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Credit deflation and the reflation cycle to come.


DurhamBorn

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On 08/02/2019 at 11:10, kibuc said:

With their gold operations hamstrung by strike action since Nov, with possible contagion to Platinium operations and with Lonmin takeover delayed it has to be Palladium, doesn't it. Is it big enough part of their business to justify +50%  in less tham a month and +70% in less than two? Clearly,  the market thinks it is.

Palladium price is driven mostly by the car industry and I don't think thats a particularly enticing prospect. I think they should use whatever money they made on palladium rally to get their gold house in order.

It's unlike traing any other sector.

 

Worth noting Impala platiunum is up for $1.13-all time low- to $3.24 in 4 months

On 08/02/2019 at 18:28, DurhamBorn said:

Silver to $24+ then down to sub $10.No timescale,its cycle based though id expect within 18 months if it happens.To be honest people have to make their own choices in how to invest.These are roadmaps not trading calls.I dont know myself how il trade this yet,though likely id top slice by 30%.My eye is really on 2025/28.Main point like you say though is not to panic on any falls and to use to top up.The next cycle is looking fantastic for PMs,only the scale is in doubt.

Most PM investors should be up at least 30% now in most stocks from their bottoms,and if they used ladders they could take out the first one now.Apart from that timing is very difficult.I have some miner investments that have taken until today to be up 1%,up 35% from their bottoms.

Even my our PM's are in the black and I'm the worst PM investor I know.

On 09/02/2019 at 20:30, Majorpain said:

Bubble,what bubble.I think the big car co.'s will e at Tesla alive longer term.I've hada couple of short runs on them but no position currently.I think they'll end up worthless personally.

51 minutes ago, Barnsey said:

Hadn't seen the stepchange one, oh dear....

And this is before the deluge.

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10 hours ago, sancho panza said:

And this is before the deluge.

EXACTLY...staggering really with record low unemployment and now some signs of wage growth, basically "As good as it gets" yet these two debt charities are getting more calls than the depths of the GFC.

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13 hours ago, Barnsey said:

Interesting tweet the other day from Christians Against Poverty (free debt advice charity), saying they've had their busiest few days in 22 years! We're extremely close to the edge folks, brace positions!

What's their advice?  Neither a borrower nor a lender be?

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28 minutes ago, dgul said:

What's their advice?  Neither a borrower nor a lender be?

xD Very good! I was thinking more along the lines of “When sorrows come, they come not single spies. But in battalions!”

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1 hour ago, Barnsey said:

EXACTLY...staggering really with record low unemployment and now some signs of wage growth, basically "As good as it gets" yet these two debt charities are getting more calls than the depths of the GFC. 

The BOE's 2018 Q4 credit conditions survey had some interesting findings, in a nutshell risky lending is down and defaults are up across the board.

It sounds like you can still get credit easily, but only if you have some collateral for the banks to take if you fail to pay.  The days of paying off debt with more debt are (finally) coming to an end, which ties in nicely with people up s*** creek needing debt help!

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2 hours ago, billfunk said:

So, the £2000 question is "After today's 8.6% surge in Sibanye is it worth a punt in hope for a two-bagger up to $10 or more?"

It’s on its way back down now. My question is should I sell to lock in my profits and buy again when it is at $2?

Rhetorical question, not expecting an answer BTW 🙂

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On 08/02/2019 at 12:50, DurhamBorn said:

On Sibanye,iv made a lot of money over the years on them,and would of bought a big chunk when they were down,but i only bought a few,reason being i had too many SA miners.Id introduce a 12% stop under them if i had a big holding probably and spread the profit among the silver miners.Really pleased people have done so well on them on here.

 

I just want to say thank you @DurhamBorn, and all other posters on here, for the informative posts and the inspiration to do some research into what's coming in the next few years. I would never have considered looking into gold and silver (and the miners) if it wasn't for the posts on here. If only the miners continue to behave over the next 8 years as they have over the past 6 months I'll be more than happy. If they all behaved like Sibanye I'd be overjoyed.

