly go.

I well remember the top of the tech bubble and all the experts were calling various companies higher and higher on No...and I mean NO...earnings.We left the party early-way too early,but we got on early as well.There's a lot of people calling the S&P higher after an exponential phase on the back of terminal declines in velocity over ten years.I think the internals of the UK market are flagging weakness but time will tell.

The Goldies really do appear to be at the point of maximum despair in many ways.Sometimes that means more than all the fine research pumped out by the whizz kids in the city.

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7 minutes ago, sancho panza said:

Lots to think about DB.

With my shorting, I have set criteria for each sector that I'm following that allow for entry.Currently, up on the 5 running although a couple are on the cusp (best is Travis Perkins down 17%,ITV,BDEV-again-,Taylor Wimpey,), 2 already shut down Barratts for a 12% gain and Reckitt B for a 7% loss).Looking to add more as the whole construction sector looks to be rolling over to be honest-just slowly but as the weeks progress more and more indicators are lining up for the 30+ companies I'm watching although admittedly,many of that 30 aren't construction related eg ITV/WH Smith.

 

With the long side,I have more trouble as I tend to look at the financials much more which obviously,brings a lot more variables into play.My Goldies,as I said are all down,some substantially so-50%+ ElDorado/New Gold although they're small holdings.However,I've been in the game a long time and some of my greatest ever trades,started life as a 50%+ running loss.I'm wary of my limitations and after putting what I call my 'blocking bets' on ie if it runs up from purchase price I won't add more, we're left with plenty to spare.When you look at the long term charts and then you look at the market cap to revenue of some of the big blue chip miners,it's amazing how low they've come and could possibly go.

I well remember the top of the tech bubble and all the experts were calling various companies higher and higher on No...and I mean NO...earnings.We left the party early-way too early,but we got on early as well.There's a lot of people calling the S&P higher after an exponential phase on the back of terminal declines in velocity over ten years.I think the internals of the UK market are flagging weakness but time will tell.

The Goldies really do appear to be at the point of maximum despair in many ways.Sometimes that means more than all the fine research pumped out by the whizz kids in the city.

Those shorts look to of done very well indeed.Like you my biggest long term profits have come from buying hated sectors and many carried on down 20%,30% more etc.That is why i use my indicators to take the emotion out of it.A road map gives me the likely macro direction.We are moving from capitulation to despondency in the PM sector and that is perfect because it leaves behind as many investors and funds as possible.In the reversal they will be too afraid to act,just when action is needed.

Its ironic,but the sector has a very good chance of making people life changing amounts if the ducks line up.

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6 minutes ago, DurhamBorn said:

Its ironic,but the sector has a very good chance of making people life changing amounts if the ducks line up. 

Completely agree, the market has gone a little bit crazy.  The following is very rough, but its does show what a steal some of the PM miners are IMO.

1oz gold -$1181

1oz silver -$14.64

Harmony $800m Mcap 105m oz AU Reserves - $7.6 oz gold

Sibanye $1270m Mcap 102m oz AU Reserves - $12.4 oz gold

Hochschild $1052 Mcap 351m oz AG Reserves - $2.9 oz Silver

Fresnillo $9244 Mcap 2100m oz AG Reserves - $4.4 oz Silver

And that's just the main PM each produce, you can add in and other credits for other metals they produce.  Fres gets its silver nearly for free FFS!

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2 minutes ago, Majorpain said:

Completely agree, the market has gone a little bit crazy.  The following is very rough, but its does show what a steal some of the PM miners are IMO.

1oz gold -$1181

1oz silver -$14.64

Harmony $800m Mcap 105m oz AU Reserves - $7.6 oz gold

Sibanye $1270m Mcap 102m oz AU Reserves - $12.4 oz gold

Hochschild $1052 Mcap 351m oz AG Reserves - $2.9 oz Silver

Fresnillo $9244 Mcap 2100m oz AG Reserves - $4.4 oz Silver

And that's just the main PM each produce, you can add in and other credits for other metals they produce.  Fres gets its silver nearly for free FFS!

Once a bull gets going you will start to see headlines about that very thing.Instead of giving a value based on profits people will start to value at per resource ounce.I fully expect some will start to be valued at $50 an oz in the ground.Of course a lot of resources arent profitable at todays prices.Its ironic that PMs are so hated when Gold has just performed its job to perfection for Turkish people.A Turk holding gold has protected his wealth.His brother who only had currency has lost about half of his.As always the market hurts as many people as possible.

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sancho panza
1 hour ago, DurhamBorn said:

Those shorts look to of done very well indeed.Like you my biggest long term profits have come from buying hated sectors and many carried on down 20%,30% more etc.That is why i use my indicators to take the emotion out of it.A road map gives me the likely macro direction.We are moving from capitulation to despondency in the PM sector and that is perfect because it leaves behind as many investors and funds as possible.In the reversal they will be too afraid to act,just when action is needed.

Its ironic,but the sector has a very good chance of making people life changing amounts if the ducks line up.

