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Credit deflation and the reflation cycle to come.


DurhamBorn

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6 minutes ago, Yellow_Reduced_Sticker said:

isn't the deal at BV ...when you come to sell the funds are transftered back to the bank acc that you funded BV with...

so most of us it will be a UK bank?

You can take physical delivery, albeit at a cost.

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Yellow_Reduced_Sticker
28 minutes ago, dgul said:

Well, it wouldn't matter, just that it was held.  They'd prosecute to make you sell it.

But the issue is moot -- PMs were banned in the 30's because it was a form of currency that was actually held by people.  They had to force people to use FRN, so had to ban gold.

No-one uses gold now, save for a few mad people you meet on the internet.  Thus they won't ban gold as it isn't even on the radar as a problem.  If there's something that could* challenge the status of 'state sponsored money' it is crypto; it's far more likely that they'd ban that.  But in reality nearly everyone uses fiat currency for everything -- the banks have won that particular battle.

[* well, it isn't actually going to, but theoretically]

...AND that is the SIMPLE reason I wouldn't touch crypto with a stick!

1 minute ago, kibuc said:

You can take physical delivery, albeit at a cost.

THANKS for that i didn't know, GREAT cos mines in singers AND i get out there once in a while...

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1 minute ago, Yellow_Reduced_Sticker said:

...AND that is the SIMPLE reason I wouldn't touch crypto with a stick!

you should, the losses can be staggering. hahaha, they cant take what youve pissed away.

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9 hours ago, NogintheNog said:

I took a pension in 2015 under the new rules as a small lump sum payment. As soon as you access any pension you are restricted to the MPAA, which that year was £10,000 but dropped to £4000 a year later:(

Further more if you are a Non Taxpayer a £2880 limit is applied for tax relief, see https://www.moneyadviceservice.org.uk/en/articles/tax-relief-on-pension-contributions

As DB says you need to be looking at Draw-down to minimize tax, and topping up using ISA's. Pensions have become very restrictive for you at this point.

Ah, I think I may have misunderstood the MPAA, so let me explain what I now think it is and perhaps someone can confirm.

So say I retire at 55 tomorrow and take my DC pension.If I do no work I have my initial £11850 tax allowance. On top of that I have my MPAA allowance of £2880. So I have a total tax allowance of £14730....basically if I take any more than this from my DC in one year I will be taxed on the sum over this...is this correct?

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44 minutes ago, null; said:

A couple of thoughts:

- buying PM in modern times leaves a paper trail - if the goverment find evidence you bought some, they assume you still have it, even if it was lost in a boating accident. 2021 headline - "Government forces Coininvest to reveal details of all customers"

- crypto - more likely to be used a currency over PM. As for what will happen in this area, its a real wild card.

PM's more likely used as a store of value.

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53 minutes ago, null; said:

A couple of thoughts:

- buying PM in modern times leaves a paper trail - if the goverment find evidence you bought some, they assume you still have it, even if it was lost in a boating accident. 2021 headline - "Government forces Coininvest to reveal details of all customers"

- crypto - more likely to be used a currency over PM. As for what will happen in this area, its a real wild card.

wrong!

lots of peer to peer gold transactions are done between private individuals.  Or, you go to Singapore, buy 8000 GBP worth of gold and fly back in.  Or, you buy 1 gold coin at a time  using cash.... etc etc

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1 hour ago, null; said:

A couple of thoughts:

- buying PM in modern times leaves a paper trail - if the goverment find evidence you bought some, they assume you still have it, even if it was lost in a boating accident. 2021 headline

Dave the loan shark took it to cover your obscene gambling debts? :)

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Napoleon Dynamite
1 hour ago, MrXxx said:

Ah, I think I may have misunderstood the MPAA, so let me explain what I now think it is and perhaps someone can confirm.

So say I retire at 55 tomorrow and take my DC pension.If I do no work I have my initial £11850 tax allowance. On top of that I have my MPAA allowance of £2880. So I have a total tax allowance of £14730....basically if I take any more than this from my DC in one year I will be taxed on the sum over this...is this correct?

I don't think so.

I'm still working this out, but I don't think the MPAA is about drawing out of your pension, it's about contributing to it.

Once you've access your pension benefits, it comes into play, restricting what you can put back into your pot.

Suspect it's to stop people drawing down a pot, taking advantage of taxable benefits and topping the pot up again in and getting a 2nd bite at the tax relief.

That's guesswork and filling in the blanks from what I've googled, so feel free to contradict or expand on it.

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28 minutes ago, Cattle Prod said:

So Brent broke 80 dollars, strongly. That has been a ceiling for a while, let's see if it holds. You'll read a lot of noise about it, but the signal is about supply issues. As I said, the only reason it's not currently $110 a barrel (we have the same stockpiles now as we had when it was that price) is that the market doesnt think it has to pay more than 80. That there is supply to be switched on at this this price. That perception. It's wrong.

