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Credit deflation and the reflation cycle to come.


DurhamBorn

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So what's happening with Eldorado Still showing unavailable in HL i know they did a stock split

So apart from Yamana and Eldorado, all my miners are now in the green with Ashanti Gold currently +47.6% since I bought a small number of shares for how long who knows

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2 hours ago, DoINeedOne said:

So what's happening with Eldorado Still showing unavailable in HL i know they did a stock split

So apart from Yamana and Eldorado, all my miners are now in the green with Ashanti Gold currently +47.6% since I bought a small number of shares for how long who knows

HL havent updated the listing yet,i expect they will do it tomorrow.Im very pleased with Anglogold Ashanti,i dont have a big holding but am very pleased with the increase.Il probably sell it though as i do shave profits from the miners sometimes.I got shot of the few Sibanye i had as well.I own Eldorado and am well down on it,but iv made good money on it before.Il likely sell it when i unload the rest of my miners as i tend to look at them as a whole.Id be very happy if i can unload all of them for an average 30% to 50% profit.

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Talking Monkey
22 minutes ago, DurhamBorn said:

HL havent updated the listing yet,i expect they will do it tomorrow.Im very pleased with Anglogold Ashanti,i dont have a big holding but am very pleased with the increase.Il probably sell it though as i do shave profits from the miners sometimes.I got shot of the few Sibanye i had as well.I own Eldorado and am well down on it,but iv made good money on it before.Il likely sell it when i unload the rest of my miners as i tend to look at them as a whole.Id be very happy if i can unload all of them for an average 30% to 50% profit.

DB will you be unloading all miners before the debt deflation takes hold then buy back in for the reflation

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28 minutes ago, DurhamBorn said:

HL havent updated the listing yet,i expect they will do it tomorrow.Im very pleased with Anglogold Ashanti,i dont have a big holding but am very pleased with the increase.Il probably sell it though as i do shave profits from the miners sometimes.I got shot of the few Sibanye i had as well.I own Eldorado and am well down on it,but iv made good money on it before.Il likely sell it when i unload the rest of my miners as i tend to look at them as a whole.Id be very happy if i can unload all of them for an average 30% to 50% profit.

SBGL looks to have punched up recently though DB... do you not want to hold it now because you don’t think it will continue on an uptrend now? 

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2 minutes ago, Talking Monkey said:

DB will you be unloading all miners before the debt deflation takes hold then buy back in for the reflation

Im not sure yet.I was going to unload them all,but keep my physical,but i might yet keep some and then average back into them if they go down.I hope im really torn about that later this year because it means the run has continued.I have no doubt i want a decent PM exposure in the next cycle,im just not sure i we get an up down up,or an up up up.Given what i thinks coming though the next cycle id rather get  a haircut i can average into than end up with no exposure to the best sector to protect against the inflation.

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1 minute ago, Thorn said:

SBGL looks to have punched up recently though DB... do you not want to hold it now because you don’t think it will continue on an uptrend now? 

I had a lot of capital in the sector Thorn and too much in SA.No other reason.I skimmed some Endeavour Silver profits as well.I also opened ladders in a few more stocks (BAT Tobacco at £25 being one,i sold a big holding at £50) and wanted capital in place if price points keep being hit.I nearly always sell any bottom ladder that then goes up 20%.A good example is Stagecoach.I sold a bottom ladder at £1.69,but have then re invested at £1.30 as it hit my ladder points.Once im fully invested again i wont be doing any of this its only during this volatile transition period.

