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Credit deflation and the reflation cycle to come.


DurhamBorn

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23 hours ago, Cattle Prod said:

Big oil yes, small oil no. The problem is a good geologist can pretty much invent the stuff. It even happened at Shell. Big big oil has cleaned up their act, and are cash machines. I currently have Shell, Exxon and BP, but I might dump BP as theyve taken a position on shale. I avoided Conoco and Chevron for tge same reason. I don't know why the market is undervaluing Exxon. Their financial hurdles are the strictest in the industry, and are in charge of the best exploration acreage of the last 5 to ten years. Maybe its on the downstream side. 

My positions are small, and part of my divi portfolio. I will add if they drop. 

I used to work for Statoil, and I like what they are doing strategically, but I cannot get past their work ethic!! 

Next tier down, I like what Nexen/CNOOC are doing and Premier Oil but I dont own either.

Edit:

I forgot Total. They're very annoying to work with in a joint venture, but are a good company. Slightly overvalued. ENI is also overvalued after a very good exploration run of success. One of the few who truly value their explorers, who are the wealth creators, but don't give you a return for 5 - 10 years. I hope they keep it going.

Thanks for your take .My dad worked in the oil companies and always said Exxon was the best run,and he's owned a chunk for years.

Really interested in your take on ENI/Total.

Statoil look peaky but I'm a simple chart gazer.I'd like to own them from a geopolitical/sterling point of view.

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3 minutes ago, sancho panza said:

Thanks for your take .My dad worked in the oil companies and always said Exxon was the best run,and he's owned a chunk for years.

Really interested in your take on ENI/Total.

Statoil look peaky but I'm a simple chart gazer.I'd like to own them from a geopolitical/sterling point of view.

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I think you'll find a lot of that peakiness is due to the NOK exchange rate which of course follows the oil price thus exacerbating the swings. I had them in NOK when I was in Norway and they were pretty good.

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12 hours ago, DurhamBorn said:

The metals and the miners are in reversal range,but like you say trying to nail a bottom in the sector is a waste of time.The only indicator i use that is saying sell is the ALGO indicator that tracks momentum.The other 7 indicators are all pointing to a strong buy,so we will have to see if the ALGO turns last or not.I see the dollar 96.5 down to 92 in the next wave.The sentiment in the miners and the PMs is terrible at the moment and i like to see that.A lot of silver production is as a by-product mostly from copper miners.

Check out the HUI:gold  chart.Only time PM miners cheaper vs gold was 2015.Either Gold goes down or the PM miners go up.

Think I'm goin mad staring at the opportunities here.

 

@leonardratso

Inchcape topping out(Decl. short) .Any other big listed car dealerships you know of

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14 minutes ago, Option5 said:

I think you'll find a lot of that peakiness is due to the NOK exchange rate which of course follows the oil price thus exacerbating the swings. I had them in NOK when I was in Norway and they were pretty good.

Simple explanation I'd completely overlooked .Cheers Option

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8 hours ago, Hardhat said:

AJ Bell a good platform to invest in GDX / GDXJ?

Bullion Vault, Royal Mint or physical for gold sovs / ozs?

I use Goldmoney for physical.

will have to look into aj Bell. Not offered with HL but they have some other mining funds.

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5 minutes ago, Ashby said:

Latest COTs out today. Incredible! Commercials now 15k net long silver and also long gold.

CB47665D-7EDA-4901-A765-38CBF9861E10.png

 

Why the hell would commercials want to be that long in silver futures.  Makes no sense.

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7 hours ago, dgul said:

Why the hell would commercials want to be that long in silver futures.  Makes no sense.

Sure it does, if you have a massive stack of silver out the back of your factory, you want to make sure it dont lose lots of money before you process it.  That works both up and down.

Greed isnt the name of the game, and they have lots of experience, so it has potential to indicate where the real market sees the price to be.  Nothing is 100% however.

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Yellow_Reduced_Sticker
1 hour ago, Majorpain said:

Sure it does, if you have a massive stack of silver out the back of your factory, you want to make sure it dont lose lots of money before you process it.  That works both up and down.

Greed isnt the name of the game, and they have lots of experience, so it has potential to indicate where the real market sees the price to be.  Nothing is 100% however.