Astonishingly, Saudi has let it be leaked, probably in response to Trump bleating, that they will struggle to pump ~11mbpd, rather than the consensus view of 12.5. There is 1.5mbpd of spare capacity gone, poof. Ive looked at all their fields (somewhat crudely, no pun intended) and came to this conclusion last year. They are currently drawing down above ground stocks.

Shale (Permian) is running up against natural geological limits (specifically its becoming more gassy) and the EIA/IEA will continue to correct their ridiculous production projections.

There is little other spare capacity in the world. It's probably never been this thin.

If a deal isnt done with Iran quickly, I think we're in for a repeat of 2007. Oil spike to burst world economy. 

A lot of the spike in 2008 was driven by futures trading rather than actual demand iirc

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51 minutes ago, Cattle Prod said:

So Brent broke 80 dollars, strongly. That has been a ceiling for a while, let's see if it holds. You'll read a lot of noise about it, but the signal is about supply issues. As I said, the only reason it's not currently $110 a barrel (we have the same stockpiles now as we had when it was that price) is that the market doesnt think it has to pay more than 80. That there is supply to be switched on at this this price. That perception. It's wrong.

Astonishingly, Saudi has let it be leaked, probably in response to Trump bleating, that they will struggle to pump ~11mbpd, rather than the consensus view of 12.5. There is 1.5mbpd of spare capacity gone, poof. Ive looked at all their fields (somewhat crudely, no pun intended) and came to this conclusion last year. They are currently drawing down above ground stocks.

Shale (Permian) is running up against natural geological limits (specifically its becoming more gassy) and the EIA/IEA will continue to correct their ridiculous production projections.

There is little other spare capacity in the world. It's probably never been this thin.

If a deal isnt done with Iran quickly, I think we're in for a repeat of 2007. Oil spike to burst world economy. 

Your the second person to mention this, the first was a trader I was engaged in conversation with recently.

I want to take a punt on this. Which oil majors are worth buying in your opinion now

 

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Well, how much of this have I missed then...

Went on a bender for a couple of months, when I returned to the world the old site was nowt but tumbleweeds and everyone had run away.

 

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7 minutes ago, Calcutta said:

Well, how much of this have I missed then...

Went on a bender for a couple of months, when I returned to the world the old site was nowt but tumbleweeds and everyone had run away.

 

Ah it’s yourself. 

Loads of good stuff. 

Number One is that if Durhamborn marries his lady we are all going to come along for the do.

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14 minutes ago, Cattle Prod said:

Interesting, what parts did your friend also mention? If I was gping to take a punt I'd either go brent (to incorporate the saudi factor) futures or an etf like uso. Any major will move more slowly as they are half gas, and hand it out as divi

He was a senior trader at Goldman Sachs Oil and Gas/Energy based in London that just happened to be in my company briefly at the time (about 6 weeks ago). He was also taking into account the strengths and weakness of Sterling, Brexit etc. and the effect these will have on the UK economy. Anti Brexit he was that I found odd. Anyway

So we have Brent Crude ETF (never done before) or

The Majors that will a) go up in price and B) give a dividend

If we are to keep faith with this forum topic and we have a new reflation cycle then the majors will be a safe bet to start acquiring and hold from a conservative trading point of view

 

 

 

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2 hours ago, Cattle Prod said:

If a deal isnt done with Iran quickly, I think we're in for a repeat of 2007. Oil spike to burst world economy. 

Is this the general expectation of those in the industry, commodities traders and the like?

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Alifelessbinary

What are people’s views on the current Gold/Silver ratio?

Gold : Silver Ratio

Current Ratio 84.63 10 Year High 84.63 10 Year Low 33.02 10 Year Change +8.66 (+11.40%)

After all the talk of PMs recently I got some of my stack out of hiding and was shocked at the discrepancy between silver and gold prices. Seeing 80 odd silver bullion coins next to a solitary gold Britannia really highlights the issue.

I hope it’s showing that silver should see some gains ahead, but it could just mean gold is overvalued. 

I general buy silver as I have a general soft spot for numastics and it provides wealth protection outside of the standard system. It’s also great fun seeing a table filled with coins, as it’s something you don’t see in the cashless society and it feels like you’ve got your own pirate booty.

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Alifelessbinary
1 hour ago, Cattle Prod said:

It's not about demand, its about the perception of supply, which is expressed in the futures market.

Thanks for your updates and expertise in this area, it’s always appreciated.

The uso EFT has had a pretty solid run over the last 12 month up 50%, but the long term charts are erratic to say the least! Probably a ride too much for me, especially as I have a few goldies, but I’ll be sticking with some of the big oil firms to hopefully collect some monster divis.