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Talking Monkey
14 minutes ago, DurhamBorn said:

Im not sure yet.I was going to unload them all,but keep my physical,but i might yet keep some and then average back into them if they go down.I hope im really torn about that later this year because it means the run has continued.I have no doubt i want a decent PM exposure in the next cycle,im just not sure i we get an up down up,or an up up up.Given what i thinks coming though the next cycle id rather get  a haircut i can average into than end up with no exposure to the best sector to protect against the inflation.

thanks DB, I guess if what is expected to happen by say 2025 does happen, it may make no difference if we assume the end point by then is up up up for PMs

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12 minutes ago, Talking Monkey said:

thanks DB, I guess if what is expected to happen by say 2025 does happen, it may make no difference if we assume the end point by then is up up up for PMs

For gold and silver, I think they are still in a cyclical bear market that began after the peak in 2011. I think both are poised for nice rallies here (silver to $24 and gold to $1500) before rolling over in a final leg down to lower lows (silver to $8 & gold to $700). From there a big new cyclical bull begins that takes silver to $200-$300 and gold to $10,000 by 2025.

The global deflationary bust is coming (or is here) and should take the stock market down 50% to 80% (maybe not the FTSE though and maybe not all stocks) which is why rates and the PMs drop so low. The policymakers massive response to the deflationary bust and financial crisis will jump start an inflation-driven recovery cycle that will be a lot like the late seventies.

I'm sure I will be off on some of my targets but we will not be dealing with range-bound markets. Between now and the end of the next cycle we are heading for some of the greatest volatility ever. The huge run-up in debt this cycle pretty much guarantees that volatility this time around is likely to exceed anytime in history.

The leveraged are going to be shocked as interest rates increase during the next cycle as CBs try to control inflation they created and that is when PMs will really shine.

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Talking Monkey
45 minutes ago, DurhamBorn said:

For gold and silver, I think they are still in a cyclical bear market that began after the peak in 2011. I think both are poised for nice rallies here (silver to $24 and gold to $1500) before rolling over in a final leg down to lower lows (silver to $8 & gold to $700). From there a big new cyclical bull begins that takes silver to $200-$300 and gold to $10,000 by 2025.

The global deflationary bust is coming (or is here) and should take the stock market down 50% to 80% (maybe not the FTSE though and maybe not all stocks) which is why rates and the PMs drop so low. The policymakers massive response to the deflationary bust and financial crisis will jump start an inflation-driven recovery cycle that will be a lot like the late seventies.

I'm sure I will be off on some of my targets but we will not be dealing with range-bound markets. Between now and the end of the next cycle we are heading for some of the greatest volatility ever. The huge run-up in debt this cycle pretty much guarantees that volatility this time around is likely to exceed anytime in history.

The leveraged are going to be shocked as interest rates increase during the next cycle as CBs try to control inflation they created and that is when PMs will really shine.

I wonder how the miners will do if silver goes to 8 and gold to 700 would a lot go bust or will it be very brief the trough in PM prices. I worry that when laddering into the miners a lot of them just go under

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Bobthebuilder
35 minutes ago, DoINeedOne said:

I like miners but would certainly sleep better at night holding gold coins and most of gold/silver in bullionvault

 

3 minutes ago, Talking Monkey said:

I wonder how the miners will do if silver goes to 8 and gold to 700 would a lot go bust or will it be very brief the trough in PM prices. I worry that when laddering into the miners a lot of them just go under

Personally, I would only invest in miners, money that i am prepared to lose.

I really like Bullionvault, i sleep better at night with some of that.

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6 minutes ago, Bobthebuilder said:

 

Personally, I would only invest in miners, money that i am prepared to lose.

 

 

I am prepared to lose it 

but i have enough ups and downs with crypto :CryBaby:

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Bobthebuilder
2 minutes ago, DoINeedOne said:

I am prepared to lose it 

but i have enough ups and downs with crypto :CryBaby:

Fair enough.

I have a mate who made a ton outa krypto. Hes retired to the shires now, driving a steam train last i heard.

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Eventually Right
1 hour ago, DurhamBorn said:

Im not sure yet.I was going to unload them all,but keep my physical,but i might yet keep some and then average back into them if they go down.I hope im really torn about that later this year because it means the run has continued.I have no doubt i want a decent PM exposure in the next cycle,im just not sure i we get an up down up,or an up up up.Given what i thinks coming though the next cycle id rather get  a haircut i can average into than end up with no exposure to the best sector to protect against the inflation.

