Credit deflation and the reflation cycle to come.

[Viceroy]

3 hours ago, MvR said:

Anyone with thoughts on GBP going into ( potential ) Brexit at the end of this month? 

I'm seeing some negative divergence on my W%R(45) oscillator against both the dollar and the euro at the moment, and we're about one swing cycle from the Brexit deadline ( marked with a vertical line ). I'm currently around 40% in cash.. 1/3 of that in dollars and 2/3 in sterling.. wondering whether I should spread the sterling around a bit more. I'm heavy enough in PMs and miners for now. 

Of course it can work both ways. Regardless of my long term positive view on Brexit,  I'm thinking the markets would probably punish sterling in the short term on a no deal, based on previous action, but a delay or watering down of Brexit could cause it to rise. IMHO of course and definitely not advice.  

What are others doing?

Italy elections on 4 March will be interesting.  If the Lega party gets in (and I've read they're expected to win), they vow to implement an Italexit unless the EU submits to their demands.

If the EU acquiesces to Italy then surely they'll have to for the UK..   But then each member will want caveats..!  

Armstrong has mentioned recently he sees a hard Brexit so the Pound will surely tank based on that outcome as you note.. (at 55 mins from 23 Feb 2019) https://www.canadianinsider.com/video/commodities-bob-hoye-gold-real-estate-martin-armstrong-market-cycles-eric-hadik-amytsxv

 

[MvR]

Well.. I grabbed a small chunk of a few silver miners before the close.. Coeur, Fortuna and Great Panther.  If they drop more, that's OK. They're for the long term. 

[MrXxx]

12 hours ago, Democorruptcy said:

That sounds very The Big Short!

No, I think that was a synthetic, synthetic, dog shit wrapped in cat shit ETF! :-) :-) :-)

[subutai80]

4 hours ago, MvR said:

Anyone with thoughts on GBP going into ( potential ) Brexit at the end of this month? 

Bit of divergence on the weekly. Stronger pound as Article 50 keeps getting extended meaning Brexit becomes more unlikely??

[MvR]

11 minutes ago, subutai80 said:

Bit of divergence on the weekly. Stronger pound as Article 50 keeps getting extended meaning Brexit becomes more unlikely??

Interesting.. I don't tend to use MACD much as it lags a period or two behind W%R(45),  but mine also confirms your prognosis on the weekly.  I guess we'll see. Even in the case of a hard, sorry, CLEAN Brexit, my entirely un-evidenced intuition tells me sterling will recover moderately quickly once the cracks in the euro start showing more clearly. Longer term, I think our freedom to act in our own interests, free of an impending EU collapse, will make us a safe haven of sorts.  Just IMHO though.

[sancho panza]

5 hours ago, JMD said:

Thanks again SP. The parent company is Fujitsu Japan, they bought the old British ICL, rebranding it Fujitsu UK. However, the pension scheme is still named the ‘ICL pension scheme’ and Japanese parent company sends the UK pension scheme a shortfall ‘top-up payment’ of £40m each year, sounds generous but then again this was a goodwill gesture after Fujitsu reneged on its original promise of not to close the DB scheme to current employees, but which they did close. The top-up agreement ends in 2032. The scheme has approx. £4bn assets and £5bn liabilities, and for last 10 years the £1bn deficit has hardly shifted. Not sure if that's sustainable especially as head count keeps reducing, down to 10,000 from 20,000 back in year 2000. Not as bad as BT’s £14bn deficit I suppose but then again I understand BT have plans to pay off their entire deficit over the next 13 years.

 

I can see your point.I was going mention BT in my reply to you but thought better of it as I have only a dasic understanding of the issues.

Your logic is very logical.Although if yields move up the deficit might reduce.

[sancho panza]

2 hours ago, Viceroy said:

Italy elections on 4 March will be interesting.  If the Lega party gets in (and I've read they're expected to win), they vow to implement an Italexit unless the EU submits to their demands.

If the EU acquiesces to Italy then surely they'll have to for the UK..   But then each member will want caveats..!  

Armstrong has mentioned recently he sees a hard Brexit so the Pound will surely tank based on that outcome as you note.. (at 55 mins from 23 Feb 2019) https://www.canadianinsider.com/video/commodities-bob-hoye-gold-real-estate-martin-armstrong-market-cycles-eric-hadik-amytsxv

 

Yes,I think some have been celebrating the 'no' no deal Brexit a little early.Anyone of the 27 could throw a spanner in the works.

As you say Italian elecvtion will be very interesing.

1 hour ago, MvR said:

Well.. I grabbed a small chunk of a few silver miners before the close.. Coeur, Fortuna and Great Panther.  If they drop more, that's OK. They're for the long term. 

