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Credit deflation and the reflation cycle to come.


DurhamBorn

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Has anybody got a link to a decent list of FTSE companies and how far in debt they are? 

 Sure I'm being simple but my phone just won't throw one up.

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Interesting to see just how many US govt workers are struggling after the loss of just 1 paycheck, some even having to sell their cars. Preview of what's to come in near recession, house of cards to fall down insanely fast IMO

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Democorruptcy
9 hours ago, stokiescum said:

its about flexability i think,being able to adapt and take advantage of the system legaly but the key to that is massive saveings or low debt.take me the x is at my house her house lies empty she is exchanging in 3 weeks.due to domestic violence he basicly drove her nuts she got sectioned.she has had her pip assesment back.

basicly any time within the next 18 months i can be her carer,ok its only 280 a month but reduced council tax i have a lodger he brings in 220 and i would be allowed to earn 120 a week thats basicly 1 shift at work.now id pay no tax and get 1k a month for what is pretty much early retirment.now you say what happens in 18 months the odds are certain she goes to her doctors with anxiety etc and is given another 18 months.the ability to even concider this option is low debt if you have saveings over 6k they wont let you do it.but you need your debt low enough that it becomes an option.if i was renting it becomes even more profatable has your rents paid.so theres my plan b if work pisses me off or my mum requires help id simply do the above and deprive the state of her care fees 

Made me think of that cheap house you mentioned before and I came up with BTC, Buy to Care.

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10 hours ago, stokiescum said:

its about flexability i think,being able to adapt and take advantage of the system legaly but the key to that is massive saveings or low debt.take me the x is at my house her house lies empty she is exchanging in 3 weeks.due to domestic violence he basicly drove her nuts she got sectioned.she has had her pip assesment back.

basicly any time within the next 18 months i can be her carer,ok its only 280 a month but reduced council tax i have a lodger he brings in 220 and i would be allowed to earn 120 a week thats basicly 1 shift at work.now id pay no tax and get 1k a month for what is pretty much early retirment.now you say what happens in 18 months the odds are certain she goes to her doctors with anxiety etc and is given another 18 months.the ability to even concider this option is low debt if you have saveings over 6k they wont let you do it.but you need your debt low enough that it becomes an option.if i was renting it becomes even more profatable has your rents paid.so theres my plan b if work pisses me off or my mum requires help id simply do the above and deprive the state of her care fees 

I know plenty of people (im talking half of most northern ex pit villages etc) who retired before they were 25,all on benefits.The problems came when Brown increased them at a huge rate and he also created it where benefits added on top of each other.Work 16 hours have £80 tax credit on top,have a child have £65 extra + £20 child benefit,,oh he is a bit naughty,pretend he has ADHD or something,have another £50 tax credits,oh and PIP for care,have another £60 a week.House? have another £120 for the rent.£400 for free a week.When i started work in 88 a single parent in that situation would of ended up getting about 55% of what i took home from a decent factory job.There was plenty of incentive to work and get one,buy a house,build savings etc.

Now the single mother in that situation gets around 35% MORE than someone working 40 hours hard work in a local factory.Insane.

Anyway its off topic and better on other threads,but it does show how this country really is now one of 50% taking from the other 48.9% and the 1% taking it from all of them.We want to be the 0.1% who navigate the situation.

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54 minutes ago, DurhamBorn said:

I know plenty of people (im talking half of most northern ex pit villages etc) who retired before they were 25,all on benefits.The problems came when Brown increased them at a huge rate and he also created it where benefits added on top of each other.Work 16 hours have £80 tax credit on top,have a child have £65 extra + £20 child benefit,,oh he is a bit naughty,pretend he has ADHD or something,have another £50 tax credits,oh and PIP for care,have another £60 a week.House? have another £120 for the rent.£400 for free a week.When i started work in 88 a single parent in that situation would of ended up getting about 55% of what i took home from a decent factory job.There was plenty of incentive to work and get one,buy a house,build savings etc.

Now the single mother in that situation gets around 35% MORE than someone working 40 hours hard work in a local factory.Insane.

Anyway its off topic and better on other threads,but it does show how this country really is now one of 50% taking from the other 48.9% and the 1% taking it from all of them.We want to be the 0.1% who navigate the situation.

The flip side (if those mentioned have de-skilled) might be skills shortages and rapidly rising wages. Whether they adjust the tax bands to encourage work I’m not sure. 

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just have to go on QT and have a bit of a blub to get it all back if its stopped.

I reckon it will be stopped by force rather than by a plan to reduce it, after all when i run out of cash and i cant lend it up, then i become homeless, by force.

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Another bit on Vista Gold (which I do hold):

 

Vista Gold: Overlooked And Undervalued

Mt. Todd contains nearly 6 million ounces of gold reserve (proven/probable).  A Preliminary Feasibility Study updated in 2018 shows a project with 381,000 ozs of annual production over a 13-yr mine life (479,000 ozs/yr for first 5 years), an after-tax IRR of 20% and after-tax NPV of $679 million.  The current market cap of the stock is $57 million (100 million shares outstanding).  As an operating mine, it would be the fourth largest gold mine in Australia and one of the largest new gold mines in the world over the last several years.