My short work is comparatively small at the minute.I'm looking to build a portfolio of profits to take into the big cahuna sometime next year-ref posts with @Barnsey- regarding the fact that share buy backs will likely keep a bottom under the market (all the Directors repaying the City whizz kids with rising earnings on flat profits,managing to snatch defeat from the jaws of victory by spunking the profits on shares at exponentially bloated prices)

I think successful investing is about learning to conquer emotions-plan your trades,trade your plan.I love the old bubble graph and like you think we're somewhere between capitulation and despair ref the Goldies.I leave my long term indicators to tell me when despair is in the rear view but by then they could have treble bagged ....

image.png.30bf5d6e7287ac2f29106c6a8212feae.png

 

I'd go with Buffet on buy backs.I think the current round is a top of the market signal.Nearly $1 trillion USD on S&P 500 stocks.

https://www.telegraph.co.uk/investing/shares/share-buybacks-soar-can-spell-bad-news/

'However, not all share buybacks are equal – and not all are good for shareholders. For example, BP has spent $61.7bn on share buybacks since 2000, and over that time its share price has still fallen.

Famed investors Warren Buffett and Charlie Munger say that share buybacks are only good in certain circumstances: if a company has already invested in its business, if the company is not taking on debt to do so, and if the buybacks are done at below the stock’s intrinsic value.'

1 hour ago, Majorpain said:

Completely agree, the market has gone a little bit crazy.  The following is very rough, but its does show what a steal some of the PM miners are IMO.

1oz gold -$1181

1oz silver -$14.64

Harmony $800m Mcap 105m oz AU Reserves - $7.6 oz gold

Sibanye $1270m Mcap 102m oz AU Reserves - $12.4 oz gold

Hochschild $1052 Mcap 351m oz AG Reserves - $2.9 oz Silver

Fresnillo $9244 Mcap 2100m oz AG Reserves - $4.4 oz Silver

And that's just the main PM each produce, you can add in and other credits for other metals they produce.  Fres gets its silver nearly for free FFS!

Wow,just wow.!

 

Those SA miners are incredible.Just check Impala as well.That looks like despair to me.They don't look as if they're headed for insolvency either.Amplats too.

 

1 hour ago, DurhamBorn said:

Once a bull gets going you will start to see headlines about that very thing.Instead of giving a value based on profits people will start to value at per resource ounce.I fully expect some will start to be valued at $50 an oz in the ground.Of course a lot of resources arent profitable at todays prices.Its ironic that PMs are so hated when Gold has just performed its job to perfection for Turkish people.A Turk holding gold has protected his wealth.His brother who only had currency has lost about half of his.As always the market hurts as many people as possible.

I think people forget we've had physical Bitcoin since time immemorial.I never used to see the need until I started understanding the importance of velocity economically and coming to grips with the importance of it's decline since the monetary policy response 2008/9.

As ever worth reading a seminal post I've posted before on what the yellow stuff hedges from Mish.I'm firmly in the camp that is hedging CB incompetence.Highlights are mine.

https://moneymaven.io/mishtalk/economics/secular-disinflationary-trend-hits-new-highs-deflation-on-deck-what-s-that-mean-for-gold-1HVGJo4NykmJCIDVGUc9UQ

'What’s That Mean for Gold?

Contrary to popular belief, gold is not an inflation hedge. We had inflation every step of the way from 1980 to 2000 with gold falling from $850 to $250 along the way.

To be more precise, we had disinflation, a falling, but positive rate of inflation as measured by the CPI. Those are conditions in which gold tends to perform miserably.

Gold tends to do well in deflation, stagflation, and times of credit stress. More importantly, gold does well when confidence in central banks is on the wane.

On June 24, I gave a presentation to the Venture Alliance group. Here are a few slides on gold from my presentation.

Faith in Central Banks

The second to last slide above is worth a detailed inspection. Here is the timeline.

  • August 15, 1971: Nixon closed the gold redemption window. Gold was $43.15 per ounce.
  • January 21, 1980: Gold closed at $850 an ounce. That was the market top for decades.
  • March 1980: US inflation peaked at 14.8%. The Federal Reserve Board led by Paul Volcker raised the federal funds’ rate to a peak of 20% in June 1981. It was not the rate of hikes that directly led to the plunge in gold. Rather, the rate hikes convinced the public and the markets that the Fed had everything under control.
  • August 11, 1987: Greenspan took over as Fed chair. The “Great Moderation” started. Disinflation and slowing falling interest rates were the norms. Greenspan was labeled the “Maestro”. Faith in central banks peaked under Greenspan.
  • May 7, 1999: The Bank of England announced plans to dump gold for other assets. The price of gold was $282 per ounce. The advance notice of the sale drove the price down by 10% by the time of the first auction on July 6, 1999. With many traders shorting, gold reached a low of $252.80 on July 20. This is frequently called “Brown’s Bottom” after Gordon Brown, the UK Chancellor of the Exchequer.
  • 2000-2007: The DotCom bubble burst and Greenspan slashed interest rates to a then record low. This was followed by a housing bubble, a housing bubble bust, and Greenspan leaving the Fed. Ben Bernanke took over. Bernanke slashed interest rates to nearly zero and kicked off three rounds of QE. Faith in central banks was again in question for most of this timeline.
  • August 23, 2011: Gold peaked at $1923.70 with a European debt crisis underway, worries about Greece, and with the Fed involved in a series of QE actions.
  • July 26, 2012: Mario Draghi gave his famous “Whatever it Takes” speech. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” Faith in central banks was temporarily restored.
  • November 22, 2015: Gold touched $1056. In the chart, I gave a December date. That timeframe is when faith in central banks hit a rebound peak.
  • Present: A debate is on whether or not the Fed is behind or a head of the curve. Dissent at the Fed as to whether it should be hiking or cutting is widespread. Many economists advocate a higher range of inflation even though the Fed cannot get to 2% inflation. Asset bubbles are numerous and obvious to many observers, but not the Fed.

