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Credit deflation and the reflation cycle to come.


DurhamBorn

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1 hour ago, sleepwello'nights said:

I understand the principle but who do you pay the £2880 pension contribution to and how do you draw it back out? 

Pay it into a SIPP,the broker puts the 25% on top for you from HMRC automatic.Turn it into drawdown,open new SIPP the next tax year,turn it into drawdown etc.

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Bricks & Mortar

 

7 hours ago, DurhamBorn said:

if they go to £150 a coin it will be much better flogging a few a week

Do you expect silver, (and other metals), to stay high for a sustained period?  I'm thinking of the 1980 price spike, that you'd have missed if you blinked.

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6 minutes ago, AnythingWithWheels said:

To those of you asking where to buy silver coins - I always use goldsilver.be, paying in EUR using TransferWise.  All above board, and without the 20% VAT penalty. Just bought some nice 10oz Queen’s Beasts and more Britannias to add to the stack.

Those Queens Beasts are lovely.Notice a new 10oz George and Dragon Brit,really nice that.

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6 minutes ago, DurhamBorn said:

Those Queens Beasts are lovely.Notice a new 10oz George and Dragon Brit,really nice that.

They are - and at a relatively small premium to the 1oz coins.

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Yellow_Reduced_Sticker
10 minutes ago, Bricks & Mortar said:

 

Do you expect silver, (and other metals), to stay high for a sustained period?  I'm thinking of the 1980 price spike, that you'd have missed if you blinked.

Ya never know the Hunt Brothers offspring may be back to Corner the Silver Market in the next spectacular Silver bull market...

https://priceonomics.com/how-the-hunt-brothers-cornered-the-silver-market/

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14 minutes ago, Bricks & Mortar said:

 

Do you expect silver, (and other metals), to stay high for a sustained period?  I'm thinking of the 1980 price spike, that you'd have missed if you blinked.

Yes i do,at least over a couple of years.As always though there will likely be a blow up vertical towards the top over a month or so.I wont be selling any silver until its $80 an oz and then not much until it hits $120 and if it doesnt il keep holding.

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Alifelessbinary

I’m planning on visiting Hatton Market Gardens on Friday to pick up some sovs. If anyone has any specific questions let me know and I’ll answer them here once I get back.

At the moment their premium on sovereigns is up from 3% to 4%, but they are still one of the cheapest places I’ve found and where easy to deal with on my last visit.

Anythingwithwheels - I just made exactly the same purchase, so I hope they don’t confuse our orders, unless you ordered more than me!

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1 minute ago, Alifelessbinary said:

I’m planning on visiting Hatton Market Gardens on Friday to pick up some sovs. If anyone has any specific questions let me know and I’ll answer them here once I get back.

At the moment their premium on sovereigns is up from 3% to 4%, but they are still one of the cheapest places I’ve found and where easy to deal with on my last visit.

Anythingwithwheels - I just made exactly the same purchase, so I hope they don’t confuse our orders, unless you ordered more than me!

Ask them why they think the commercials have gone net long silver for the first time in history.

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Alifelessbinary
37 minutes ago, DurhamBorn said:

 

Ask them why they think the commercials have gone net long silver for the first time in history.

Ha, I’ll give it a go, but I’m sure the sales asssitant’s eyes will glaze over. 

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56 minutes ago, Alifelessbinary said:

I’m planning on visiting Hatton Market Gardens on Friday to pick up some sovs. If anyone has any specific questions let me know and I’ll answer them here once I get back.

At the moment their premium on sovereigns is up from 3% to 4%, but they are still one of the cheapest places I’ve found and where easy to deal with on my last visit.

Anythingwithwheels - I just made exactly the same purchase, so I hope they don’t confuse our orders, unless you ordered more than me!

I just wonder about security, walking out of a gold shop with a heavy bag. Surely crims must know about this will you get to the nearest tube in one piece?

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21 minutes ago, Funn3r said:

I just wonder about security, walking out of a gold shop with a heavy bag. Surely crims must know about this will you get to the nearest tube in one piece?

You could hold £500,000 in sovereigns in a box half the size of a shoe box. I don't think anyone would notice.

