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Credit deflation and the reflation cycle to come.


DurhamBorn

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My New Gold holdings are still 32% down...do I cut my losses and run or see what happens...lots of food for though up thread.  Might just flip a Sov and see if it's heads or tailsxD

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Bricks & Mortar

Hecla Reports Hedges.

Hecla's been the dog of my stocks.  Bought in early April.  Quickly found myself down 40%.  Have held on, and even today I'm still down 6%.  They had some bad news back in April, about some mines they bought that didn't deliver that they thought they would.  Took on debt to do it too.  I think I recall someone on here (or maybe elsewhere), writing that their management were idiots.

So, the latest is they've hedged their production through to end Q1 2020 at $1400 gold and $15.13 silver.

I'm an amatuer, and certainly don't properly understand the implications if hedging.  I guess it means they've an extra cost to bear over that period.  But, in case gold & silver falls sharply at the end of the year, they're good through to April? 

Is this something to look for, if a person was considering holding stocks right through the bust, rather than convert to cash in a bank account).  (Not necessarily with Hecla - DYOR - at your own risk)

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49 minutes ago, Ma2 said:

Funny hearing people today complaining about public sector pay increasing above inflation.

When you tell them it isn’t above inflation, only what the public sector workers tell you inflation is (all the while knowing roughly what it really is), they don’t really understand it but you can see they feel something’s wrong!

As someone said earlier, if people are financially illiterate then you pretty much have them where you want them as a government.

https://www.bbc.co.uk/news/amp/uk-politics-49041295

 

It is worth pointing out that pay rises (and caps) in the public sector is complicated.  For sure, it isn't 'pot of money change -> pay change'

Consider a pot of money that stays the same in real terms (ie, goes up with inflation).

  • Everyone gets an inflation pay rise each year.  This is covered by the above.
  • In addition, each year people retire and are replaced by new entrants.  The retirees are likely to be experienced and on higher pay, the new entrants are inexperienced and on lower pay.  Overall, employee numbers should remain the same (otherwise there's a recruitment drive, allowing industry to die down, etc).  So, the net difference between retirees and new entrants results in an overall 'saving'
  • But, in addition to the inflation pay increase, each worker gets an 'experience' increase -- and this is covered by the savings above.
  • So, in the public sector there is an 'inflation' pay rise and an 'experience' pay rise each year -- and as such each employee can automatically get above inflation pay rises throughout their career.

I recall in the depths of the crisis 2008-2012 or so, where public sector workers were complaining about having no pay rise.  I'd say I, in the private sector, also had no pay rise.  Then I'd point out that that actually meant that there was no more money in the top line of my pay slip.  The public sector workers were always a bit reluctant to mention that their pay slip did actually have an increase.  Oh, they'd go on about how that is different because they'd be more experienced, therefore blah, blah, blah.  The point was while there might have been no additional money available for their 'industry',  there was money available for their personal pay.  Unlike the people like me in the private sector, where 'no pay rise' meant no more money at all (and often a pay cut.  Not an 'inflation adjusted pay cut' -- but less actual real money).

Oh, and at that time private sector people actually lost their jobs.

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Thanks @dgul that is really fascinating (frightening?!) how things work behind the scenes of our country.  

Like you say an increase is an increase whatever you call it, especially when jobs are going completely in other industries 😬

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I seem to have bought into a few of the silvers during their peak in something like Feb so still got some catching up to do hopefully.  Like others have said averaging in would have made sense I think especially for volatile miners.  It's unfortunate with fees etc though so I did a @sancho panza "spray n pray". Have always tried to buy stocks minimum between 800-1200 - though saying that checking now I seem to have bought under £700!? of sibanye a year ago (whilst new gold £1000+ lol)

I do have two more silvers that I bought more recently that have made respectable returns though 

 

Anyway going forward I am not in a hurry to sell the miners - with the pm price heading north by all sounds I still would have thought there is more growth in the silvers.

With regards to the below I would love any thoughts by ye wise men.  I really like the Imperial tobacco play with regards to cash generation and cannabis especially.  The other easy route in possibly could be drinks manufactures.  I think it was Corona that has made a sizable investment already.  It would be good to come at this with different angles... Maybe one to keep on hold or watchlist.

