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Credit deflation and the reflation cycle to come.


DurhamBorn

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2 hours ago, BearyBear said:

Gold looks strong but it still needs to break 1380 level to give us a proper buy signal.

Silver looks weak.

Silver will remain weak until those base metal mines curb their output IMO, far too much supply otherwise.  With the US having its longest period of economic expansion ever in July it isn't likely to be too much longer.  Unless of course we are never going to have another recession!

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4 hours ago, BearyBear said:

Gold looks strong but it still needs to break 1380 level to give us a proper buy signal.

Silver looks weak.

Gold should get to minimum $1500 and GDX maybe the $30 area.There are lots of gaps to fill,but my tracking stocks id expect to lead are doing just that ,the South African miners.Harmony is up 33% in a month and the move started bang in the window.Iv sold my bottom ladder today for a 30% gain.My best set up stock Gold Fields Inc is up 50% from mid May and iv actually sold that today the whole holding.If the complex runs il be very happy,but if we get a pull back il probably buy some Sibanye and AG.

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Democorruptcy
18 hours ago, Castlevania said:

I thought they’d changed it so only first time buyers can use the scheme, as well as reduce the value of houses that can be bought to be more in line with local averages?

Changing not changed. Think it's from 2021?

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sancho panza
On 12/06/2019 at 16:13, JMD said:

hi SP, I own some US TIPS... my understanding of these inflation linked bonds is that inflation is good thing - however lower interest rates is bad. So if aim is to protect capital value, timing when to sell bond is an issue.

Please correct me if i'm incorrect about this as my plan will be to sell before October because its anticipated that US rates cuts may be announced then.

Not looking for financial advise of course!... just interested in learning. 

I'm not a bond trader and have little understanding of the dynamics.

Be careful relying on market predictions of rate cuts.Good piece here

https://wolfstreet.com/2019/06/11/the-market-is-almost-always-wrong-about-what-the-fed-will-do-chart/

 

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sancho panza
On 12/06/2019 at 20:27, Bobthebuilder said:

Wild west for sure, i install boilers for my sins, you should see the shit i see on a daily basis.

On topic, Howdens shares anyone?

I've traded in and out of Howdens a few times over the last 12.All short.Know little of the business.The chart showed a few tops to me but what's the fundamentals of that business like?Are they mainly selling to people doing up houses or do they sell to BDEV etc??

Do you think they're doing badly.

Decl-no current position

On 13/06/2019 at 11:56, CVG said:

And they are a good investment as part of a diversified portfolio, but the LT Gilts are specifically there to benefit from deflation. If I got rid of them completely then I wouldn't have the balance needed to smooth the volatility in the portfolio. The fact that they have been one of the best performing assets of the last few years has been really helpful at a time when we have been waiting for our PM investments and selected stocks to take off.

I'm keen to understand some of the basics.Are there any layman style websites laying out the classic trades.............?

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sancho panza
On 13/06/2019 at 22:20, Noallegiance said:

Conversation overheard today suggests that the indoctrination is so strong that 18-21 year old folk are not living youth like those of previous generations. They genuinely now feel that if they don't get their degree (don't get me started) whilst stunting spending on any kind of fun, they'll not get near owning a home.

Government and central bank policy touches all generations. 

Ignorance ain't so blissful.

x2

12 hours ago, Majorpain said:

Financial bulletin boards for the FTSE PM miners are pretty dead, even with the moves in PM's over the past few weeks.

Good contrarian sign IMO that the bottom is in and we are on the way up.

The rallies in some stocks eg Goldfields over the last three weeks $3-60 to $5-25,have been really unnerving.There are very few retial traders buying PM miners which a place I like to be.

image.png.b88332c55d3b81524e8c32da484a5660.png

9 hours ago, Majorpain said:

Silver will remain weak until those base metal mines curb their output IMO, far too much supply otherwise.  With the US having its longest period of economic expansion ever in July it isn't likely to be too much longer.  Unless of course we are never going to have another recession!

Do you know which base metals create the most silver by product by any chance MP?