 
Surely this is about hedging?
 
Say silver price continues to go DOWN...
 
RE: "massive stack of silver out the back of your factory," = less profits
 
However if they had SHORTED...
 
They would of protected themselves price wise because of the short trade profits...
 

OR I'm i missing something?

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29 minutes ago, Yellow_Reduced_Sticker said:
 
Surely this is about hedging?
 
Say silver price continues to go DOWN...
 
RE: "massive stack of silver out the back of your factory," = less profits
 
However if they had SHORTED...
 
They would of protected themselves price wise because of the short trade profits...
 

OR I'm i missing something?

They short to protect the money they have in the silver while they get it and then sell it.Whenever the commercials go very low net short silver (and gold) there is usually a big rally or a bull ahead.The fact they are now net long is incredible.These are the insiders.Nothing is ever certain,but given these numbers and given the fact retail (dumb money) is short,and sentiment is rock bottom the mining sector has the potential here to make people massive profits.Not certain of course,but from a risk reward id say the best chance since defensives were rock bottom during the tech boom.

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9 hours ago, dgul said:

Why the hell would commercials want to be that long in silver futures.  Makes no sense.

Only one reason.They think an upwards explosion is a real threat and they need to protect their business from the fact they have promised their customers silver in x time,but might not be able to secure it,or have to pay a premium to spot.They have never gone net long before in history,but when they have been least net short in the past a reversal and often a violent one is close.I wouldnt just use the COTs report,but with all the sentiment indicators etc in strong buy areas we cant ignore what its telling us.People in the industry who use silver think its going up strongly,the retail investors think its going down forever.

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Democorruptcy

Not a yellow reduction sticker maybe more outright deflation? I ordered a birthday present for a friend from Argos online, to pick up at Sainsbury. Picked it up the next day, bank account debited. Two weeks later Argos email and say they are cancelling the order and re-crediting my account, the money is now back in. I've decided not to ask for the present back to return it. I only picked it up at Sainsbury because I was going to Wetherpoons and they said there was no such thing as a free lunch! I hope I haven't upset any Argos or Sainsbury shareholders too much.

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Democorruptcy
19 minutes ago, DurhamBorn said:

Only one reason.They think an upwards explosion is a real threat and they need to protect their business from the fact they have promised their customers silver in x time,but might not be able to secure it,or have to pay a premium to spot.They have never gone net long before in history,but when they have been least net short in the past a reversal and often a violent one is close.I wouldnt just use the COTs report,but with all the sentiment indicators etc in strong buy areas we cant ignore what its telling us.People in the industry who use silver think its going up strongly,the retail investors think its going down forever.

How far do these sort of records go back? I'm thinking after Volcker raised rates so gold plunged and became very unloved?

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Yellow_Reduced_Sticker
38 minutes ago, DurhamBorn said:

They short to protect the money they have in the silver while they get it and then sell it.Whenever the commercials go very low net short silver (and gold) there is usually a big rally or a bull ahead.The fact they are now net long is incredible.These are the insiders.Nothing is ever certain,but given these numbers and given the fact retail (dumb money) is short,and sentiment is rock bottom the mining sector has the potential here to make people massive profits.Not certain of course,but from a risk reward id say the best chance since defensives were rock bottom during the tech boom.

 
RE:"People in the industry who use silver think its going up strongly,the retail investors think its going down forever."
 
Thanks for that DB.
 
This is really only want we need to know - the psychology of the market rules the short term then fundamentals take over...bit like the .com boom, every bugger and his grandma thought it would go up forever only to find out MOST of these .com companies have NEVER made a profit!
 
Hence the eventual .com COLLAPSE!
 

I've bought 40% of my silver allocation at bullionvault (3 purchases all each at lower prices lol) - if ONLY i knew where the silver price bottom is...anyone know the answer to the BILLION dollar question?:D

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4 hours ago, Majorpain said:

Sure it does, if you have a massive stack of silver out the back of your factory, you want to make sure it dont lose lots of money before you process it.  That works both up and down.

Greed isnt the name of the game, and they have lots of experience, so it has potential to indicate where the real market sees the price to be.  Nothing is 100% however.