I’ve been having similar thoughts DB. If the deflation is big enough, then I figure everything gets sold to fund margin calls etc, and gold/silver/miners etc all get sold off, regardless of intrinsic value. (There may also be cases where certain central banks sell off their gold reserves to try to defend their currencies?)

However, if financial/economic conditions continue to deteriorate in 2019, I think the market sniffs out the likely central bank responses of massive money printing ahead of time, and so investor interest in gold/miners increases significantly.

in that situation, say in Q3/Q4 2019, where gold has run up to $1500, gdx to $35, I think I’d be too scared to sell my miners, as I’d worry that a deflationary sell off in gold might not happen, or might be very mild-and the next thing you know the miners you sold have gone up 20/30/40% and it becomes psychologically very difficult to repurchase a decent size position quickly, as you’re both scared that deflation may yet take down gold, and also mentally berating yourself for selling the position in the first place.

It will hopefully be a nice dilemma to have in a few months though!

 

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15 minutes ago, Eventually Right said:

I’ve been having similar thoughts DB. If the deflation is big enough, then I figure everything gets sold to fund margin calls etc, and gold/silver/miners etc all get sold off, regardless of intrinsic value. (There may also be cases where certain central banks sell off their gold reserves to try to defend their currencies?)

However, if financial/economic conditions continue to deteriorate in 2019, I think the market sniffs out the likely central bank responses of massive money printing ahead of time, and so investor interest in gold/miners increases significantly.

in that situation, say in Q3/Q4 2019, where gold has run up to $1500, gdx to $35, I think I’d be too scared to sell my miners, as I’d worry that a deflationary sell off in gold might not happen, or might be very mild-and the next thing you know the miners you sold have gone up 20/30/40% and it becomes psychologically very difficult to repurchase a decent size position quickly, as you’re both scared that deflation may yet take down gold, and also mentally berating yourself for selling the position in the first place.

It will hopefully be a nice dilemma to have in a few months though!

 

Might not take as long as you think, be careful

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Noallegiance

Imagine selling PMs at a higher target and then watching as it lifts up and away.

The uber cautious will consider just holding.

Although, depending on what you want to do with it,  a 40-50% reduction in PM value will look fine against 60%+ asset falls. In such circumstances the fiat value would be irrelevant for PM holders. Nominally down but in real terms it's chicken dinner.

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5 hours ago, DoINeedOne said:

So what's happening with Eldorado Still showing unavailable in HL i know they did a stock split

So apart from Yamana and Eldorado, all my miners are now in the green with Ashanti Gold currently +47.6% since I bought a small number of shares for how long who knows

At least this shows that not just my broker screwed it up.  Eldorado (NYSE-listed) has now re-appeared in my Degiro account.  The only issue now is that it only shows price move (in my account) since consolidation, so I will need to dig a bit deeper to appreciate full extent of my losses

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2 hours ago, Talking Monkey said:

I wonder how the miners will do if silver goes to 8 and gold to 700 would a lot go bust or will it be very brief the trough in PM prices. I worry that when laddering into the miners a lot of them just go under

Its a good question and one i think about often.I guess a lot depends on currency.For SA miners if the Rand goes down 50% along with gold they will survive,and might even thrive if they have hedged 30% as Harmony do.I also expect we might see $700 and $1700 within 12 months of each other.I dont think we will see many go under who are actually producing as the falls will be large,but short lived.The question is what sort of affect $8 silver would have on the share prices of pure silver plays.?.Gold miners would likely be less hard hit,but even so the highly indebted ones would be.That could provide half an answer.If the sector does run higher sell the marginal/indebted companies who tend to outperform then and hold the more conservative ones.Another problem of course is massive economic problems,even if short lived might cause some governments to tax,or even take control of mines.I am happy to take some profits though to re-invest in stocks i like for the longer term that are already down 50%+,though im very wary that whats ahead is very dangerous for peoples wealth.We dont want our capital being the big loser to pay for the debt deflation caused by the lunacy and greed of others.