7 hours ago, DurhamBorn said:

Gold should get to minimum $1500 and GDX maybe the $30 area.There are lots of gaps to fill,but my tracking stocks id expect to lead are doing just that ,the South African miners.Harmony is up 33% in a month and the move started bang in the window.Iv sold my bottom ladder today for a 30% gain.My best set up stock Gold Fields Inc is up 50% from mid May and iv actually sold that today the whole holding.If the complex runs il be very happy,but if we get a pull back il probably buy some Sibanye and AG.

Are you seeing $1500,then a pull back to $800,then a big move?

We'll be holding for a long time I suspect,I'm a terrible trader/timer of PM miners

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Castlevania

@sancho panza lead. To a lesser extent zinc. My great grandfather and all his forefathers were silver lead miners. ‘‘Twas a shit life.

Edit: I should add I did some research and the average expected life for a man was 35. Cause of death?

Lead poisoning

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sancho panza
Just now, Castlevania said:

@sancho panza lead. To a lesser extent zinc. My great grandfather and all his forefathers were silver lead miners. ‘‘Twas a shit life.

Cheers for that.I was jsut pondering if the decline in any base metal might give a clue as to when silver would start rising?

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Castlevania
16 minutes ago, sancho panza said:

Cheers for that.I was jsut pondering if the decline in any base metal might give a clue as to when silver would start rising?

It’s a difficult one due to the world being on a gold standard until the Second World War. What I do know is that the Great Depression was the end of the silver lead mines of mid wales (which had been mined continuously since Roman times).

Edit: the flipside is that the primary silver miners will have been mining a lot of base metals as by product, which has invariably kept some of them solvent.

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9 hours ago, sancho panza said:

 

I'm keen to understand some of the basics.Are there any layman style websites laying out the classic trades.............?

This is a good overview of the PP approach from Monevator.

https://monevator.com/the-permanent-portfolio/

After buying the book and doing more research using the excellent Portfolio Charts

https://portfoliocharts.com/

I settled on using the Gold Butterfly as my portfolio framework.

Now, I know that you are supposed to use Passive Index funds but I actively manage within the framework by selecting specific equities, diversifying into miners, etc using lots of great info from folks like you and DB, and others.

If Linkers have a position anywhere in the portfolio then I think that they would be in the Cash element. I have PB, ST Gilts, Foreign Currency there already. I might just add some Linkers for extra diversification!

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11 hours ago, sancho panza said:

x2

The rallies in some stocks eg Goldfields over the last three weeks $3-60 to $5-25,have been really unnerving.There are very few retial traders buying PM miners which a place I like to be.

image.png.b88332c55d3b81524e8c32da484a5660.png

Do you know which base metals create the most silver by product by any chance MP?

Are you seeing $1500,then a pull back to $800,then a big move?

We'll be holding for a long time I suspect,I'm a terrible trader/timer of PM miners

Im not sure on the big pull back SP so il have to consider things when gold hits $1500 as the minimum i see in the first leg.GDX probably will see $28/$30 during that.Im very happy with Goldfields.I was my best set up stock and i took 37% out of it.If it had been a rubber band stock (Harmony,Endeavour,Coeur etc) id of simply sold the bottom ladder and kept the rest,but the set up stocks arent as explosive as the rubber band ones,and a 50% jump in that time was too tempting.I also wanted capital as i have some ladders close to/hit buying points,some new entries (Card Factory,Imperial,BT,,,ITV,Stagecoach,RM etc) and although i have the capital for them all,iv added a couple of extra stocks and the Goldfields profit pays for two ladders in two of them.Some arent reflation stocks,but have strong cash profiles.

At this stage it might of sold 50% of holdings if we do see the above levels then run the rest.I was going to simply use GDX as my timing tool,but iv been adding target prices on several of my PM stocks and will probably use them to sell ladders as/if they run.

Copper mines are probably the main silver producers,but is so small as a proportion that even in a big bull it wouldnt drive the economics of a copper mine given the scale of them.

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1 hour ago, CVG said:

This is a good overview of the PP approach from Monevator.

https://monevator.com/the-permanent-portfolio/

After buying the book and doing more research using the excellent Portfolio Charts

https://portfoliocharts.com/

......

IMO, an excellent shout out.  I did exactly the same things in Q1 last year.  Locked myself up and focussed on this and the rest for 3 long months to prepare for retirement, or at least downsizing.