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22 minutes ago, Cattle Prod said:

No not quite. I dont deal with traders, but subsurface people. Most subsurface people see the lack of capital investment biting a little later, maybe 2020/21. But as was pointed out, futures speculation caused the 2007 spike. So I see a spike, a crash and then I hope (to give time to switch energy sources) a more steadily increasing price reflecting a secular supply decline. Unlikely though, it will be amplified by the futures market and I think $200 is already baked in the cake. This will of course destroy demand, which will ultimately be good for us all. But I don't think prices will moderate as much after that, as this time supply (at lower prices) will be unable to help the slow and grinding transition to new energy sources. This means huge dislocations, particularly in poorer countries. What worries me is food - modern agriculture is based on practically free hydrocarbons for fuel and fertiliser. There were 3rd world food riots in 2007.

Of course this all dovetails with DBs reflation thesis: expensive oil is going to inflate almost everything.

 

My oil and gas work isnt anywhere near the currency work,but we do cross market it with liquidity cycles.Good place to add our recent dollar calls were once again the best in the market.The dollar turned just below 97 and is now at 94.We see 88 and maybe 74 unless the deflation kicks in before the targets can be hit.

For oil we see below $20 for a very short period then a bull market to $200+.Natural gas will maybe be the 2nd best performing commod in the next cycle after silver.The explosion in the oil price will drive the reflation and also the rush to clean transport etc with a lag.As you say agriculture will move very quickly to potash,another huge winner in the next cycle.

Silver is the big one though for me.In the history of futures trading the commercials have never ever sought to take delivery and been net long like they are now.The large speculators are also momentum players and are also at a 20 year extreme in net short postioning.When that turns they will chase positions.We have an outstanding chance here to accumulate silver (and platinum whos gold ratios is at the lowest since the early 80s).I think there is a very strong chance we are close to the biggest silver bull in history,but just a very strong one will do.

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4 hours ago, MrXxx said:

Ah, I think I may have misunderstood the MPAA, so let me explain what I now think it is and perhaps someone can confirm.

So say I retire at 55 tomorrow and take my DC pension.If I do no work I have my initial £11850 tax allowance. On top of that I have my MPAA allowance of £2880. So I have a total tax allowance of £14730....basically if I take any more than this from my DC in one year I will be taxed on the sum over this...is this correct?

The MPAA only counts if you have already turned a pension live.Until then it doesnt exist.Once you have turned a pension live you can only put in £2880 into a pension each year from that date.Thats simply to stop you taking from one pension then sticking it into another for the tax relief then taking it back out the next year etc and repeat.The fact they have left an allowance of £2880 is actually very generous as they are really giving everyone £600 a year free dosh as you can pay in £2880,get the tax relief then draw it back out even with a live pension.I fully intend to do just that and at least it will cover half the council tax.

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11 hours ago, wherebee said:

wrong!

lots of peer to peer gold transactions are done between private individuals.  Or, you go to Singapore, buy 8000 GBP worth of gold and fly back in.  Or, you buy 1 gold coin at a time  using cash.... etc etc

Are there places then where you can buy (and importantly sell) gold/silver in cash without any sort of ID requirements or paper trail?

Excuse my ignorance, I've never bought any in my life.

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8 hours ago, Cattle Prod said:

No not quite. I dont deal with traders, but subsurface people. Most subsurface people see the lack of capital investment biting a little later, maybe 2020/21. But as was pointed out, futures speculation caused the 2007 spike. So I see a spike, a crash and then I hope (to give time to switch energy sources) a more steadily increasing price reflecting a secular supply decline. Unlikely though, it will be amplified by the futures market and I think $200 is already baked in the cake. This will of course destroy demand, which will ultimately be good for us all. But I don't think prices will moderate as much after that, as this time supply (at lower prices) will be unable to help the slow and grinding transition to new energy sources. This means huge dislocations, particularly in poorer countries. What worries me is food - modern agriculture is based on practically free hydrocarbons for fuel and fertiliser. There were 3rd world food riots in 2007.

Of course this all dovetails with DBs reflation thesis: expensive oil is going to inflate almost everything.

 

 

And expensive gas as well, I was surprised to see a new high on the gas futures and also much more volatile compared to the previous 24 months. My guess was that it was going to drop back down, just goes to show how worthless my predictions are....

Someone wrote (can't find the post) about peoples housing, food and energy priorities. Something like the energy bill gets paid last. My thoughts are that its impossible to avoid energy costs as its a fundamental imput cost to just about everything. Food may be the priority, but when you factor in the increased cost of agriculture fuel and fertiliser, the increased cost of food transportation and refrigeration etc. I've seen some massive food distribution centers and the energy costs for the chillers must be enormous. It's not even just chilled food, I know farmers who even moan about the cost of running fans to dry onions and grain dryers are another big one.

The next 3-6 months will confirm if its a blip or heading direct to inflation, that's not long. If it goes that way, then right now is being ahead of the curve.

