Credit deflation and the reflation cycle to come.

[Castlevania]

56 minutes ago, DurhamBorn said:

Anglo American are the big platinum miner,but diluted by everything else.Im thinking about buying some more physical, have a small amount.The sentiment indicators are looking terrible for platinum,ie superb for buying it.Likely a big bull market is about to start in the metal.Its likely platinum will double before gold does,but its a lot easier to play the gold sector through the miners.For holders of Sibanye though i would hold as a volatile,but very leveraged play.

Thanks. I used to live with a South African girl who’s Dad was the go between with one of the platinum mining companies and the South African unions. Needles to say he slept with a gun beneath his pillow.

[Straingone]

11 minutes ago, Harley said:

Funny, BCA Marketplace PLC came into view today with it's 4.8% dividend, increased FCF, lower net debt, etc.  And its price recently had a technical bounce.  Sounds like you wouldn't be a buyer though on a fundamental basis?

BCA are the equivalent of gold rush shovel sellers. Massively benefiting from there  financialisation of the  used car market.

[DurhamBorn]

47 minutes ago, Froggy2000 said:

Hi Everyone 

Long time lurker here.  Since I found the thread a few months ago I've gone to the beginning and read the whole thing!  What a great thread - I've learnt a lot so thank you everyone

I've followed the markets since the financial crisis woke me up a bit.  It looks to me that the Fed is trapped and that the markets will soon wake up to the fact the ZIRP is now permanent.  Alongside that will come massive inflation despite what happens to credit in the interim.  My 2c anyway.  All in all, I agree with the jist of the thread.

Anyway I have a question!  My liquid investments are in FTSE 100 trackers at the moment and I am happy with them.  This thread has inspired me to add some more specific investments that will benefit from the macro environment.  I have this year's ISA allowance to invest and I'm torn between domestic stocks that are pretty battered down right now (Centrica, Royal Mail, Vodafone etc), or whether to go into the gold miners.

The issue I have with the gold miners is the transaction costs.  My FTSE tracker is with iWeb sharedealing.  I paid a 25GBP one off fee and there are no other fees for holding the investment!  Great value.  Unfortunately the selection is limited and they don't have GDX.

I can set up an ISA account with AJ Bell (only one can be set up a year apparently) but there is a 1% FX charge for foreign dealing.  Plus 0.25% annual management charge, plus 0.5% GDX fee.

The last two are a fact of life and quite competitive actually, but the FX charge can really stop you from moving in and out each year or so - 2% round trip cost on 20k is 400quid!

To those that hold GDX, what provider do you use?  Is there away to avoid the FX charge by funding the account with USD?  Maybe I'm better off just going for UK listed miners.

DurhamBorn, thank you for your fantastic contribution (founding?!) of the thread.  Do you just use GDX as a guide to the miners as a whole or do you actually hold it?

Thank you!

 

I hold a small amount of GDX and a bigger amount of GDXJ.I tend to use it more for a roadmap.A lot of what drives the miners is how much money is flowing into GDX/GDXJ and i use price points in those rather than individual stocks mostly.For instance il likely sell a lot (30%?) of my miners when GDX hits around $28,.

[Harley]

43 minutes ago, Froggy2000 said:

To those that hold GDX, what provider do you use?  Is there away to avoid the FX charge by funding the account with USD?  Maybe I'm better off just going for UK listed miners.

Interactive Investors supports multi-currency accounts.

Some other gold miner ETFs are available on the LSE.

[Democorruptcy]

2 hours ago, DurhamBorn said:

There are gaps to fill on the thrust up,but its hard to say if we pull back or not.Many silver stocks are lagging so far due to silver not following gold yet,but it will later and they can still be bought.Rough estimate is we go up into late August (maybe gaps being filled in stocks shooting up between now and then) a pull back then up into xmas.My initial target is $28 on the GDX sometime this year then il decide then how much to sell.I will be selling some then,though not sure how much yet.People will not expect this is a trend change in the complex,simply a bounce,but if it is the change there should be some very nice profits in many miners.As always for others reading,not financial advice/only a sector for the experienced or brave.

When the thread started (May 17 on ToS) Gold then 1,280 Silver 17.5 haven't really gone anywhere yet. Initially you were suggesting there could be either a deflationary crash in which even gold was knocked down hard, or no knock down and straight to inflation. Which do you see now and the absolute low for gold if it hasn't already happened?

[Barnsey]

Mexico threat now cancelled, Fed positioning to ease rapidly, especially after bad jobs numbers twice this week. Cue the very belated summer melt up which I thought we already had, things to go stratospheric before a bust in Autumn as fundamentals continue to deteriorate in the real economy?