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9 hours ago, billfunk said:

So, the £2000 question is "After today's 8.6% surge in Sibanye is it worth a punt in hope for a two-bagger up to $10 or more?"

They look overbought on the charts medium term.

But I hold some as part of my tranche 2 and whilst I think they're headed down for a bit,I won't be selling.I bought on a ten year view-----but as ever reserve the right to flog them at a moments notice.

You could always sell enoguh to tkae out your stake and then be in for free-a very nie position indeed,

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10 minutes ago, sancho panza said:

They look overbought on the charts medium term.

But I hold some as part of my tranche 2 and whilst I think they're headed down for a bit,I won't be selling.I bought on a ten year view-----but as ever reserve the right to flog them at a moments notice.

You could always sell enoguh to tkae out your stake and then be in for free-a very nie position indeed,

i love when/if i get into a position to just have house money in, well anything really.

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12 minutes ago, leonardratso said:

i love when/if i get into a position to just have house money in, well anything really.

I might even take my own advice tmrw thinkming about it.

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Wolf leading the line again with some  debt deflationista on New York's housing market.

Unlike Australia,,the US has rising mortgage rates.And from is looks as though prices are softening.

I've underling ,highlighted and oversized one or two pealer lines

https://wolfstreet.com/2019/02/11/liquidity-in-new-york-citys-housing-market-dries-up/

Liquidity in New York City’s Housing Market Dries Up

by Wolf Richter • Feb 11, 2019 • 25 Comments

52% of the homes listed for sale last spring still have not sold. For sellers, “the situation calls for a clear strategy: cut prices.”

Over half the 12,000-plus homes that were listed for sale in New York City on StreetEasy during the peak listing months of March, April, and May 2018 still have not sold as of early February, according to StreetEasy’s review of public records. This “historic wave of homes,” as StreetEasy calls it, arrived last spring “as price growth began to sputter and owners looked to cash out.” But buyers were not in the mood at those prices. And so 52% of the homes have still not sold.

In Manhattan, 56% of the homes listed in March, April, and May 2018 have not yet sold. What makes buyers reluctant are the price declines. The StreetEasy median price index for Manhattan, at $1.132 million in December, is back where it had been in September 2015. For the past six months in a row, the median price index for Manhattan has fallen below the same month a year earlier. These are the first such year-over-year declines since Housing Bust 1. Given the dollars involved in a Manhattan home, those price declines can add up:

US-manhattan-home-prices-StreetEasy-Inde

In New York City overall, thanks to price gains in other boroughs, StreetEasy’s median price index was still up 1.7% in December compared to a year earlier.

Across New York City, of the 48% of the homes that did sell since being listed last spring, 70% “sold significantly below their asking price,” StreetEasy said in its study. This is up from 62% over the same time period in 2017 and from 61% in 2016. This time around, the median price cut between initial listing price and recorded closing price (as shown in public records) was 5.5%.

In Manhattan, of the homes that did sell, 77% sold below their initial asking price. And “even in the comparably strong market in Queens, just 54% of homes found buyers.”

But aggressive pricing works

Of the homes that sold across New York City, only 19% sold above asking price. They “tended to be among the cheapest in their respective neighborhoods for their bedroom count,” StreetEasy explains in the study. They were put on the market with aggressive asking prices that then created buyer activity. StreetEasy:

  • Homes that sold above asking price “were initially listed for a median of 8.8% below the respective 2018 median price for their neighborhood and bedroom count.”
  • Homes that sold below asking price “were listed for a median of 1.2% above the respective median for their neighborhood and bedroom count.”
  • Homes that failed to sell “were initially listed for a median of 6.4% above their respective benchmark median.”

The homes that were aggressively priced and then sold above asking price (about 1,000 homes in total) spend four weeks on the market.

But homes that were put on the market with a relatively higher price, but then were sold below asking price spent an average of nine weeks on the market.

The higher the price, the harder it gets:

  • Homes listed at less than $1 million: 45% failed to sell.
  • Homes listed at $1 million or more: 61% failed to sell.
  • Homes listed at $5 million or more (656 units): 79% failed to sell.