The Mt Todd Project will be converted eventually to a mine.  I suspect that, as the price of gold rises, a large mining company will either invest in the Project and take over operational control or acquire Vista outright.  The Company has signed recent non-disclosure agreements with mining companies interested in the Project. Until an “exit strategy” event unfolds, this stock is an easy double from its current price.

http://investmentresearchdynamics.com/vista-gold-overlooked-and-undervalued/

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39 minutes ago, Errol said:

Another bit on Vista Gold (which I do hold):

 

Vista Gold: Overlooked And Undervalued

Mt. Todd contains nearly 6 million ounces of gold reserve (proven/probable).  A Preliminary Feasibility Study updated in 2018 shows a project with 381,000 ozs of annual production over a 13-yr mine life (479,000 ozs/yr for first 5 years), an after-tax IRR of 20% and after-tax NPV of $679 million.  The current market cap of the stock is $57 million (100 million shares outstanding).  As an operating mine, it would be the fourth largest gold mine in Australia and one of the largest new gold mines in the world over the last several years.

The Mt Todd Project will be converted eventually to a mine.  I suspect that, as the price of gold rises, a large mining company will either invest in the Project and take over operational control or acquire Vista outright.  The Company has signed recent non-disclosure agreements with mining companies interested in the Project. Until an “exit strategy” event unfolds, this stock is an easy double from its current price.

http://investmentresearchdynamics.com/vista-gold-overlooked-and-undervalued/

Be aware that the mine doesn't exist yet and is estimated to cost $850mln. Spending that much - and probable way more - for a target asset value of $679mln a few years down the line doesn't sound like a good piece of business, plus for a company with a market cap of 1/15th of that sum it's out of reach anyway. 

People smarter and more knowledgeable than me suggest that geology is the problem here. Open-pit design makes for cheap digging, but the hardness of the rock results in high-cost crushing&extracting, and recoveries are expected to be very low. That's why the indicated 6mln oz in the ground is only worth 650mln usd with gold price at 1300$. At the current gold price, that mine looks like a money-losing business. 

At a reasonable 1000$ AISC that mine - when built - should be worth at least three times as much, but as things stand it seems it's not even worth building. 

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Nicolas Turgeon

With this vote in Parliament on Tuesday evening happening is anyone else thinking about doing some hedging against a drop in the pound?

I already have a handful of shares priced in US dollars but I also have some cash in sterling which I'm happy to move into USD temporarily. The question is - will the pound go up or down? Is the chance of a drop greater than the chance of a rise? And psychologicaly will it hurt more to bet on a drop and end up losing money because of a rise, or to do nothing and lose because of a drop?

Bloomberg has some forecasts along with the chances of each and expected excahnge rate:
https://www.bloomberg.com/news/articles/2019-01-12/war-gaming-the-pound-on-brexit-vote-suggests-more-wild-rides

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Inoperational Bumblebee

Good link. I'm not sure I agree with the percentage likelihoods mentioned, but useful to know what they claim to be thinking.

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On 05/06/2018 at 04:01, DurhamBorn said:

Im expecting massive change.At least it will be massive to the population who now think a deflation cycle lasts forever.Interest rates will be near or above 10% by 2025,or at the very least heading that way.The consumer is now starting to be less of the economy and that will continue.Not dead,just falling.Government will take up the slack,but not by funding chinese made trampolines in every social housing garden paid for by tax credits.They will be funding massive projects in clean energy,telecoms,transport etc.The end of deflation cycles are where the productive part of the economy cant make a profit so declines past the stage where it can fund the needs of the population.We are at that point now.

Things like this are just the start.

https://www.theguardian.com/environment/2018/jun/04/uk-takes-5bn-stake-in-welsh-nuclear-power-station-in-policy-u-turn

"The UK will take a £5bn-plus stake in a new nuclear power station in Wales in a striking reversal of decades-long government policy ruling out direct investment in nuclear projects."

Governments will be borrowing at coupons of 0.5% or less as QE flows direct into fiscal investment spending.

A reflation is dead ahead,and it will have its sleeping partner with it,high inflation.Leveraged deflation assets like BTL are about to be creamed.Massive wealth destruction ahead.

Hi DB. Glad to see you over here. I also believe there will be a bout of inflation.

But I'm not sure how to play it. I have lots of savings, rent a good place and intend to buy in the future.

I see most of what is happening now and in the near future as the logical end of a shift in demographics and the end of an insane level of financialisation which could flourish in boomer land.

I have a pet theory that we are going to see wage inflation as boomers drop out the work force, causing skilled labour shortages (no, AI won't pick up the slack).

Wage inflation is, IMHO, the only thing the establishment give a fuck about. Wage inflation can lead to financial independence, and the only way to choke it off is to raise rates.