I stayed with the PP but will look at yours.  I use it for my floor fund, complemented with a separate HYP for my upside fund.  This suits me as I now value capital preservation at the expense of modest gains given where I'm at retirement/downsize wise.  

I just reworked my floor fund to include more than my SIPP, bringing in other instruments such as NS&I certificates to the bond part of the fund.  That has increased my flexibility and options, and  lowered risks.

I've also have extended holdings in each asset class so for example include regional ETFs in the equity section.  I've also renamed the gold section "hard assets" to include other PMs and maybe property ETFs.

I also run a trading account for higher gains at risk.

I feel this setup covers all the bases for me.  A lot more stuff in the detail as well, like a fair system to identify when to buy, etc.  It feels great!

But the key point is that the sources you mention are excellent  for crafting portfolios to suit whatever you're after.

I would also add JustETF.com as worth a look if you are just looking at UK available ETFs as it helps plough through the array of ETFs.

DYOR to work out what's right for you all though!

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@sancho panza

https://www.thebalance.com/the-10-biggest-silver-producers-2340234

KGHM Polska Miedź S.A.

Glencore plc

Compania de Minas Buenaventura

Volcan Compania Minera

Hindustan Zinc Ltd

138m oz of silver with those, whilst they wont all be base/PM mix i have a feeling that a very large % is.

The more pure PM miners in that chart produced 126m oz as way of comparison.

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Can someone give a quick primer on what differentiates rubber band PM stocks... Are these the companies that are running at a loss if the metal prices remain surpressed whereas less rubbery ones maybe have less in the ground but can withstand long period of prices going down? Ta

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17 hours ago, sancho panza said:

I've traded in and out of Howdens a few times over the last 12.All short.Know little of the business.The chart showed a few tops to me but what's the fundamentals of that business like?Are they mainly selling to people doing up houses or do they sell to BDEV etc??

Do you think they're doing badly.

 

SP, I don't know about the company investment potential, but for what its worth I know Howdens are highly rated by landlords for their durable cabinetry and for company service. Probably a small part of their business but do seem to be the go to supplier for landlords.

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29 minutes ago, Dogtania said:

Can someone give a quick primer on what differentiates rubber band PM stocks... Are these the companies that are running at a loss if the metal prices remain surpressed whereas less rubbery ones maybe have less in the ground but can withstand long period of prices going down? Ta

They are simply miners who have been hit very hard as gold struggles.It is based on their price action,not their fundamentals.Rubber band stocks tend to keep falling and keep providing pain unless gold starts to run higher.However once gold does turn,then runs they have massive amounts of pent up energy and so tend to explode harder.I buy technical set up stocks like Gold Fields whenever the set up looks ok,but the rubber band stocks i buy on gold itself and when i think it will move.I sold a lot early this year and bought them back from early to late May as my road map said that was the likely turning point for the complex and it worked out to be dead right so far.That was based on cycles work and liquidity flow/inflation expectations tracking numbers.That road map is showing $1500 gold to $1620 this year and $30 area GDX.Its showing gold to lead,then platinum to run hard followed by silver.Platinum should double from here,and be the best performer from the PMs

A classic rubber band stock and no1 on my silver miners rubber band tracker is Endeavour Silver.If silver turns by the time it hits $17 id expect Endeavour to lead the complex and bounce 50%+,if it doesnt turn then more pain will come as the company struggles with low prices.A technical set up stock is Agnico (no2 on my technical set up list) and that would be expected to run 25% in the same move,but offer much less pain if the complex is still consolidating.

For tracking stocks i use Harmony and Sibanye.The South African miners are very price sensitive and tend to lead the complex by a few weeks to a month.My technical set up screen flagged Goldfields as the no1 set up as i mentioned back in the thread,that delivered in spades much quicker than expected and is sold.I tend to use triangle patterns on technical set ups.

The smart money is short,so the gaps might be filled yet and a pull back,but i think gold should hit a new all time high by 2021,time will tell.

 

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17 hours ago, sancho panza said:

 

I'm keen to understand some of the basics.Are there any layman style websites laying out the classic trades.............?