What did unsuccessful sellers do? Pull the unit off the market.

The report explains: “Most sellers who were unable to find buyers at suitable prices have simply pulled their listings from the market. Of all listings created in spring 2018, 40% are either paused, delisted, or otherwise no longer available on StreetEasy. Only 7.5% of all the listings from the peak months, or 14% of the total unsold units, are still actively seeking buyers.”

A flood of listings for the spring home-shopping season.

With these unsold units lurking in the shadows, and “with inventory levels still near historic highs,” StreetEasy says, “we will likely continue to see heightened inventory heading into the spring home-shopping season, as these sellers try again to find a buyer.”

StreetEasy expects “another large wave of inventory to hit the market again in 2019 – one that will likely include many of the units listed but unsold in 2018.”

And the study has some suggestions:

For sellers still seeking buyers, then, the situation calls for a clear strategy: cut prices.”

Sellers may be tempted to hold out in the hope that some buyer will pay far above what others are offering. But with falling prices in many areas of the city, and inventory lingering on the market, such an outcome is highly unlikely. Many are willing to buy, but almost no one will be willing to pay more than what the broader market demands.”

Buyers, on the other hand, should note the importance of doing their research. Pay special attention to how listing prices compare to neighborhood benchmarks…. Be picky, be patient, and be prepared to negotiate.”

Liquidity dries up when prices fall.

And this is what sellers in New York City are re-learning: Liquidity in a housing market exists only when the market is hot and prices rise. When bidding wars break out, anything sells, at just about any price, which causes prices to surge further.

But when the mood changes, and prices begin to fall, liquidity just evaporates. And homes sit on the market and simply fail to sell – as in New York City, with 52% of the homes listed last spring still not having sold.

But there is always liquidity somewhere, just at lower prices. To find that liquidity, sellers have to lower their aspirations and cut their asking prices. Liquidity is where the willing and able buyers are. Cut the price enough – and that’s valid for most assets – and you will find liquidity. And as buyers see those lower transaction prices in their neighborhood, they pull back further, being, as StreetEasy suggests, picky, patient, and prepared to negotiate.

Years of price gains in new houses are unwinding as homebuilders try to make deals. Read… New House Prices Drop 12% as Supply Surges

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7 hours ago, sancho panza said:

Wolf leading the line again with some  debt deflationista on New York's housing market.

Unlike Australia,,the US has rising mortgage rates.And from is looks as though prices are softening.

I've underling ,highlighted and oversized one or two pealer lines

https://wolfstreet.com/2019/02/11/liquidity-in-new-york-citys-housing-market-dries-up/

Liquidity in New York City’s Housing Market Dries Up

by Wolf Richter • Feb 11, 2019 • 25 Comments

52% of the homes listed for sale last spring still have not sold. For sellers, “the situation calls for a clear strategy: cut prices.”

Over half the 12,000-plus homes that were listed for sale in New York City on StreetEasy during the peak listing months of March, April, and May 2018 still have not sold as of early February, according to StreetEasy’s review of public records. This “historic wave of homes,” as StreetEasy calls it, arrived last spring “as price growth began to sputter and owners looked to cash out.” But buyers were not in the mood at those prices. And so 52% of the homes have still not sold.

In Manhattan, 56% of the homes listed in March, April, and May 2018 have not yet sold. What makes buyers reluctant are the price declines. The StreetEasy median price index for Manhattan, at $1.132 million in December, is back where it had been in September 2015. For the past six months in a row, the median price index for Manhattan has fallen below the same month a year earlier. These are the first such year-over-year declines since Housing Bust 1. Given the dollars involved in a Manhattan home, those price declines can add up:

US-manhattan-home-prices-StreetEasy-Inde

In New York City overall, thanks to price gains in other boroughs, StreetEasy’s median price index was still up 1.7% in December compared to a year earlier.

Across New York City, of the 48% of the homes that did sell since being listed last spring, 70% “sold significantly below their asking price,” StreetEasy said in its study. This is up from 62% over the same time period in 2017 and from 61% in 2016. This time around, the median price cut between initial listing price and recorded closing price (as shown in public records) was 5.5%.