Tobacco companies I think @DurhamBorn said were not reflation stocks.  I understand they are consumer stocks but would have thought them not being classically such a discretionary spend (ie addicts will spend regardless of economy). Also they are cash generating beasts so good as defensive?

I have a position in Vodafone too which whist down a fair bit really like the concept discussed here - it's opened my eyes so thanks.  SSE and centrica likewise too although for wherever reasons less bullish.  Royal mail for some reason I don't like the idea of although totally appreciate the idea and opening my eyes to it.  May well drip something in at some point though never no 🙂.

Looking at my small portfolio I have some biotech fund (AXA) from a few years ago that I don't pay into now and have taken profits before but is well up (35%).  Any thoughts on biotech?  I'm very bullish long term but guessing it's one that could sink heavily in any downturn with lots of US listed companies.

likewise to the above I have been paying in an extremely small amount to pictet robotics fund that over last 9 months is well up again but equally feel as above could suffer in a crash.

 

Does anyone have any thoughts on Woodford patient fund that's collapsed price wise recently?  I think Woodford seemed to be a good picker of firms with good management etc in the past.  The patient trust seems slightly more risky investing in earlier stage illiquid companies with room for growth and relating to health care.  In a different economic environment that would be perfect but even now maybe the strengths of his choices could come out trumps in the medium term?  Or is he a fallen star / toxic and avoiding anything Woodford be sensible?

And finally a quick mention of scientific games corp (SGMS)  for a gambling pick.  The price seems to have more than halved in last 12 months but since it's not a behemoth but has considerable tech/ games/ offering... Could be a target for a buy out possibly?  

Two other sectors i have seen mention is agriculture and definitely want some piece having previously done well through a fund investing in potash and the like.  Also I think @sancho panza mentioned TAN EFT which as a sector I like the sound but still get the impression it's hard to get a grip on what or who will rule in the future, with maybe lots of risk in these early days but not necessary being priced in to the value.

Thanks again to all for wonderful open and sometimes contraian thread!! And btw I am rank amateure 🤪

 

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2 hours ago, Yellow_Reduced_Sticker said:

Thats insane, what car do ya have ...rolls royce?

I've just done my Honda JAZZ service, renewed the spark-plugs (8) / oil + filter  (quality replacements - sent to me door total £42)

OR i'm i missing something...& this what dealships charge ? ?

Well what do i know, maybe i'm out of the times... as i drove the same MK1 Golf C for 21 years until a year or so ago, serviced it myself  (its garaged now appreciating in value every year its now my: GOLF ETF xD)

EDIT: Oh ...SORRY for being OFF TOPIC again! :P:Old:

Same here,helps i build engines for a living as well.I didnt get laid off today 60 people did though.Just the start of course.Saving money is never off topic on this thread you know that.I got 3 packs of 5% steak mince for 62p a pack the other night.Having mince pie dinner for tea.Just insured my 2nd car £201 for the year.I like having a spare car as i can fix any problems on one while driving the other,bit like when younger and having two birds on the go,xD

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sancho panza
45 minutes ago, dgul said:

It is worth pointing out that pay rises (and caps) in the public sector is complicated.  For sure, it isn't 'pot of money change -> pay change'

Consider a pot of money that stays the same in real terms (ie, goes up with inflation).

  • Everyone gets an inflation pay rise each year.  This is covered by the above.
  • In addition, each year people retire and are replaced by new entrants.  The retirees are likely to be experienced and on higher pay, the new entrants are inexperienced and on lower pay.  Overall, employee numbers should remain the same (otherwise there's a recruitment drive, allowing industry to die down, etc).  So, the net difference between retirees and new entrants results in an overall 'saving'
  • But, in addition to the inflation pay increase, each worker gets an 'experience' increase -- and this is covered by the savings above.
  • So, in the public sector there is an 'inflation' pay rise and an 'experience' pay rise each year -- and as such each employee can automatically get above inflation pay rises throughout their career.