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Alifelessbinary

As Errol has rightly said I could easily hide them in a pocket full of change. Most would be attackers would be more interested in my phone than the odd looking coins in my pocket.

Hatron Garden is actually an extremely secure area as it has its own security force. I’d be more worried about coins being stolen by the postal service, or lost by me, than being mugged.

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7 hours ago, Alifelessbinary said:

As Errol has rightly said I could easily hide them in a pocket full of change. Most would be attackers would be more interested in my phone than the odd looking coins in my pocket.

Hatron Garden is actually an extremely secure area as it has its own security force. I’d be more worried about coins being stolen by the postal service, or lost by me, than being mugged.

is that the place where the geriatric crew robbed them by wandering in and out all night? or was that diamonds?

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Yellow_Reduced_Sticker
2 hours ago, leonardratso said:

is that the place where the geriatric crew robbed them by wandering in and out all night? or was that diamonds?

YEP Film is out this month, i can't find it online stream to see for FREE...

I can't aford to pay to see it at the cinema ...as my NEW GOLD is down:o

 

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20 hours ago, DurhamBorn said:

When silver explodes you will be able to sell it easily.You can walk in bullion dealers,if in the North Chards in Blackpool,easy to get to just south of the pleasure beach.You can then exchange a Maple for a Thai massage while your there (ok 3 at the moment but 1 soon xD),or plenty in London.You can even sell them on Ebay easy and if your buying Vat free from Germany now you can pretty much sell them straight away for small profits.Though of course if they go to £150 a coin it will be much better flogging a few a week then.

 

Thanks DurhamBorn ! ..... I still don't quite get why when it explodes people pay the higher price ? aggghhh so much to learn .... need one of this Thai massages ha !

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5 minutes ago, Mere mortal said:

Thanks DurhamBorn ! ..... I still don't quite get why when it explodes people pay the higher price ? aggghhh so much to learn .... need one of this Thai massages ha !

The same reason people buy houses at ever increasing prices and don't blink... they believe the trend will continue forever.

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12 hours ago, AnythingWithWheels said:

To those of you asking where to buy silver coins - I always use goldsilver.be, paying in EUR using TransferWise.  All above board, and without the 20% VAT penalty. Just bought some nice 10oz Queen’s Beasts and more Britannias to add to the stack.

Hi AnythingWithWheels, just had a look at goldsilver.be .... so they ship direct to your home address ? How easy to set up an account ? I currently only have my passport as ID as staying with parents for now after moving back from OZ so I have no ID related to home address such as utility bills/statements etc...

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21 hours ago, DonkeyKong said:

You can walk in and Sell Silver and other PM's yes. Hatton Garden Metals in London have a price list on their website. No idea if you need an account or if you can literally just walk in. I assume there are other places around the UK too.

HGM.jpg

thanks DonkeyKong

4 minutes ago, Cosmic Apple said:

The same reason people buy houses at ever increasing prices and don't blink... they believe the trend will continue forever.

really ? ok !

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12 hours ago, Alifelessbinary said:

I’m planning on visiting Hatton Market Gardens on Friday to pick up some sovs. If anyone has any specific questions let me know and I’ll answer them here once I get back.

At the moment their premium on sovereigns is up from 3% to 4%, but they are still one of the cheapest places I’ve found and where easy to deal with on my last visit.

Anythingwithwheels - I just made exactly the same purchase, so I hope they don’t confuse our orders, unless you ordered more than me!

yes me please ! I currently don't really exist yet here in the UK... not long moved back from Oz and staying with parents so other than passport I have no id, and nothing that correlates to an address here.... could I just walk in and buy with cash/card without setting up an account etc ?

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25 minutes ago, Mere mortal said:

Thanks DurhamBorn ! ..... I still don't quite get why when it explodes people pay the higher price ? aggghhh so much to learn .... need one of this Thai massages ha !

Greed.

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On 26/09/2018 at 08:26, MrXxx said:

OK, this is the bit where I am still confused (taking from one pension and sticking it into another). So when you get the sum out of pension A it is taxable, but the taxman allows you to put the first £2880 into pension B, thus gaining (saving) the 25% (£600) that would have been lost in tax...correct?...