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Talking Monkey
5 minutes ago, DurhamBorn said:

Its a good question and one i think about often.I guess a lot depends on currency.For SA miners if the Rand goes down 50% along with gold they will survive,and might even thrive if they have hedged 30% as Harmony do.I also expect we might see $700 and $1700 within 12 months of each other.I dont think we will see many go under who are actually producing as the falls will be large,but short lived.The question is what sort of affect $8 silver would have on the share prices of pure silver plays.?.Gold miners would likely be less hard hit,but even so the highly indebted ones would be.That could provide half an answer.If the sector does run higher sell the marginal/indebted companies who tend to outperform then and hold the more conservative ones.Another problem of course is massive economic problems,even if short lived might cause some governments to tax,or even take control of mines.I am happy to take some profits though to re-invest in stocks i like for the longer term that are already down 50%+,though im very wary that whats ahead is very dangerous for peoples wealth.We dont want our capital being the big loser to pay for the debt deflation caused by the lunacy and greed of others.

Thank you DB for the thoughtful answer

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Interesting to hear people’s thoughts on whether the miners would be hit in a deflation and the psychology of buying back in if you sell but it doesn’t hit.

I like DB’s thoughts on perhaps selling the ones more leveraged to gold/silver price. Most to gain/lose/gain again sort of thing.

On this issue I often think of your words DB... a cycle turn always hurts the most amount of people... or something to that effect. Need to be careful that a run up in the miners prior to a deflation isn’t the thing that ends up hurting me/you/us.

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There are really too many variables to be able to tell exactly whats going to happen, for example if copper crashes hard (which it should do) then as output reduces you get significatly less byproduct silver.  That would obviously be a big benefit to the main silver producers.  Equally the PM miners should break the link with the stock market at some point, but god knows when.

Once we get an idea of what the cause of the crash really is then i will make a decision, im suspecting worldwide corporate debt/China crash/Euro turmoil so am positioned in high quality companies with low/no debt that stand a good chance of making it through if it all goes pete tong.  Plenty of cash on hand for when everyone is running around thinking the world is going to end like 2008.

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sancho panza
On 29/12/2018 at 09:29, Funn3r said:

For the benefit of non-experts could you explain what it means? I assume you mean the red and black lines next to the photo have dropped through the blue line. 

Firstly red and black seem always very close together but what are they? I found out SPX means S&P stock market index (per month) but why are there two together?

Secondly the blue lines seem almost but not quite connecting previous peaks/troughs but why?  The 2018 red and black lines haven't gone down any more than they have lots of times previously. Either they will continue to fall, or they will go back up again and if so the blue line will need to be redrawn a bit. How does that help? Why does it matter anyway I thought there was a "past performance is no indication of future results" thing with the stock market?

I followed the DB thread carefully ever since TOS and have learnt a lot from a real-world point of view and agree that all this debt just can't go on. Beyond that even though I opened an HL account I don't feel like putting any money into it at all. If there's a big crash then even I can get the message, buy cheap things in the right industries, but not just now the way nobody seems to know what's going on and anything seems likely day to day. 

Trend line are in the eye of the beholder

On 30/12/2018 at 14:31, DurhamBorn said:

Run something past you all for opinion.A family member has no wife and hasnt always been in the best of health.He works and i already look after around £100k of investments of his.He has a small final salary pension from an ex blue chip employer for £2600 a year at 65 RPI linked up to 12%.He has been offered £101k in transfer value.He already has a small SIPP,so easy to transfer into and it looks like they are offering 40 times annual pension.Given his health (hes 49),lack of anyone to leave a spouse pension too ,he has kids so could leave anything in SIPP to them under 75 years old etc it looks like an insane good deal.Ok he loses £50 a week at 65 for life,but it means he would have around £200k at 55 if he would like to retire then,or semi retire and given he needs around £12k a year and has full state pension credits already.

What do you all think.If it was you would you take £50 a week at 65 or £100k into your SIPP you can access in 6 years.?

 

Take the cash,every time.

On 30/12/2018 at 22:13, DurhamBorn said:

Good point,it might be worth the risk the transfer value falls to wait until 54.That way we will know there havent been any government changes and also the level of his other investments then.(or if his health goes downhill then take action then asap).