No -- that doesn't make sense.

When commercials take up a short they're saying 'I've got a business with variable input and output costs which are okay at the moment -- I'll reduce the risk of the variability by buying up loads of the input stuff now, at a price I know works, and I'll try to sell stuff I'll be producing in a few months time to people now, with a promise I'll deliver when we get there.'  This can be achieved by going long oil (as the primary input cost) and short silver (as the primary output stuff).  There is no risk or gambling etc -- they're protecting the business from risks.

I can get the reduced short -- although I don't necessarily have the same interpretation as DB -- IMO that could just be as well them saying, 'we're close to threshold here -- no point in protecting the price -- we're better off taking the risk and if the price goes down we've had it (and we'll have had it if the prices remain at this level as well).'

However, going long?  That's them saying 'We've going to have 100,000oz to sell at 6 months in the future, but, you know what, at exactly the same point in 6 months time were're going to promise to buy 50,000oz off someone!  Then we'll have 150,000oz!'  That's madness.  Sure, it makes sense from a speculation point of view, but producers don't work that way -- they want to reduce risk, not increase it.

The only thing that would make sense for miners is if they had spot price offtake agreements, and they were scared that an increased price would ruin them if they couldn't meet the promised output (for whatever reason) and were fined at spot prices.  There might just be enough mines/ out there with this sort of arrangement that a protective long would make sense at a suspected price reversal point. 

It also sort of makes sense for processors/refiners -- but they've got exposure to spot prices on the way in and out.  This will usually net out, but with a small net short for metal within the process.  I suppose they could reduce their output hedge (the short side) and put in place more exposure to low input prices (the long side), which would give a net long position.

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2 hours ago, Democorruptcy said:

How far do these sort of records go back? I'm thinking after Volcker raised rates so gold plunged and became very unloved?

The early 70s mostly,though the COT report was late 60s i think.The commercials have never been net long ever as far as my records show.The other asset the commercials are now very long in is sterling.

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1 hour ago, dgul said:

I can get the reduced short -- although I don't necessarily have the same interpretation as DB -- IMO that could just be as well them saying, 'we're close to threshold here -- no point in protecting the price -- we're better off taking the risk and if the price goes down we've had it (and we'll have had it if the prices remain at this level as well).'

However, going long?  That's them saying 'We've going to have 100,000oz to sell at 6 months in the future, but, you know what, at exactly the same point in 6 months time were're going to promise to buy 50,000oz off someone!  Then we'll have 150,000oz!'  That's madness.  Sure, it makes sense from a speculation point of view, but producers don't work that way -- they want to reduce risk, not increase it.

Unless you were expecting a disruption of supply and needed extra ounces to complete agreed contracts?  Inflation adjusted silver is now below 2015/6 lows iirc. 

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Democorruptcy
27 minutes ago, DurhamBorn said:

The early 70s mostly,though the COT report was late 60s i think.The commercials have never been net long ever as far as my records show.The other asset the commercials are now very long in is sterling.

That's interesting. Does that mean we should we be looking at Gold assets in Sterling rather than USD? (At least in the short term) Would you get more profit if they are correct about both, rather than a Gold in USD price rise, being offset by a Sterling rise? Or would it be factored into the FTSE Sterling price of miners. Do you have an opinion on such as Randgold or Fresnillo?

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I had a perusal of the share prices in the Times today. What surprised me are the number of companies with their share prices at 12 month lows or marginally above. If you look at the banks, Barclays, HSBC and Lloyds all closed yesterday at a 12 month low. RBS is marginally above their 12 month low. Similar thing in other sectors. 

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Bobthebuilder
1 hour ago, Castlevania said:

I had a perusal of the share prices in the Times today. What surprised me are the number of companies with their share prices at 12 month lows or marginally above. If you look at the banks, Barclays, HSBC and Lloyds all closed yesterday at a 12 month low. RBS is marginally above their 12 month low. Similar thing in other sectors. 

Lloyds is down about 15% since March, biggest BTL mortgage provider i see.

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6 minutes ago, Thorn said:

Watching the Albert Hall Last Night of the Proms.

Just wondering how many of the revellers have to rent.

95%

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