I recall in the depths of the crisis 2008-2012 or so, where public sector workers were complaining about having no pay rise.  I'd say I, in the private sector, also had no pay rise.  Then I'd point out that that actually meant that there was no more money in the top line of my pay slip.  The public sector workers were always a bit reluctant to mention that their pay slip did actually have an increase.  Oh, they'd go on about how that is different because they'd be more experienced, therefore blah, blah, blah.  The point was while there might have been no additional money available for their 'industry',  there was money available for their personal pay.  Unlike the people like me in the private sector, where 'no pay rise' meant no more money at all (and often a pay cut.  Not an 'inflation adjusted pay cut' -- but less actual real money).

Oh, and at that time private sector people actually lost their jobs.

You're jsut plain worng on the two bits in bold.There's no automatic expericne pay increase if you're at the top of your band which takes about 6 years.After that you either need to move a band up or you get the 1% on offer.For those on lower wages then-as per various discussions-the real rate of inflation is way higher.But thats the same for privcate sector.

As below 1% was the common rater of increase for 2015/16/17.Then in 2018 they changed the bandings.

NHS pension is still pretty good but much like all public sector shopuld have been changed twenty years ago to reduce liabilities.

The public sector isn't the paradise of ever growing pay that you think it is.The pressures can be different as well.

Reality is that we're massively short in loads of roles.the stress jsut isn't worth dying early for.Lot of people inside it,think it's unsustainable in current form.

Private sector pay varies more,less relaible,pensions worse.Agreed.

 

Decl-I work in the NHS.

1% 2017

https://www.employeebenefits.co.uk/issues/march-online-2017-2/nhs-employees-to-receive-1-pay-rise/

1% 2016

https://www.gov.uk/government/news/nhs-staff-to-receive-1-pay-rise

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sancho panza
47 minutes ago, Ma2 said:

Thanks @dgul that is really fascinating (frightening?!) how things work behind the scenes of our country.  

Like you say an increase is an increase whatever you call it, especially when jobs are going completely in other industries 😬

He's only wrong on the two substantive points on which he bases his argument.

The churn in A&E has to be seen to be believed.

The whole public sector gets it easy meme has some evidence behind it in terms of pension and holiday.otherwise it misses the wider point that the political class is out of touch with reality in so many different ways and runs most things really badly.

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Ill just add on the NHS pay/pension

Pension is now 68 so most will barely see it after working themselves to death.

Taking promotions/moving up a band for the short term one will likely end up barely better off considering the extra baggage unless you manage to secure the new band 7-11 months from your inc date. Because the pay bands crossover for the most part you'll essentially just move up one pay point. 

The new NHS pay rise agreed last year mugged off a good proportion of the employees, but barely no one actually knows this as they can't do the sums. 

Moving to a new trust they should match your pay point. In my experience (dealing on my wife's behalf ) you have to fight tooth and nail for it. You can see why women on the whole are paid less because they would usually just accept the offer as dealing with HR is really quite an experience.

giphy.gif

 

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Jesus just popped into Waitrose for a pizza and few beers as i want to chill out and watch a film and all the staff were cuddling each other with some older ones in tears

Looking confused was told that the store is closing and they were only told yesterday when the press release came out

The press release says they are closing 7 stores with up to 700 job losses 

https://waitrose.pressarea.com/pressrelease/details/78/NEWS_13/11349

Bromley, Oadby and Wollaton are being acquired by Lidl the party acquiring Sandhurst has asked not to be named at this time. 

Quite sad to see really the older ones have probably spent most of their lives working there

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Don Coglione
On 17/07/2019 at 09:31, Bricks & Mortar said:

This is excellent.  Tapping into exactly where my thought process is turning now.

And this is our next problem.  We're a thread full of people bought into this theory of the future.  Many of us invested, in various ways into the final 'crack-up-boom' - mostly in precious metal miners,   but also short-sellers, currency speculators and stock pickers for the next cycle.  Some of us rank amatuers at this sort of thing.
Where is the top?  What will it look like for your investment choices?  Do you need to 'get out in time?'

I'm one of these rank amatuers.  I spell it wrong to reinforce that.  It's DYOR / Pin your own tail on your own donkey. 

I fear the peak may have a precipitous drop on the other side.  I'll probably not wait for $26 silver, $40 GDX, or whatever other prediction has been made or reposted in this thread.  In most (all?) cases, I think these predictions aren't intended as trading calls, but as predictions of the top.  They're almost certainly wrong, to some degree, and no-one can tell which side they'll turn out to be wrong on.  It probably only takes a single event, like a country invading another, or surprise early QE, to change them.