He could di before 54 then his family get nothing.

 

 

8 hours ago, reformed nice guy said:

1 year US treasury is now above 2,3,5 and 7 year. Will it go above the 10 year this week?

Happy New Year

chart (2).png

https://moneymaven.io/mishtalk/economics/yield-curve-recession-watch-7-year-treasury-yield-inverts-with-1-year-Ko1gGwDlokylgXl7PMgnPA/

'Despite the flattening and now inverting yield curve, note that the spread between the 10-year and 7-year bond actually rose over the course of 2018.

The spread between the 30-year long bond and the 10-year note is nearly what it was a year ago.

I believe this is a strong bond market signal that the end of the bond bull market approaches. It's possible it's already over. But I do expect one more strong push lower in yields as recession hits in 2019.

We have enormous deficits as far as the eye can see from a starting point of $21 trillion in debt.

Got Gold?

Mike "Mish" Shedlock'

 

4 hours ago, DurhamBorn said:

Im not sure yet.I was going to unload them all,but keep my physical,but i might yet keep some and then average back into them if they go down.I hope im really torn about that later this year because it means the run has continued.I have no doubt i want a decent PM exposure in the next cycle,im just not sure i we get an up down up,or an up up up.Given what i thinks coming though the next cycle id rather get  a haircut i can average into than end up with no exposure to the best sector to protect against the inflation.

There's a lot of uncertainty.For me at the minute,I wouldn't be trading PM miners in case a run up starts and I'm not on board.I take the view that it's a chaep asset class that may get cheaper in which case I'd load up some more.

Over ten years,I think they're a good buy but beware the fact that I bought New Gold and Eldorado last year before they blew up specturalrly.

I'd rather take some trading risk shorting(there are lots of stocks to go at) .Been burned too often in the past getting off the train a few stations too soon.My fear is that the CB's have lost control.

2 hours ago, Eventually Right said:

I’ve been having similar thoughts DB. If the deflation is big enough, then I figure everything gets sold to fund margin calls etc, and gold/silver/miners etc all get sold off, regardless of intrinsic value. (There may also be cases where certain central banks sell off their gold reserves to try to defend their currencies?)

However, if financial/economic conditions continue to deteriorate in 2019, I think the market sniffs out the likely central bank responses of massive money printing ahead of time, and so investor interest in gold/miners increases significantly.

in that situation, say in Q3/Q4 2019, where gold has run up to $1500, gdx to $35, I think I’d be too scared to sell my miners, as I’d worry that a deflationary sell off in gold might not happen, or might be very mild-and the next thing you know the miners you sold have gone up 20/30/40% and it becomes psychologically very difficult to repurchase a decent size position quickly, as you’re both scared that deflation may yet take down gold, and also mentally berating yourself for selling the position in the first place.

It will hopefully be a nice dilemma to have in a few months though!

 

Great post.

2 hours ago, Noallegiance said:

Imagine selling PMs at a higher target and then watching as it lifts up and away.

The uber cautious will consider just holding.

Although, depending on what you want to do with it,  a 40-50% reduction in PM value will look fine against 60%+ asset falls. In such circumstances the fiat value would be irrelevant for PM holders. Nominally down t in real terms it's chicken dinner.

Yep.There's not many Turkish residents regretting their PM miner purchases when the Lira has lost 50% versus the $

image.png.5136738b4ac702a55788e2a0991f55e4.png

 

1 hour ago, Lavalas said:

Interesting to hear people’s thoughts on whether the miners would be hit in a deflation and the psychology of buying back in if you sell but it doesn’t hit.

I like DB’s thoughts on perhaps selling the ones more leveraged to gold/silver price. Most to gain/lose/gain again sort of thing.

On this issue I often think of your words DB... a cycle turn always hurts the most amount of people... or something to that effect. Need to be careful that a run up in the miners prior to a deflation isn’t the thing that ends up hurting me/you/us.

YOu can always sell and leave yourself in for free

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