This then means that your sweet spot for avoiding paying income tax (if we ignore cgt, interest allowance, isa etc) in not the PA of £11850 but actually £600 higher...correct?

If you then fail to do this by spending the £2880 straight away rather than placing into another pension you are throwing away/losing £600 each year...correct?...

This is ` free money` that when you choose to withdraw from your pension and spend you will only lose the 20% tax on, so in effect the taxman is gifting you £480 a year...correct?

Thanks for bearing with me, but if my understanding above is now correct you folks have made me now appreciate something I would have missed completely.

Yes, this is complicated:CryBaby: No surprise with government policy I suppose!

Basically if you've taken a pension and are not a UK taxpayer you can pay £2880 back into a pension and get the 20% tax relief.

See here; https://www.moneyadviceservice.org.uk/en/articles/tax-relief-on-pension-contributions#tax-relief-if-youre-a-non-taxpayer

If you have taken a pension and you are a UK taxpayer (it could be you pay tax on your pension you have made live), you can pay the full £4000 a year back into a pension and get the 20% tax relief.

See here; https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

I must admit it really is as clear as mudO.o

Only really relevant for those nearer to taking a pension or contemplating it. These are the sort of government rules that will quietly got rid of by any future (more) cash strapped government a la Gordon Brown. For the younger guys n girls on here you need to keep your eye on it as it will be changed!

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As per many discussions on here about Powell being a real change of tack compared to previous incumbents at the fed..

Powell's lack of a neo classical economics education will stand tax payers in good stead.

 

https://wolfstreet.com/2018/09/26/fomc-jerome-powell-press-conference-rate-hikes-still-accommodative/

'The Fed’s Not Backing Off: Powell’s Standouts & Zingers at the Press Conference

by Wolf Richter • Sep 26, 2018 • 6 Comments

US is “on an unsustainable fiscal path, there’s no hiding from it.”

I have to say, Fed Chairman Jerome Powell is a breath of fresh air when he talks, after the near-physical pain I experienced listening to his last three predecessors. I actually get what he is saying, even if it’s a little twisted. I can make out his veiled disdain for fancy but dubious economic theories and iffy forecasts. And I get to look forward to some zingers when I least expect them – such as at today’s press conference, when he valiantly defended the Fed’s preferred inflation measure, core PCE, by saying that it “tends to run a little lower, but that’s not why we pick it.”

About that wildly ballooning federal deficit:

Even though the question came at the end of the press conference, I’m pulling it to the top because it’s so important. Asked if fiscal policy – the ballooning deficit, after tax cuts and spending increases – comes up a lot at FOMC meetings, he said:

“It doesn’t really come up. It’s not really our job…. We don’t have responsibility for fiscal policy. But in the longer run, fiscal policy will have a significant impact on the economy, so for that reason, I think, my predecessors have commented on fiscal policy, but they have commented on it at a high level rather than trying to get involved in particular measures.

“My plan is to stick to the same approach, and stay in our lane. So I would just say, it’s no secret, it’s been true for a long time, that with our uniquely expensive healthcare delivery system and the aging of our population, we’ve been on an unsustainable fiscal path for a long time. And there is no hiding from it, and we will have to face that, and I think the sooner the better.

“These are good times. This is the economy in the range of full employment. Interest rates are low. It’s a good time to be addressing these things. So I put that out there and leave it at that.”

About that mysteriously vanished sentence:

A sentence that had vanished from the FOMC statement today, after having been standard for years – “The stance of monetary policy remains accommodative” – caused instant media speculation that the Fed would “pause” next year, in line with persistent bias in the media of seeing every vagueness as a dovish signal.

Powell shot this down several times, first in his prepared statement and then in the Q&A. In the statement, he emphasized, “overall financial conditions remain accommodative,” and specifically addressed the disappearance of that sentence:

This change does not signal any change in the likely path of policy; instead, it is a sign that policy is proceeding in line with our expectations. We still expect, as our statement says, “further gradual increases….”

During the Q&A, he was asked about it several times, from different angles. And he expanded on the theme:

“The point with ‘accommodative’ was that its useful life was over. We put that in the statement in 2015 just when we lifted off [beginning of rate-hike cycle]. The idea was to provide assurance that we weren’t trying to slow down the economy, but that in fact interest rates were still going to be pushing to support economic activity. That purpose has been well served, and that language now doesn’t really say anything that’s important to the way the committee is thinking about policy going forward. That’s why it came out.”