But when I've got my optimistic hat on for the PM's,  I've half a thought the top might be later, or less precipitous than, say the S&P and other stock markets.  Perhaps the final gains in PM's will be investors getting out of these markets, and piling into PM's, thinking they're a place of safety?  The eventual peak being more rounded, and the downturn in PM's caused as investors gradually pull their money out of the space to cover their debts elsewhere.  This last paragraph, just a feeling, (that I only get on optimistic days), on my part, and I'll remind you again I'm a RANK AMATUER at this.  Hoping this post moves the discussion on to what the top might look like, and how we might deal with it.

As a fellow amateur, these are, of course, the $64,000 questions.

My own feeling is that TA of individual PM miner stocks is bollocks - viz NGD and their hedging and AISC position, do they really correlate with the recent spring back? Better, in my view, to take a broader macro view, as espoused by the legendary @durhamborn.

Personally, I have missed both ends. Intended to sell TGZ after its seemingly inexplicable run-up last summer, but was on holiday and missed my target, so quickly did it fall (no automated trades set up, perhaps a mistake). Subsequently, as I have posted on here before, I sold SBGL at $4.00 a few months ago, chastened by my prior experience. Emotions went from gutted when it flew back up to $4.80, then smugness when it dropped to $3.20-ish. Imagine how I feel today...

Now sitting on half a dozen stocks averaging over 40% to the good, but which to flip? For context, this represents a substantial, 5 figure, gain - not life-changing, but a year's salary nonetheless (across tax-free wrappers, naturally).

Again, as an amateur, I am interested in the psychological aspect of this investing malarkey. Personally, I have decided to set a target sell price and try not to berate myself if a stock continues to fly afterwards. Having said that, I haven't sold anything this week and gold is giving up most of its gains, even if most stocks are holding their own...

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6 hours ago, Castlevania said:

They more than make up for it in their profit margins. 

They currently more than make up for it, if the situation changes then having cash locked up for 2+ years at 0% could be an undisirable position!

 It's more a sad reflection on the economy and low monthly payments culture than the company tbh.

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Thanks all for the discussion on the public sector wages really interesting to get a range of input. My point was more around the masking of true inflation rates from the general public though but it’s starting to bite now people can actually see prices rising in the shops. 

The government gets a helping hand from supermarkets as they keep some core food items artificially low to get consumers into the store (milk, bread for example) and say how cheap they are!

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Chewing Grass
2 minutes ago, Ma2 said:

Thanks all for the discussion on the public sector wages really interesting to get a range of input. My point was more around the masking of true inflation rates from the general public though but it’s starting to bite now people can actually see prices rising in the shops. 

The government gets a helping hand from supermarkets as they keep some core food items artificially low to get consumers into the store (milk, bread for example) and say how cheap they are!

Don't forget the Chinese, they have been slaving away since 1992 to keep inflation low in the non-supermarket sector. Cheap TVs, whitegoods, kitchenalia, power tools, shoes etc etc etc.

It has all masked inflation for the benefit of all from lazy politicians to a complicit electorate and those who have come to rely on the availability of state funded largesse.

If stuff is cheaper you don't need as much money to buy it.

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Noallegiance
1 hour ago, DoINeedOne said:

Jesus just popped into Waitrose for a pizza and few beers 

1. I wasn't convinced he was real, but now you've seen him....

2. Did you get a selfie?

3. Did you ask him about his surprising choice of sustenance?

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Castlevania
1 hour ago, Majorpain said:

They currently more than make up for it, if the situation changes then having cash locked up for 2+ years at 0% could be an undisirable position!

 It's more a sad reflection on the economy and low monthly payments culture than the company tbh.

Depends if they offload the loan to a separate company. They essentially just factor in how much the loan company will want for administering the loan and taking on the credit risk and add it onto the ticket price.

Or it’s a desperate attempt to keep sales up.

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Castlevania
1 hour ago, Ponty Mython said:

Again, as an amateur, I am interested in the psychological aspect of this investing malarkey. Personally, I have decided to set a target sell price and try not to berate myself if a stock continues to fly afterwards. Having said that, I haven't sold anything this week and gold is giving up most of its gains, even if most stocks are holding their own...