I think I'm a little too underweight the Silver miners.

 

Off topic,I was eyeing a trade on IG today and was unable to look at pricing a GDX trade as it wouldn't open a ticket even though the NYSE was open.Any ideas why that might be ?

[Agent ZigZag]

33 minutes ago, sancho panza said:

Well.. I grabbed a small chunk of a few silver miners before the close.. Coeur, Fortuna and Great Panther.  If they drop more, that's OK. They're for the long term. 

iM NOT BUYING/ADDING  AT THE MOMENT ANY SILVER SHARES JUST YET.DOESNT FEEL RIGHT ALTHOUGH I DID BUY LAST MONTH MORE PHYSICAL SILVER. IF THERE IS A SELL OFF  THEN I WILL BE ALL IN. ESPECIALLY IF THE DOLLAR INDEX TURNS DOWN

[MvR]

39 minutes ago, sancho panza said:

Off topic,I was eyeing a trade on IG today and was unable to look at pricing a GDX trade as it wouldn't open a ticket even though the NYSE was open.Any ideas why that might be ?

I'm not sure.  normally they allow order details to be entered but then reject it due to non-ISA compatibility for me. I assume that's a KIID issue.. Not sure why you couldn't get that far though, if that's what you mean. 

Actually I'm fairly sure I tried it a few days back and it at least got to the order entry page. 

My charts haven't worked in the ISA side of things for a while on IG, but that could be a Flash issue. I prefer their new style spread betting charts though. much quicker to go through a watchlist quickly so that doesn't really bother me. 

[Green Devil]

1 hour ago, sancho panza said:

Yes,I think some have been celebrating the 'no' no deal Brexit a little early.Anyone of the 27 could throw a spanner in the works.

As you say Italian elecvtion will be very interesing.

I think I'm a little too underweight the Silver miners.

 

Off topic,I was eyeing a trade on IG today and was unable to look at pricing a GDX trade as it wouldn't open a ticket even though the NYSE was open.Any ideas why that might be ?

I've tried to buy gdx or other US etfs. As an EU resident you are not allowed to do this. You have to buy a similar EU offered etf. This changed last year. 

[Bricks & Mortar]

2 hours ago, Viceroy said:

Italy elections on 4 March

I don't think there's an election on 4th March.   There was one on 4th March last year though.   And lots of chat about eu elections in May.

[Inoperational Bumblebee]

I think using indicators on GBP charts for trading is pointless right now. Surely TA is far inferior to FA at this point in the game? Depends on your timeframe I guess.
That said, I did open a short on cable for a few hours earlier.

[Green Devil]

7 hours ago, Inoperational Bumblebee said:

I think using indicators on GBP charts for trading is pointless right now. Surely TA is far inferior to FA at this point in the game? Depends on your timeframe I guess.
That said, I did open a short on cable for a few hours earlier.

Anything to do with gbp you are betting on political announcements posturing on Brexit. Highly risky imo and more like flipping a coin. 

[MvR]

8 hours ago, Inoperational Bumblebee said:

I think using indicators on GBP charts for trading is pointless right now. Surely TA is far inferior to FA at this point in the game? Depends on your timeframe I guess.
That said, I did open a short on cable for a few hours earlier.

I sort of agree, although the counter argument might be that at times like this, where the fundamentals really could go either way, TA is all we really have to go on. Price will normally find its way to a key support/resistance level as news is about to break, as if it's setting itself up to catch the most people out, and increase the risk associated with trading the news.  

Almost by definition, market prices move to a point where it's a 50:50 coin flip either way in the very short term, at least in the view of those participating. The trick to short term trading, as far as I can tell, is to be thinking in a different time scale to other participants, getting the position sizing right, and knowing when to exit the trade.

Then there's the the argument that TA and price moves in general hint at the collective beliefs of a large number of market participants. It's amazing how often market moves predict real life events, either directly or in a contrarian way as more knowledgable players push the price one way only for it to snap back the other way once the news is out.  

 

[Democorruptcy]

9 hours ago, sancho panza said:

Yes,I think some have been celebrating the 'no' no deal Brexit a little early.Anyone of the 27 could throw a spanner in the works.

As you say Italian elecvtion will be very interesing.

If you are interested in that election, here are the results of it

March 4th 2018

[Lightscribe]

10 hours ago, MvR said:

Interesting.. I don't tend to use MACD much as it lags a period or two behind W%R(45),  but mine also confirms your prognosis on the weekly.  I guess we'll see. Even in the case of a hard, sorry, CLEAN Brexit, my entirely un-evidenced intuition tells me sterling will recover moderately quickly once the cracks in the euro start showing more clearly. Longer term, I think our freedom to act in our own interests, free of an impending EU collapse, will make us a safe haven of sorts.  Just IMHO though.