In Manhattan, of the homes that did sell, 77% sold below their initial asking price. And “even in the comparably strong market in Queens, just 54% of homes found buyers.”

But aggressive pricing works

Of the homes that sold across New York City, only 19% sold above asking price. They “tended to be among the cheapest in their respective neighborhoods for their bedroom count,” StreetEasy explains in the study. They were put on the market with aggressive asking prices that then created buyer activity. StreetEasy:

  • Homes that sold above asking price “were initially listed for a median of 8.8% below the respective 2018 median price for their neighborhood and bedroom count.”
  • Homes that sold below asking price “were listed for a median of 1.2% above the respective median for their neighborhood and bedroom count.”
  • Homes that failed to sell “were initially listed for a median of 6.4% above their respective benchmark median.”

The homes that were aggressively priced and then sold above asking price (about 1,000 homes in total) spend four weeks on the market.

But homes that were put on the market with a relatively higher price, but then were sold below asking price spent an average of nine weeks on the market.

The higher the price, the harder it gets:

  • Homes listed at less than $1 million: 45% failed to sell.
  • Homes listed at $1 million or more: 61% failed to sell.
  • Homes listed at $5 million or more (656 units): 79% failed to sell.

What did unsuccessful sellers do? Pull the unit off the market.

The report explains: “Most sellers who were unable to find buyers at suitable prices have simply pulled their listings from the market. Of all listings created in spring 2018, 40% are either paused, delisted, or otherwise no longer available on StreetEasy. Only 7.5% of all the listings from the peak months, or 14% of the total unsold units, are still actively seeking buyers.”

A flood of listings for the spring home-shopping season.

With these unsold units lurking in the shadows, and “with inventory levels still near historic highs,” StreetEasy says, “we will likely continue to see heightened inventory heading into the spring home-shopping season, as these sellers try again to find a buyer.”

StreetEasy expects “another large wave of inventory to hit the market again in 2019 – one that will likely include many of the units listed but unsold in 2018.”

And the study has some suggestions:

For sellers still seeking buyers, then, the situation calls for a clear strategy: cut prices.”

Sellers may be tempted to hold out in the hope that some buyer will pay far above what others are offering. But with falling prices in many areas of the city, and inventory lingering on the market, such an outcome is highly unlikely. Many are willing to buy, but almost no one will be willing to pay more than what the broader market demands.”

Buyers, on the other hand, should note the importance of doing their research. Pay special attention to how listing prices compare to neighborhood benchmarks…. Be picky, be patient, and be prepared to negotiate.”

Liquidity dries up when prices fall.

And this is what sellers in New York City are re-learning: Liquidity in a housing market exists only when the market is hot and prices rise. When bidding wars break out, anything sells, at just about any price, which causes prices to surge further.

But when the mood changes, and prices begin to fall, liquidity just evaporates. And homes sit on the market and simply fail to sell – as in New York City, with 52% of the homes listed last spring still not having sold.

But there is always liquidity somewhere, just at lower prices. To find that liquidity, sellers have to lower their aspirations and cut their asking prices. Liquidity is where the willing and able buyers are. Cut the price enough – and that’s valid for most assets – and you will find liquidity. And as buyers see those lower transaction prices in their neighborhood, they pull back further, being, as StreetEasy suggests, picky, patient, and prepared to negotiate.

Years of price gains in new houses are unwinding as homebuilders try to make deals. Read… New House Prices Drop 12% as Supply Surges

Sentiment can be a viscous circle and that's where we are now...sellers are reluctant to drop prices due to recent history and so do this by a token amount, whilst buyers (given a recent 180 change in media coverage) now hold off believing that they will get a better deal in six months time. Any seller who wants to capitalize on the recent highs before they really drop needs to give a reduction that is `too good to refuse`, as in 12-24 months with pressured sellers it won't be a `big deal` and even greater reductions will be the norm.