I set price targets and if they are reached I re-evaluate, whilst trying to not be overly greedy when prices are up and fearful when they are down. Investment psychology is a difficult business.

This week I sold all of my holding in Eldorado (Not a big position - 1000 shares) but they’d doubled in a couple of months whilst I wasn’t paying attention. Two thirds of my quite large holding in Acacia after agreeing to an improved takeover offer from Barrick (this was purchased as a purely speculative punt, where I hoped to make a quick profit and I have). And sold a quarter of my GDXJ which was up by around a third, but the speed of the gains over the week unnerved me a bit. Everything else I’m happy to hold for the time being.

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leonardratso

have to admit i hardly ever look back at sold stocks, weather they made good money or not, i suppose i should and rinse-repeat like i do with crapto, crapto has a habit of catching you out at the end though so i do tend to treat it like a cash machine and withdraw profit so i cant replay it and possibly lose it. It will all come out in the willy wash.

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1 hour ago, Castlevania said:

Depends if they offload the loan to a separate company. They essentially just factor in how much the loan company will want for administering the loan and taking on the credit risk and add it onto the ticket price.

Or it’s a desperate attempt to keep sales up.

There wasn't anything obvious in the accounts so i suspect your right.  Bit of a bummer if your paying in cash and paying for the finance regardless!

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2 hours ago, Ponty Mython said:

As a fellow amateur, these are, of course, the $64,000 questions.

My own feeling is that TA of individual PM miner stocks is bollocks - viz NGD and their hedging and AISC position, do they really correlate with the recent spring back? Better, in my view, to take a broader macro view, as espoused by the legendary @durhamborn.

Personally, I have missed both ends. Intended to sell TGZ after its seemingly inexplicable run-up last summer, but was on holiday and missed my target, so quickly did it fall (no automated trades set up, perhaps a mistake). Subsequently, as I have posted on here before, I sold SBGL at $4.00 a few months ago, chastened by my prior experience. Emotions went from gutted when it flew back up to $4.80, then smugness when it dropped to $3.20-ish. Imagine how I feel today...

Now sitting on half a dozen stocks averaging over 40% to the good, but which to flip? For context, this represents a substantial, 5 figure, gain - not life-changing, but a year's salary nonetheless (across tax-free wrappers, naturally).

Again, as an amateur, I am interested in the psychological aspect of this investing malarkey. Personally, I have decided to set a target sell price and try not to berate myself if a stock continues to fly afterwards. Having said that, I haven't sold anything this week and gold is giving up most of its gains, even if most stocks are holding their own...

You could always sell your original capital and ride the rest free.Iv sold around 40% of my miners,but i had nearly 6 figures invested and i made 2 years net salary and 6 years living expenses in two months.I had 22% of my portfolio + 100% of my salary going into my SIPP for 10 months into PM stocks.Il end up with 10% in silver miners probably by October.My aim is and has been to re-position my portfolio ready for the next cycle.I already have enough to retire and have a decent income (on my lower needs than most) already,so im not aiming for huge increases in wealth.Its hugely important to be hedged though as we transition cycles.Plus there is a very good chance generational wealth could be made in the miners so iv already got a few marked out that im going to ride all the way to 2027 from here.Iv taken profits in most of those,but intend to hold the rest.

Iv very happy with how we have all done.A lot of work went into things,and it proved very rewarding.

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1 hour ago, Castlevania said:

I set price targets and if they are reached I re-evaluate, whilst trying to not be overly greedy when prices are up and fearful when they are down. Investment psychology is a difficult business.

This week I sold all of my holding in Eldorado (Not a big position - 1000 shares) but they’d doubled in a couple of months whilst I wasn’t paying attention. Two thirds of my quite large holding in Acacia after agreeing to an improved takeover offer from Barrick (this was purchased as a purely speculative punt, where I hoped to make a quick profit and I have). And sold a quarter of my GDXJ which was up by around a third, but the speed of the gains over the week unnerved me a bit. Everything else I’m happy to hold for the time being.

Nothing wrong with doing that.100% gain is never to be sniffed out.Iv owned Eldorado three times and its been very kind.Whacked me for 50% down at one point this time,but i laddered in as usual and its been a perfect rubber bander.

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