Quick question - what views do you all have on the governments actions in response to this? DB - we know your take on this, wondering if anyone has alternative views to give some balance?

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2 minutes ago, Cattle Prod said:

I might have already said it here but I think gas storage "Rough 2" and a slew of gas power plants will be top of tge infrastructure spending list. The govenment has been negligent and outright dangerous in how they are treating energy supply. Shutting coal without increasing baseload supply (wind is not baseload) has left this country on a knife edge. Hence Russian LNG being diverted to the UK last winter. No wonder Putin feels he can act with impunity here, the UK is very exposed.

Interesting points on the intensitivity of modern agriculture. I wonder about the energy bill being paid last: yes, if political pressure means no one gets cut off. But if you've ever been truly cold, you'll pay almost anything for heat!

 

If political pressure means no one gets cut off, wouldn't that make it even worse? Everyone would continue to use energy, but someone would have to be paying for it somewhere, especially if we end up importing a growing amount.

On the subject of gas storage, as a kid we used to live not far from one of those gas storage things, the ones with the huge round things that would move up and down (apologies I have no idea what they are called). A lot of those seem to have gone in recent years, do you know why they are no longer needed?

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8 hours ago, DurhamBorn said:

The MPAA only counts if you have already turned a pension live.Until then it doesnt exist.Once you have turned a pension live you can only put in £2880 into a pension each year from that date.Thats simply to stop you taking from one pension then sticking it into another for the tax relief then taking it back out the next year etc and repeat.The fact they have left an allowance of £2880 is actually very generous as they are really giving everyone £600 a year free dosh as you can pay in £2880,get the tax relief then draw it back out even with a live pension.I fully intend to do just that and at least it will cover half the council tax.

OK, this is the bit where I am still confused (taking from one pension and sticking it into another). So when you get the sum out of pension A it is taxable, but the taxman allows you to put the first £2880 into pension B, thus gaining (saving) the 25% (£600) that would have been lost in tax...correct?...

This then means that your sweet spot for avoiding paying income tax (if we ignore cgt, interest allowance, isa etc) in not the PA of £11850 but actually £600 higher...correct?

If you then fail to do this by spending the £2880 straight away rather than placing into another pension you are throwing away/losing £600 each year...correct?...

This is ` free money` that when you choose to withdraw from your pension and spend you will only lose the 20% tax on, so in effect the taxman is gifting you £480 a year...correct?

Thanks for bearing with me, but if my understanding above is now correct you folks have made me now appreciate something I would have missed completely.

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30 minutes ago, MrXxx said:

OK, this is the bit where I am still confused (taking from one pension and sticking it into another). So when you get the sum out of pension A it is taxable, but the taxman allows you to put the first £2880 into pension B, thus gaining (saving) the 25% (£600) that would have been lost in tax...correct?...

This then means that your sweet spot for avoiding paying income tax (if we ignore cgt, interest allowance, isa etc) in not the PA of £11850 but actually £600 higher...correct?

If you then fail to do this by spending the £2880 straight away rather than placing into another pension you are throwing away/losing £600 each year...correct?...

This is ` free money` that when you choose to withdraw from your pension and spend you will only lose the 20% tax on, so in effect the taxman is gifting you £480 a year...correct?

Thanks for bearing with me, but if my understanding above is now correct you folks have made me now appreciate something I would have missed completely.

Something like that yes.I will have enough from ISAs for income so il be able to play around with the SIPP etc.Im going to time mine so i can pull the allowance out each year tax free and have zero left in it by 67.I have a £60 a week final salary pension at 67 so dont want any more as on top of my state pension of £160 that takes me to the tax limit nearly.

 

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10 hours ago, DurhamBorn said:

My oil and gas work isnt anywhere near the currency work,but we do cross market it with liquidity cycles.Good place to add our recent dollar calls were once again the best in the market.The dollar turned just below 97 and is now at 94.We see 88 and maybe 74 unless the deflation kicks in before the targets can be hit.

For oil we see below $20 for a very short period then a bull market to $200+.Natural gas will maybe be the 2nd best performing commod in the next cycle after silver.The explosion in the oil price will drive the reflation and also the rush to clean transport etc with a lag.As you say agriculture will move very quickly to potash,another huge winner in the next cycle.

Silver is the big one though for me.In the history of futures trading the commercials have never ever sought to take delivery and been net long like they are now.The large speculators are also momentum players and are also at a 20 year extreme in net short postioning.When that turns they will chase positions.We have an outstanding chance here to accumulate silver (and platinum whos gold ratios is at the lowest since the early 80s).I think there is a very strong chance we are close to the biggest silver bull in history,but just a very strong one will do.

Excuse my ignorance DB, but when you mention the 'dollar price' at 97, 94, 88, 74, how is this priced? Relative to what?

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