The price of gold closely follows faith in central banks. If you think faith in central banks will again come into widespread question, then add to your gold stash.

Deflation on Deck?

Is deflation on deck? Yes, asset deflation, a very destructive kind of deflation.

CPI deflation is not to be feared. More precisely, CPI deflation is a benefit. Falling prices increase purchasing power by definition and thus raise standards of living.

Yet, central banks (especially the Fed, ECB, Bank of Japan, and the People’s Bank of China) foolishly poured trillions of dollars into the economy an attempt to boost CPI inflation.

Instead of boosting the CPI, central banks created numerous asset bubbles. When asset bubbles burst, and they always do, bank loans based on inflated asset values come into question.

This is precisely what happened in the housing bubble, and it will happen again, perhaps not as severely globally, but it may be crippling in the EU.

Economic Challenge to Keynesians

Of all the widely believed but patently false economic beliefs is the absurd notion that falling consumer prices are bad for the economy and something must be done about them.

I have commented on this many times and have been vindicated not only by sound economic theory but also by actual historical examples.

There is no answer because history and logic both show that concerns over consumer price deflation are seriously misplaced.

BIS Deflation Study

The BIS did a historical study and found routine deflation was not any problem at all.

"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.

Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.

Meanwhile, economically illiterate writers bemoan deflation, as do most economists and central banks. The final irony in this ridiculous mix is central bank policies stimulate massive wealth inequality fueled by soaring stock prices.'

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Eventually Right

Anecdotally, I was a VW garage a couple of weeks ago as my girlfriend was looking for a new (second hand) car.

i was talking to one of the salesmen about the new 18 plate Polo, and noted to him that they seemed significantly bigger than the old model.

His response was that the reason behind this increase in size, was that Golf drivers on finance deals were finding it difficult to afford to finance a new Golf, and so the Polo had been increased in size to give them a similar sized, but more affordable option.

No idea whether it’s true or not (it tripped off his tongue, and he seemed confident-but that’s his job), but surely a sign of a bubble running out of road if so.

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5 minutes ago, Eventually Right said:

Anecdotally, I was a VW garage a couple of weeks ago as my girlfriend was looking for a new (second hand) car.

i was talking to one of the salesmen about the new 18 plate Polo, and noted to him that they seemed significantly bigger than the old model.

His response was that the reason behind this increase in size, was that Golf drivers on finance deals were finding it difficult to afford to finance a new Golf, and so the Polo had been increased in size to give them a similar sized, but more affordable option.

No idea whether it’s true or not (it tripped off his tongue, and he seemed confident-but that’s his job), but surely a sign of a bubble running out of road if so.

Doesn't make sense to me. Cars which were originally designed as small are getting bigger and it's been like that for decades, check older Corsa, Nissan Micra, Honda Jazz, VW Polo too. Every newer version is slightly bigger than its predecessor. Larger cars are also getting bigger but the difference is not that significant.

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25 minutes ago, BearyBear said:

Doesn't make sense to me. Cars which were originally designed as small are getting bigger and it's been like that for decades, check older Corsa, Nissan Micra, Honda Jazz, VW Polo too. Every newer version is slightly bigger than its predecessor. Larger cars are also getting bigger but the difference is not that significant.

Then under the Polo they had to introduce the Fox... (replaced by the Up!)... the same size as a 90s Polo. Same across the board... see the Ford Ka, Vauxhall Adam, Toyota Aygo etc, all came in as the smallest models in the range as the existing ones grew up.

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sleepwello'nights
46 minutes ago, BearyBear said:

Doesn't make sense to me. Cars which were originally designed as small are getting bigger and it's been like that for decades, check older Corsa, Nissan Micra, Honda Jazz, VW Polo too. Every newer version is slightly bigger than its predecessor. Larger cars are also getting bigger but the difference is not that significant.

My take on that is customer loyalty. They I've had a Golf say and are comfortable with it, they need to get a newer vehicle but need something bigger. Voila the new model Golf, a similarly reliable vehicle they know but a bit bigger to suit their newer needs. 

It applies to all manufacturers and most models with the same name over each iteration. 

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