He was asked if the Fed’s policy is accommodative now – meaning if the federal funds rate is still below some theoretical “neutral” rate at which it would neither stimulate nor slow the economy. And he said:

“The federal funds rate, even after today’s move, is below the longer-run neutral estimate of every single participant who submits an estimate. So that’s why it’s the perfect time to take the language out because it’s perfectly clear that there can’t be a signal because by definition that means an accommodative policy. So it wasn’t because the policy is not accommodative. It is still accommodative.”

And just to make sure everyone got it, he threw in “another point too”:

“We don’t want to suggest either that we have a precise understanding of where ‘accommodative’ stops, or suggest that that’s a really important point in our thinking…. What we’re going to be doing is carefully monitoring incoming data from the financial markets and the economy and asking ourselves if our policy is achieving the goals we want to achieve: Sustain the economy, maximum employment, and stable prices. That’s the way we’re thinking about it. That does kind of amount to thinking less about one’s precise point-estimate of the natural rate.”

“You can think of it in different ways. Maybe we have underestimated the neutral rate, maybe we’ll be raising our estimate of the neutral rate, and we’ll just go to that. Or maybe we’ll keep our estimate of the neutral rate here [he made a precise gesture with both hands] and then go one or two rate increases beyond it. I think it’s very possible.”

What could change the rate-hike tango?

The FOMC would raise rates faster “if inflation surprises to the upside,” he said, but “We don’t see that.”

And the FOMC would raise rates more slowly if there is:

  • “A significant correction in the financial markets,” which, as he explained later, is one that causes consumers to spend less, such as the mortgage meltdown did during the Financial Crisis, while a standard sell-off in the stock market would not qualify.
  • “A slowing down of the economy that is inconsistent with our forecast.”

The risk after the Financial Crisis is to “forget things we learned”:

Asked about the biggest lessons learned from the Financial Crisis, he listed some of the big changes in the financial system since then, such as higher capital, more liquidity, better regulation, etc., and then added:

“Those are the really important lessons. We were determined not to forget them. And I think that’s a risk now, is to forget things that we learned. That’s just human nature over time.

No problem that higher rates whack consumers:

Asked if he was concerned about the impact of higher rates on consumers, with credit-card rates having reached “17%,” he replied:

“Interest rates are going up across a broad range of consumer borrowing…. But they’re still quite low by historical levels.

“And the other thing I’ll say, if you take housing, if you look at the NAR affordability index, housing is still more affordable now than it was before the Financial Crisis. So the cost of borrowing is going up, but it’s going up from what were extraordinarily low levels.

Being “humble” about productivity forecasts:

“We’re so bad at forecasting productivity, it’s just very hard to know when productivity is going to arrive and in what quantity…. So I think we have to be humble about how little we really know about where these variables either are, or are going.”

Core PCE inflation “tends to run a little lower, but that’s not why we pick it”

In response to a question about wage growth, he explained as an aside, how wage growth is adjusted for inflation to get “real” wage growth.

The indicators of nominal wage and benefit growth are “clustered around 3%,” he said. But then you have to figure inflation into it to get real wage increases.

“And there you have to pick an inflation measure. Some people pick CPI [= 2.7%]. We of course pick Personal Consumption Expenditures [core PCE = 2.0%] because we think it’s a little better measure, it’s a little broader, and it tends to run a little bit lower as well, but that’s not why we pick it…”

Darn, and I thought all along that’s precisely why they picked it. '

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Interesting talk today with someone in one of the worlds biggest engineering companies.He told me they were moving work back into their UK plants because it was too expensive to make in China now.Thats right,too expensive in China,better in UK.This company pays its production workers £30k+ a year in the UK,very well paid.They said the cost increases in China were really hurting.Its funny because what i import has seen the prices go through the roof to the point there is very little margin if any (hence the carnage on the high street).Could China be where this debt deflation kicks off?.Given it looks like the Fed is determined to increase rates until they squeeze consumer spending down China might be very exposed.

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