So, given the above, I think the order of play *could* be:

1. wage inflation (next 1-5 years)

2. closely followed by interest rate rises as boomers will moan if prices rise (next 3-5 years)

3. asset (land) deflation and tax hikes as govt tries to fund boomer luxury (3-5 years)

4. finally, politicians kicking the boomers to the curb as the demographics tilt to non-boomers (5 years +)

5. reflation / inflation / boomers fooked

I write the above to be shot down/have others disagree. Will be interested to see what you and others think, as this site has some interesting people.

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4 hours ago, Nicolas Turgeon said:

With this vote in Parliament on Tuesday evening happening is anyone else thinking about doing some hedging against a drop in the pound?

I already have a handful of shares priced in US dollars but I also have some cash in sterling which I'm happy to move into USD temporarily. The question is - will the pound go up or down? Is the chance of a drop greater than the chance of a rise? And psychologicaly will it hurt more to bet on a drop and end up losing money because of a rise, or to do nothing and lose because of a drop?

Bloomberg has some forecasts along with the chances of each and expected excahnge rate:
https://www.bloomberg.com/news/articles/2019-01-12/war-gaming-the-pound-on-brexit-vote-suggests-more-wild-rides

Most FTSE 100 are international. This is why @Telegraph has constant "news" that FTSE has dropped but GBP is up, or vice-versa.

My point is that you don't need to go to NYSE etc to get out of UK risk.

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9 minutes ago, Democorruptcy said:

General Election first I think. It'll be May's deal Vs whatever Labour are thinking. She can't win in parliament but I don't think she can lose against Labour promising another five years of arguing about it.

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meagre merger;

https://www.zerohedge.com/news/2019-01-14/newmont-mining-buy-goldcorp-10-billion-deal-create-worlds-largest-gold-miner

In the latest deal in what's becoming a wave of consolidation among gold miners, Newmont Mining announced on Monday that it would buy smaller miner Gold Corp in a deal valued at $10 billion.

Gold

The deal could create the largest gold miner in the world, with operations stretching from the Americas, to Australia and Ghana, the companies said. Newmont will offer 0.3280 of its share and two cents for each share of its Canadian rival, according to  CNBC. The deal is the largest in the space since Randgold and Barrick announced their plans to merge back in September.

As the Wall Street Journal pointed out, the depletion of global gold mines and the resulting increase in extraction costs has pushed gold miners to seek cost efficiencies and smaller-scale combinations.

“The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels.” Goldcorp Chief Executive Officer David Garofalo said in a statement. Goldcorp shares climbed 1.3% in premarket trading on the news. The GDX, an ETF of gold miners, also climbed on the news.

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There's no question that m&a is the name of the game. Who's next - Newgold? B2gold? Pretium? Companies are looking for proven oz in the ground, so probably none of the juniors. 

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Yellow_Reduced_Sticker
2 hours ago, kibuc said:

There's no question that m&a is the name of the game. Who's next - Newgold? B2gold? Pretium? Companies are looking for proven oz in the ground, so probably none of the juniors. 

Hopefully it'll be that DOG ...New Gold, heck the old dog chart even looks as if it may be turning  UP:D

I'm only down 70% of my New Gold purchase price, so if it gets taken over/rockets ...

beers all around from me, however ONLY if i can get the beer bottles with YRS on 'em xD

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INFA doing very nicely again today I see. This is only investible pure play on U.K. gas storage that I know of. Big future in a reflation cycle.

 

B8F7CB64-83B6-4C0F-A48F-99A926157219.jpeg

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Shatner's Bassoon
28 minutes ago, Solzhenitsyn said:

INFA doing very nicely again today I see. This is only investible pure play on U.K. gas storage that I know of. Big future in a reflation cycle.

 

B8F7CB64-83B6-4C0F-A48F-99A926157219.jpeg

Do you plan on doing any top slicing? I'm leaning towards 'shit or bust' but guess it's never a profit until you cash it in. 

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1 minute ago, Shatner's Bassoon said:

Do you plan on doing any top slicing? I'm leaning towards 'shit or bust' but guess it's never a profit until you cash it in. 

I only ever invest a tiny % of my wealth in these things. About 0.5%. So it’s shit or bust for me.

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1 hour ago, Calcutta said:

Anybody ever tried Trading 212? I've seen so many adverts I'd learned to ignore it but having delved a little deeper I can't see the catch.

I'm thinking about setting up an account to practice shorting so would be interested to know if anyone has used 212 for this 

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Infrastrata going full bitcoin... again.

Meanwhile at Sibanye, AMCU is planning to extend it's strike at gold mines to platinum operation. Considering that platinum has been keeping SBGL afloat recently, that's a real kick in the bollocks.

Sibanye, staying true to its roots, will take the combative approach, trying to challenge legal status of the strike action instead of actually trying to remedy it. 'Cause you know, if you manage to get a court order telling 48% of your crew that they are 2% short and should go back to work, that's exactly what they will happily do.

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1 hour ago, Harley said:

All very quiet here.  Where have all the usual suspects gone?  Should I be busy doing something too?

The US Government shutdown means that the Langley psych-op department has gone onto a skeleton crew; there's only me here at the moment.

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