[spygirl]

10 hours ago, DurhamBorn said:

Im still driving my old 05 Pug 2.0 L diesel.14 years young now,had it 9 years.I bought my partners car off her and give her a grand for it,another 07 Pug,but i havent used it much yet,its sat on the drive.I like having two though,it means i can do any jobs on one while driving the other and its a spare for all my family when needed.Insurance is £420 a year for both of them,tax £280 the pair,MOT £80 the pair and whatever parts i need,say another £100.£880 to keep two cars on the road for the year.I depreciate the 07 one in my head at £10 a week,so in two years that will be all the costs.I was a bit upset the other day though.I drove into work past all the BMWs,Audi's etc the young lads all have on finance but saw a car OLDER than mine in the car park.An 03 Renault Clio.It upset me a bit to think i didnt have the oldest car.(in not counting the two cars from the early 1970s that two guys bring now and again they have restored,fantastic).

Ah the secret of stress free car ownership - ~10 yo cheap runner.

Have to do a long trip? NO problems, no issue with putting miles on the clock. I know some idiots on PPI who stop driving their car, in case they break the mileage limit, which does sort of raise the question why they 'bought' the fuckign car in the first place.

Someone shunts you at the lights ? Oh these things happen.

Little old lady pushes a shopping trolley into it? No worries, Ill just get a patch kit of the interweb.

 

4 hours ago, Barnsey said:

Mexico threat now cancelled, Fed positioning to ease rapidly, especially after bad jobs numbers twice this week. Cue the very belated summer melt up which I thought we already had, things to go stratospheric before a bust in Autumn as fundamentals continue to deteriorate in the real economy?

Nah.

Just kickign Mexicos arse to letting half of Latin America turn up on the border.

US jobs figures appear to slow as they run out of employable people.

 

 

[DurhamBorn]

8 hours ago, Democorruptcy said:

When the thread started (May 17 on ToS) Gold then 1,280 Silver 17.5 haven't really gone anywhere yet. Initially you were suggesting there could be either a deflationary crash in which even gold was knocked down hard, or no knock down and straight to inflation. Which do you see now and the absolute low for gold if it hasn't already happened?

I see a good chance gold goes to $800 for a very short period,but it is possible gold has started a cycle run up already.My approach to the sector is to take profits at certain points.I have no stops in place and the main thing is i expect $38 in the GDX at some point in the next several years.Whats to remember as well is gold and the miners relative to other investments.I sold the likes of the tobacco companies at double where they are now and some of that was used to buy miners that have been sold once fully after a run (2016) and top sliced once (late last year) and i bought back some of those stocks at 50% down.Lots points to this being a trend change and if it is then GDX needs to hit $28 at some point this year.

[Democorruptcy]

55 minutes ago, DurhamBorn said:

I see a good chance gold goes to $800 for a very short period,but it is possible gold has started a cycle run up already.My approach to the sector is to take profits at certain points.I have no stops in place and the main thing is i expect $38 in the GDX at some point in the next several years.Whats to remember as well is gold and the miners relative to other investments.I sold the likes of the tobacco companies at double where they are now and some of that was used to buy miners that have been sold once fully after a run (2016) and top sliced once (late last year) and i bought back some of those stocks at 50% down.Lots points to this being a trend change and if it is then GDX needs to hit $28 at some point this year.

Gold seems to be going up with the markets at the moment, previously it had good days when the markets had bad. There's already talk of Fed loosening/rate cuts but without any real market fear, just expectation of more QE.

[Talking Monkey]

7 hours ago, Barnsey said:

Mexico threat now cancelled, Fed positioning to ease rapidly, especially after bad jobs numbers twice this week. Cue the very belated summer melt up which I thought we already had, things to go stratospheric before a bust in Autumn as fundamentals continue to deteriorate in the real economy?

How stratospheric you reckon Barnsey, Dow to 30K or is that pushing it. That bust has been a long time coming wish it would get here so we can get through the bad stuff

[Barnsey]

4 hours ago, Talking Monkey said:

How stratospheric you reckon Barnsey, Dow to 30K or is that pushing it. That bust has been a long time coming wish it would get here so we can get through the bad stuff

DurhamBorn's mentor on Twitter has increased his S&P target from 3500 to 4000, but expects a short and sharp explosion upwards on a stimulus news high, crashing back to earth in a deflationary bust Autumn/Winter as recessions become confirmed around the Globe.

[Loki]

I bought a small amount of ETFS Commodity Securities 2x Daily Long Corn based on the terrible agricultural reports coming out of America and Australia

[Talking Monkey]

1 hour ago, Barnsey said:

DurhamBorn's mentor on Twitter has increased his S&P target from 3500 to 4000, but expects a short and sharp explosion upwards on a stimulus news high, crashing back to earth in a deflationary bust Autumn/Winter as recessions become confirmed around the Globe.