SP, not sure if you were asking specifically about bonds, but below link might be useful. I know CVG has already recommended the Monevator site, but this link has bond info. (reference bond funds, but same technicals apply) including articles by Lars Kroijer.

https://monevator.com/understanding-bond-index-funds/#comments

 

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Bobthebuilder
18 hours ago, sancho panza said:

I've traded in and out of Howdens a few times over the last 12.All short.Know little of the business.The chart showed a few tops to me but what's the fundamentals of that business like?Are they mainly selling to people doing up houses or do they sell to BDEV etc??

Do you think they're doing badly.

Decl-no current position

Hi SP,

Howdens mainly sell to small local builders, they sell kitchens, appliances,  staircases, wooden flooring, internal, external doors, building timber etc, etc and if you use them a lot you can get fantastic trade prices.

Dont know much about the business as such but they have always done well, back in the 2003 time they were the only part of the group keeping MFI aflout until they dropped em.

Builders love the kitchens as with discount are cheaper than ikea and the units come ready made plus a doddle to fit.

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Thanks  @DurhamBorn for the detailed explanation.  Really interesting and not something I realised exactly... Guess a lot of it is sentiment but would have thought in the very very long run surely the fundamentals would even things out.  Maybe that's not the case really for the volatile miners sector though.  Just novel and strange to me but does make bit of sense now.  And idea that one can use wider market knowledge or trends to road map which types you would weight to at different points.

 Actually would have thought sibayne world have been classed as rubber band from my earlier assumptions that it was more to do with what's in the ground etc

 

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Castlevania
3 hours ago, DurhamBorn said:

They are simply miners who have been hit very hard as gold struggles.It is based on their price action,not their fundamentals.Rubber band stocks tend to keep falling and keep providing pain unless gold starts to run higher.However once gold does turn,then runs they have massive amounts of pent up energy and so tend to explode harder.I buy technical set up stocks like Gold Fields whenever the set up looks ok,but the rubber band stocks i buy on gold itself and when i think it will move.I sold a lot early this year and bought them back from early to late May as my road map said that was the likely turning point for the complex and it worked out to be dead right so far.That was based on cycles work and liquidity flow/inflation expectations tracking numbers.That road map is showing $1500 gold to $1620 this year and $30 area GDX.Its showing gold to lead,then platinum to run hard followed by silver.Platinum should double from here,and be the best performer from the PMs

A classic rubber band stock and no1 on my silver miners rubber band tracker is Endeavour Silver.If silver turns by the time it hits $17 id expect Endeavour to lead the complex and bounce 50%+,if it doesnt turn then more pain will come as the company struggles with low prices.A technical set up stock is Agnico (no2 on my technical set up list) and that would be expected to run 25% in the same move,but offer much less pain if the complex is still consolidating.

For tracking stocks i use Harmony and Sibanye.The South African miners are very price sensitive and tend to lead the complex by a few weeks to a month.My technical set up screen flagged Goldfields as the no1 set up as i mentioned back in the thread,that delivered in spades much quicker than expected and is sold.I tend to use triangle patterns on technical set ups.

The smart money is short,so the gaps might be filled yet and a pull back,but i think gold should hit a new all time high by 2021,time will tell.

 

Fed meeting this week. I don’t think they’ll cut. Gold and all the miners down is my guess.

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1 hour ago, Castlevania said:

Fed meeting this week. I don’t think they’ll cut. Gold and all the miners down is my guess.

Inflation expectations are driving gold now i suspect.Its this stage of the cycle where inflation ticks higher while economies slow and box CBs in.There could be a decent pull back as they have ran too fast so far and people dont trust the rally.

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2 hours ago, Dogtania said:

Thanks  @DurhamBorn for the detailed explanation.  Really interesting and not something I realised exactly... Guess a lot of it is sentiment but would have thought in the very very long run surely the fundamentals would even things out.  Maybe that's not the case really for the volatile miners sector though.  Just novel and strange to me but does make bit of sense now.  And idea that one can use wider market knowledge or trends to road map which types you would weight to at different points.

 Actually would have thought sibayne world have been classed as rubber band from my earlier assumptions that it was more to do with what's in the ground etc

 

Sibanye are a rubber band stock.Lots in the ground but low margins or loss making at $1250.If you imagine Harmony,80 million oz+.At $1180 those oz are worthless,at $1500 those oz become huge assets.Thats why timing is crucial.Fundamentals do drive things in the long run,but sentiment is crucial in the sector.

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