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6 hours ago, MrXxx said:

Sentiment can be a viscous circle and that's where we are now...sellers are reluctant to drop prices due to recent history and so do this by a token amount, whilst buyers (given a recent 180 change in media coverage) now hold off believing that they will get a better deal in six months time. Any seller who wants to capitalize on the recent highs before they really drop needs to give a reduction that is `too good to refuse`, as in 12-24 months with pressured sellers it won't be a `big deal` and even greater reductions will be the norm.

Beautifully put.

The turns are always intriguing to watch but the USA is turning.

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It was mentioned a few pages back about the Pound being seen as a safe haven when things start kicking off. Any thoughts anyone on what/if/when how that could materialize?

It's always seemed likely to me that Sterling would rebound again, at least at some point in the future. Our government was the most 'successful' at debasing it's currency during the GFC, and there's plenty of 'shitholes' around the World in much poorer shape than ours.

While I'm asking silly questions, any ideas on investing in Venezuela? Right now it looks mental buy what an opportunity once there's been a touch of regime change.

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Fascinating insight into what is happening in Venezuela right now, esp in regard to currency devaluation (by the hour!) and gold mining

How Venezuela turns its useless bank notes into gold

https://www.google.co.uk/amp/s/mobile.reuters.com/article/amp/idUSKCN1PZ0BX

‘His bus driver's salary could not keep pace with Venezuela's hyperinflation, which the International Monetary Fund projects will hit 10 million percent this year.

The three men net roughly 10 grams of gold monthly from backbreaking work. Still it is roughly 20 times what they could earn back home.’

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Napoleon Dynamite

https://www.bloomberg.com/news/articles/2019-02-11/two-large-chinese-borrowers-are-said-to-miss-bond-payments

Quote

 

Two large Chinese borrowers missed payment deadlines this month, underscoring the risks piling up in a credit market that’s witnessing the most company failures on record.

...

“Chinese corporations’ expansion in the past few years has often been fueled by debt issuance, usually short-term borrowings, but their investment cycles are typically longer term,” said Shen Chen, a partner at Shanghai Maoliang Investment Management LLP. “The recent failures show that companies are still struggling to roll over their debt despite the recent easing measures.”

 

 

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2 hours ago, Calcutta said:

It was mentioned a few pages back about the Pound being seen as a safe haven when things start kicking off. Any thoughts anyone on what/if/when how that could materialize?

It's always seemed likely to me that Sterling would rebound again, at least at some point in the future. Our government was the most 'successful' at debasing it's currency during the GFC, and there's plenty of 'shitholes' around the World in much poorer shape than ours.

While I'm asking silly questions, any ideas on investing in Venezuela? Right now it looks mental buy what an opportunity once there's been a touch of regime change.

2 positive factors, due to Brexit malarkey, GBP is historically VERY undervalued. UK bond average maturity 17 years, way above average 7 years of other economies.

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4 hours ago, Calcutta said:

It was mentioned a few pages back about the Pound being seen as a safe haven when things start kicking off. Any thoughts anyone on what/if/when how that could materialize?

It's always seemed likely to me that Sterling would rebound again, at least at some point in the future. Our government was the most 'successful' at debasing it's currency during the GFC, and there's plenty of 'shitholes' around the World in much poorer shape than ours.

While I'm asking silly questions, any ideas on investing in Venezuela? Right now it looks mental buy what an opportunity once there's been a touch of regime change.

As mentioned on this site (and below), Brexit has already been priced in...if it goes hard B, when the markets realize the UK isn't going to collapse/the world falling in the £ will strengthen OR if it goes soft B the markets will breathe a sigh of relief, and the £ will strengthen.

As for Venezuela, once the `New Boy` is finally installed expect some payback to those who sponsored him via favourable trade contracts I.e. natural resources (oil?)...

...but I could be completely wrong :-), so as always Do Your Own Research!

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32 minutes ago, Errol said:

DzJv_CHW0AANxBj.jpg

Percentage change in gold reserves 2010-2019. Russia's winning. China's opaque. The world is starting to wake-up. The U.S. is sound asleep.

I’m gonner need a source on that Errol, preferably not Sputnik based.

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