That would be one explosive move higher bloody hell, if it gets close to 4000 lots of folk gonna make some good money

[DurhamBorn]

7 hours ago, Democorruptcy said:

Gold seems to be going up with the markets at the moment, previously it had good days when the markets had bad. There's already talk of Fed loosening/rate cuts but without any real market fear, just expectation of more QE.

I think its the smell of inflation in the next few quarters as the economy slows that will see the trend change hold DC.Inflation creeping up and a Fed boxed in is fantastic for gold.Fear might see the rally grow,but its inflation expectations that i see as the kicker.

[DurhamBorn]

2 hours ago, Barnsey said:

DurhamBorn's mentor on Twitter has increased his S&P target from 3500 to 4000, but expects a short and sharp explosion upwards on a stimulus news high, crashing back to earth in a deflationary bust Autumn/Winter as recessions become confirmed around the Globe.

I should add David wasnt my mentor,it was someone who worked with David at Fidelity in the 80s and part of the best equity teams there has been for decades,they worked on investing pension assets in the US for UK clients and they were doing that for Glaxo when i met him.They worked together but my friend is retired now.Their predictions of course are very similar given David is using a lot of my friends tools and are in regular contact..Its interesting reading the Woodford debacle where he keeps claiming the macro picture is fantastic etc and UK stocks should be flying.A complete miss-read on leads and lags.Its also ironic that the press is now all saying value investing/income investing is over and only growth investing will work now.Again a complete lack of understanding on cycles,liquidity affects and inflation.Hardly anyone even considers inflation anymore,and even less macro strategists understand its affects on different companies.Woodford will wake up to more and more rights issues destroying equity in his portfolio as the end of a disinflation cycle with rising inflation creates massive problems for free cash light companies.Purplebricks a prime example.They will need fresh equity,and many more.

[Talking Monkey]

1 hour ago, DurhamBorn said:

I should add David wasnt my mentor,it was someone who worked with David at Fidelity in the 80s and part of the best equity teams there has been for decades,they worked on investing pension assets in the US for UK clients and they were doing that for Glaxo when i met him.They worked together but my friend is retired now.Their predictions of course are very similar given David is using a lot of my friends tools and are in regular contact..Its interesting reading the Woodford debacle where he keeps claiming the macro picture is fantastic etc and UK stocks should be flying.A complete miss-read on leads and lags.Its also ironic that the press is now all saying value investing/income investing is over and only growth investing will work now.Again a complete lack of understanding on cycles,liquidity affects and inflation.Hardly anyone even considers inflation anymore,and even less macro strategists understand its affects on different companies.Woodford will wake up to more and more rights issues destroying equity in his portfolio as the end of a disinflation cycle with rising inflation creates massive problems for free cash light companies.Purplebricks a prime example.They will need fresh equity,and many more.

That Purplebricks chart is quite something almost quartered in a year. I look at the likes of Netflix and reckon they will quarter in due course. Loads of companies with tons of debt, after the blow off top lord knows how brutal the crash will be

[Inoperational Bumblebee]

21 hours ago, Froggy2000 said:

Hi Everyone 

Long time lurker here.  Since I found the thread a few months ago I've gone to the beginning and read the whole thing!  What a great thread - I've learnt a lot so thank you everyone

I've followed the markets since the financial crisis woke me up a bit.  It looks to me that the Fed is trapped and that the markets will soon wake up to the fact the ZIRP is now permanent.  Alongside that will come massive inflation despite what happens to credit in the interim.  My 2c anyway.  All in all, I agree with the jist of the thread.

Anyway I have a question!  My liquid investments are in FTSE 100 trackers at the moment and I am happy with them.  This thread has inspired me to add some more specific investments that will benefit from the macro environment.  I have this year's ISA allowance to invest and I'm torn between domestic stocks that are pretty battered down right now (Centrica, Royal Mail, Vodafone etc), or whether to go into the gold miners.

The issue I have with the gold miners is the transaction costs.  My FTSE tracker is with iWeb sharedealing.  I paid a 25GBP one off fee and there are no other fees for holding the investment!  Great value.  Unfortunately the selection is limited and they don't have GDX.

I can set up an ISA account with AJ Bell (only one can be set up a year apparently) but there is a 1% FX charge for foreign dealing.  Plus 0.25% annual management charge, plus 0.5% GDX fee.

The last two are a fact of life and quite competitive actually, but the FX charge can really stop you from moving in and out each year or so - 2% round trip cost on 20k is 400quid!

To those that hold GDX, what provider do you use?  Is there away to avoid the FX charge by funding the account with USD?  Maybe I'm better off just going for UK listed miners.

DurhamBorn, thank you for your fantastic contribution (founding?!) of the thread.  Do you just use GDX as a guide to the miners as a whole or do you actually hold it?

Thank you!