That is precisely my reckoning as well. However i’m thinking there may well be a Brexit delay in the near term. No doubt a future EU collapse would be down to Brexit too, as well as Italy’s forthcoming economic shitstorm. 

I’m mostly in cash in my pension, but all ongoing payments this past year are going into a low fee FTSE all share index tracker, as I feel it is already undervalued.

[subutai80]

10 hours ago, MvR said:

I don't tend to use MACD much as it lags a period or two behind W%R(45)

Thanks for the tip, I'll check the W%R(45) out

[Harley]

17 hours ago, kibuc said:

Sigh.

Gold giveth and gold taketh away.

WTF, something on sale and you're upset!  Of course, only if you think the future is rosy for the stuff.  I've been sitting on my hands patiently waiting and may just a bit longer given DBs (not advice) thoughts, or maybe start averaging in close to here.  And I'm not so sure GDX is looking that desperate.  I need to review the weekly data tomorrow.

[Barnsey]

Without wanting to get too caught up on Brexit, worth knowing that if we want more than a 2 month extension, we need to elect new MEPs. 

[Bear Hug]

On 23/02/2019 at 08:37, Castlevania said:

Barrick are looking at merging with Newmont

https://www.google.co.uk/amp/s/mobile.reuters.com/article/amp/idUSKCN1QB0AN

Centamin on Monday. I own both. I think Centamin will disappoint, Fresnillo will be better than expected. 

Well, that went only partially as expected then.  I didn't quite expect Fresnillo to crash as much.  Could really do with placing some sell orders as the market opens when the news are bad: things appear to only get worse during the day.

[DurhamBorn]

3 hours ago, Cattle Prod said:

Thanks very much for the update, DB. Made my day. Your currency calls have been superb, and yet I couldn't see why it would turn at 97 rather than 100. There is a strong upper resistance line at about 100/101 in May/June as I'm sure you know and I struggled to see it turning withput tagging that first. Then dollar bears like Luke Gromen are tactically dollar bullish for good reasons. Your 97 call was keeping me awake at night! Now things make sense to me, and 100 to 84 fits very very well with the patterns I see in my much more amateur analysis. A little run to 100 will get the dollar bulls all excited just in time for Mr. Market to bring the pain. Might knock the stock rally over too. Cheers lad!

Like you, I just wish gold would trend now! How to play this is the last piece of the jigsaw. When you say $1260 area would be the last great buying opportunity, do you mean for a 2016 type of run up, or a secular bull? In other words, would a deflationary crash bringing gold down to c. $900 offer a second, and last opportunity to buy? If we see a 2016 type run up with say GDX to 38, and then a deflationary crash, do you see that later this year, or next year?As I've discussed with you before, I can see reasons for a 2008 30% drop in gold to not happen this time. But its the question that is currently keeping me awake at night.

It's perhaps stupid of me as my current goal is to maximise capital to deploy at the bottom of the deflationary crash and bear market sell off, which is kind of greedy, and I could just avoid the guessing by averaging in every month. The destination will be the same. I guess I dont trust myself to hold through a major crash!

By the way, check out Moneyweek this week. The inflation cycle to come is all over it, infrastructure spending etc. Its getting 'out there' and as you point out in the previous page the bond market is sniffing inflation. Looking at how jumpy and desperate the Fed et al are to avoid a stock market selloff, do you think they could go straight to an inflation?! I guess they still need a trigger for the massive money printing, but they're certainly warming us up early.

We do a lot of cross market work on the dollar calls and we see a window for it to hit 100.Our liquidity work said 97 on the dollar would be the ceiling and it has proved pretty much 100% right as its tracked under and around since it hit it.Those tools are saying the reasons the dollar will fall wont come into play until May,and between now and then the set up says the foot has been taken off the head so the dollar can have one last rally to the 100 area.Can,not will.We think gold will trend from May/June if if doesnt now.The road map says $1350,$1253,$1500+,$900,$10,000.So up to $1350 proved correct,down to $1253,then trending wave up to $1500.Thats when it gets tricky.We have several cycles over laid here that state a bear market should be in full flight then,and a liquidity squeeze/debt deflation gives the PMs a sharp sell off.Then a secular bull gets underway as the reflation takes hold.

Im 100% confident on our longer calls.Its inflation with bells on.The road map just gets tricky close in,thats why we always say they arent trading calls,they just help with positioning (ie like i top sliced most of my miners by 20% that has proved perfect timing).My roadmap was right that they would pull back,but given the massive upside ahead,being whipsawed out of the complex isnt sensible.