I'm surprised iweb don't have GDX, as it's also listed on the LSE. 

[Froggy2000]

Hmm...maybe I'm not looking properly.

Thanks for all the advice everyone.

I think I'll settle on this one:

iShares Gold Producers EFT USD Acc (SPGP)

It's actually listed in GBP with iweb.  It looks like they do the currency swap for you.  The holdings are similar to GDX anyway.

Looking at the chart, it's amazing what effect GBP/USD has had.  The gold mining sector looks a little more expensive priced in GBP!

Hopefully I get a small pull back before I take the plunge!

 

 

 

[Wheeler]

51 minutes ago, Froggy2000 said:

Hmm...maybe I'm not looking properly.

Thanks for all the advice everyone.

I think I'll settle on this one:

iShares Gold Producers EFT USD Acc (SPGP)

It's actually listed in GBP with iweb.  It looks like they do the currency swap for you.  The holdings are similar to GDX anyway.

Looking at the chart, it's amazing what effect GBP/USD has had.  The gold mining sector looks a little more expensive priced in GBP!

Hopefully I get a small pull back before I take the plunge!

 

 

 

I hold both SPGP and GDXJ. I know they aren’t directly comparable as the SPGP has a spread of major producers as well as the juniors but so far it is doing much better. For example I bought both on the 28th January this year and SPGP is up 11.6% and GDXJ up 1.6% (taking all costs into account). I don’t have any GDX to compare with though.

[sancho panza]

On 07/06/2019 at 18:35, Castlevania said:

Ah platinum. What makes you think that? My understanding is that it’s been in the doldrums due to being the metal of choice for diesel catalytic converters. Palladium’s flown by contrast due to being the one of choice for petrol converters. Thanks Volkswagen.

Who are the big miners? Sibanye and Lonmin (soon to be swallowed up by Sibanye) I know of. Any others?

There's ADR s available for these

Anglo American Platinum

https://uk.investing.com/equities/anglo-american-platinum-ltd-company-profile

Implats

https://uk.investing.com/equities/impala-platinum-holdings-ltd

 

Not for this one

Northam

https://uk.investing.com/equities/northam

[Castlevania]

7 minutes ago, sancho panza said:

There's ADR s available for these

Anglo American Platinum

https://uk.investing.com/equities/anglo-american-platinum-ltd-company-profile

Implats

https://uk.investing.com/equities/impala-platinum-holdings-ltd

 

Not for this one

Northam

https://uk.investing.com/equities/northam

Thanks. Any producers outside of South Africa? Their unions are very much at the militant end of the scale...

[sancho panza]

23 hours ago, Harley said:

Interactive Investors supports multi-currency accounts.

Some other gold miner ETFs are available on the LSE.

Thanks for the ETF heads up.On IG index there's a UK version of GDX available.

Might be this one.I have no idea whether it's tradeable in sterling but would be interested to know

https://uk.investing.com/etfs/market-vectors-gold-miners-uk

[sancho panza]

7 minutes ago, Castlevania said:

Thanks. Any producers outside of South Africa? Their unions are very much at the militant end of the scale...

I think the problem is that a huge chunk of platinum reserves are in ZIm and SA.Sibanye bought up aqaurius and are now buying Lonmin so will have a huge chunk of production

As DB says some of the other big producers eg Vale and Norilsk produce loads of other commodities as well.

The more I'm talking about this to you CV the more I'm talking myself into adding to our Sib holding,prob put us in around the 3.30 mark on average

[sancho panza]

14 hours ago, spygirl said:

Ah the secret of stress free car ownership - ~10 yo cheap runner.

Have to do a long trip? NO problems, no issue with putting miles on the clock. I know some idiots on PPI who stop driving their car, in case they break the mileage limit, which does sort of raise the question why they 'bought' the fuckign car in the first place.

Someone shunts you at the lights ? Oh these things happen.

Little old lady pushes a shopping trolley into it? No worries, Ill just get a patch kit of the interweb.

 

 

At my work (NHS),all the youngsters are qualifying and getting alease car that sucks in at least a few grand a year if not more.Never mind the student debt.All the older cars in the car park belong to the older crowd and those of the youngsters that mechanic their own cars.

 

Quite how they're going to buy a hosue at ten times salary I don't know.

[Castlevania]

6 minutes ago, sancho panza said:

I think the problem is that a huge chunk of platinum reserves are in ZIm and SA.Sibanye bought up aqaurius and are now buying Lonmin so will have a huge chunk of production

As DB says some of the other big producers eg Vale and Norilsk produce loads of other commodities as well.

The more I'm talking about this to you CV the more I'm talking myself into adding to our Sib holding,prob put us in around the 3.30 mark on average

Yeah. I think (could be a myth) all platinum group metals come from asteroid collisions with earth. So most of it is found in South Africa and Russia.