[DurhamBorn]

4 hours ago, Cattle Prod said:

Thanks DB, thats helps. One reason I really respect your work is because you don't give specific calls. The real pros out there don't, as they know it's impossible!

What I was struggling with is having the time to run up again to 1500 before the sharp sell off, as I believe we are in the beginnings of a bear market now. But your comment of 'bear market in full flight by then' gives room for that to happen. The early 2000s bear took a while to really get going, there is time enough, especially as the liquidity squeeze will be toward the end.

And I dont mind if the dollar tops st 97 or 100, just that you see scope for possibly 100 means it all fits better for me!

Like you say the cycles are tight on gold getting to $1500 at the same time as the bear market in US shares really getting going.What we are seeing here is that many things that drive gold (and drive the dollar down) look set to turn in May.By this we mean inflation starting to show its hand at the same time as growth slows in the US.Those two together are the triggers to set gold trending and id expect it to be pretty quick once it gets going.A FED with slowing growth,but inflation building is where the markets get worried.Its that time that PMs really trend,but before anyone else spots why.Specific calls are for school boys and the liars,just like you say.Nobody knows that.The key is the destination.If i buy a gold miner at $2,$1.80.$1.60,i care little if it ends up at $2.80,$3.80 etc.I know very few people now who are able to understand A to Z (or actually A to XYZ) is what matters,not A to C,D to F.F to M etc.Those are for traders.Macro strategists look at the longer road map.

Im actually very excited about the value im picking up into my portfolio.The market is looking the wrong way and has zero understanding of inflation cycles.The only person who has seen one in the big banks trading rooms cleans the toilets.

This ones for you as im sure youl understand it,its from my friends work on liquidity flows,and i havent ever posted our exact work before.Find me a big trading bank who has got close to our dollar calls in the last several years.There isnt one.Youl understand this.

The dollar DXY is in a triangle pattern 93.39 low in Sept (a), 97.53 high in Nov (b), 94.635 in Jan (c), and 97.33 recent high (may be (d)). While it may pull back in a wave (e), I expect it to break to the upside and target where wave (C) = wave A x ,618 = 100.5 approximately. I think this high will likely occur into May and that GOLD will correct into that high in the dollar.

I should add these are short term road maps and we dont trade from them because they fail and we trade from the long term signals only,but it is an example of the work we do within the road maps.

[Moonraker]

Hello DurhamBorn and all, this is really good here : structured, bouncing and sharing ideas with respect.  It makes a change from either  having some incompetent  managers telling you what to do or some incompetent managers as colleagues...

[Noallegiance]

7 hours ago, sam1994 said:

I'm studying this regularly now. While I don't understand everything in detail I do appreciate the shared insight here.

Hoping that there are opportunities that present after end of tax year (6th April) so I can take advantage of this. Not concerned about short term here. 

Cheers

S

I find myself in a position whereby I understand this stuff enough to understand it but not enough to carry out most of the ideas. 

I've recently decided that I know my limitations and to think otherwise could land me in trouble.

#KISS

[DurhamBorn]

Great to have you guys here.Everyone is welcome,everyone's input valued,nobody put down in any way.This thread and the all the people on it are as valuable to me as anyone else.Investment can seem scary and in lots of ways it is.However its actually very simple.The money supply will always go up over the long term.Always.Cycles pull that money in different directions for lots of reasons.If you consume all your wages for 20 years and spend nothing on your house then things start to break.The boiler,the roof perhaps,brickwork pointing,drive cracking,bathroom leaking.At some point you have to repair those.The new boiler means the car will have to last an extra year,the roof give the holiday a miss etc.

The economics drive the choices.When prices fall in "stuff" as they have the last 40 years people consume more.In doing so they save less and capital invests less.At some point those cycles cross.The economy cant produce the wealth people are consuming.Thats when rare event happen.Inflation cycles.The economy puts itself right by sucking income to producing assets.The political cycles also tie in very well with this.Look at the 70s and now.People fed up,people knowing something isnt right etc.Western economies dont fall,they are far too complex.They inflate and they deflate.

So for investment it isnt about buying some silly penny share or the next big thing.Its about buying quality companies who the next cycle will/should favour at the end of a cycle that didnt suit them.A broad spread and balanced portfolio.Its about aiming for 12% compounding,not 100%.12% compounding will get you a fantastic pot.Im actually aiming for 9% compounding going forward mixing dividends with growth.For ordinary investers who are prepared to take some risk then a portfolio of the silver miners i put back in the thread should prove lucrative in the next cycle.

Oh and once the UK is out of the EU and out the other side of a debt deflation,we will be one of the best performing economies in the world.We have a lot of the companies that will do very well in the next cycle.