Credit deflation and the reflation cycle to come.

[DurhamBorn]

59 minutes ago, Option5 said:

Do you see silver as a good bet?

I was wondering because most of the supply is as a by product of mining for other metals (copper, lead, zinc etc) so if the economies go into recession and demand for the industrial metals falls so will the supply of silver.

An easy answer to that is this.There is a place on the coast where i would quite like a holiday home.They go for £300k at the moment.I think by 2025 i might be able to buy one with 750 ounces of silver,so bought today about £10.5k.

Those numbers are at the extremes of what i think might be possible,but even without that i think silver (and its miners) might be the buy of a lifetime.I do think it might go $22/23 down to $10 then up and away though.However id simply average down if it does do the dip.

There is a very real chance the PM miners might be to the next cycle what the .com's were to this last one.

[JoeDavola]

3 minutes ago, DurhamBorn said:

An easy answer to that is this.There is a place on the coast where i would quite like a holiday home.They go for £300k at the moment.I think by 2025 i might be able to buy one with 750 ounces of silver,so bought today about £10.5k.

How do you buy silver/gold?

[DurhamBorn]

31 minutes ago, JoeDavola said:

I'm hoping this topic can end up being a knowledge base of sorts as well as tracking what's currently happening so that we can try and make the most of what's coming.

I've got £170K savings, a £40K income, and no house (I rent @ £500/month).

I'm not too keen on spending £200K+ for a house at the moment (and that wouldn't even be a nice house; a nice one would be £300K+), because doing so would land me with at least £200 a month in bills that I currently don't have....more like £250 a month actually. So I'd be £200K down and maybe £250 better off a month if I'm lucky.

My wages aren't likely to go up, and I don't stand to inherit much money so it really matters what I do with this. If this get inflated to fuck all by the time I'm 40 in 5 years, it'll be like starting anew when I was 20....except I'll be fucking 40

It shouldnt be inflated away this cycle (althought a lot already has been).It will be the next one.A window should open up between them and if i was looking to buy thats when i would be doing it.However i would be putting £150k for the house,£20k for PMs and their miners.

Im similar in that i own outright,but i semi retired at 39.If i blew up my capital id have to go back to a job,and as that is the worst kind of hell i can imagine i take things serious.

[sancho panza]

2 hours ago, DurhamBorn said:

@sancho panza i like all the PM area and would be happy to own Impala/Amplats etc and only dont as i didnt want anymore SA exposure with owning Harmony as well as SBGL and Anglogoldashanti (although they are no longer SA mostly).Im no gold bug,its only recent iv been buying the space,but i think in the following months and years people might once again see gold (and silver) as the primary safe haven assets to protect wealth and avoid massive financial pain.Whatever happens i really would not be without some exposure going forward.

It's strange,I never used to be a goldbug but gradually,after watching a decade of pointless QE/Zirp wipe out huge productive chunks of the economy/enrich private equity types/blow asset bubbles/distort risk pricing, I converted.There is just no way out of this without a significant debt deflation.Whtehr that brings price inflation or price deflation,I jsut don't know.We could end up with credit dfeltaion alongside price inflation-the worst of both worlds.

The yellow stuff has been around for 1000's of years as a meduim of exchange.I'll take my chances with that rather than bitcoin

 

27 minutes ago, JoeDavola said:

Oh and welcome to all the new folk. I look forward to seeing more quality posters here. Free speech all the way.

Quite Joe.ToS had got rid of a few other good posters over the years,but the prospect of losing this thread was too much for many of us to bear.

Every bit of help is gratefully received.

25 minutes ago, Solzhenitsyn said:

Well hello there......

Reminded me of Terry Thomas

24 minutes ago, Yellow_Reduced_Sticker said:

is the canadian criminal dummy about to have his hands FORCED and RAISE IR's next month ?

Data backs Bank of England view that first-quarter slowdown won't last - Ramsden

https://uk.finance.yahoo.com/news/data-backs-bank-england-view-first-quarter-slowdown-150545225--business.html

I think his hand will be forced by the fed myself.

 

13 minutes ago, Banned by HPC said:

In a similar position but wouldnt touch cryptos.

Got all my money out the stock market before the last crash and been too hesitant to jump back in ever since.

Seems this thread is saying buy a UK property if you have significant savings which is pretty much enough to buy a house, as they'll be wiped out in the coming few years.

 

I'm not sure it's saying that at all.

There's no one message and what you'll take away from it is individual to your circumstances and said risk profile.

 

[JoeDavola]

Just now, DurhamBorn said:

It shouldnt be inflated away this cycle (althought a lot already has been).It will be the next one.A window should open up between them and if i was looking to buy thats when i would be doing it.However i would be putting £150k for the house,£20k for PMs and their miners.

Im similar in that i own outright,but i semi retired at 39.If i blew up my capital id have to go back to a job,and as that is the worst kind of hell i can imagine i take things serious.

Yeah my plan 5 years ago was to buy my first (and last) house outright by 35. Price increases have changed that. No desire to retire as I've got a nice job at the moment but would like to be in a position to retire by 50 if things changed, which as a frugal mortgage-less 35 year old, I would have been.

[DurhamBorn]

6 minutes ago, JoeDavola said:

How do you buy silver/gold?

Bullionvault is great for physical with some Britannia's for interest.

[Yellow_Reduced_Sticker]

OMG --> A BLAST FROM THE PAST...Terry Thomas 1 of my all time FAVORITE actors RIP.

SP YOU must be around my AGE   LOL  "You're an absolute shower"

[sancho panza]

One of Errols

 

http://investmentresearchdynamics.com/another-blow-off-top-in-stocks/

And just like  that, the  VIX index crashes right back to where it was before the late-January 10% drop in the stock market – a reflection that the remaining stock market speculators and hedge fund bots have been completely cleansed of any fear impulse that hit daytrader keyboards in the first quarter of 2018:

Hedge funds went from insanely short VIX futures to long VIX futures after the market had dropped 10% and the VIX soared. They were slaughtered on their shorts, now they are getting bludgeoned on their long position. But guess what?  They went net short again about  four days ago.  Selling volatility again at the bottom of the volatility index.  Not a good omen for perma-bulls.

The Dow has recovered about 56% of the decline that occurred from January 26th to March 23rd. Correction over and on to higher highs? Possibly. The Russell 2000 broke out to all-time highs starting in mid-May. The Nasdaq hit an all-time high Tuesday. Everything appears to be heading higher…or is it?

The Dow is being driven primarily by Boeing (BA), Microsoft (MSFT), Caterpillar (CAT) and United Health. On Tuesday, I calculated by hand that the big move higher by AMZN was responsible for 43% of the performance in the S&P 500. If AMZN had just been flat that day, the SPX would have closed lower from Monday instead of up 8 pts. By all indicators, the move in the Russell is being driven by a short-squeeze. TSLA was up $28 – 9.6% – yesterday because Elon Musk whispered the phrase, “Model 3 production target,” into the ears of the romance-starved Tesla bulls. Also known as a “shot of short-squeeze Viagra.”

When the market was plunging earlier in the year, the hedge fund bots shifted from insanely long to recklessly short.  Now they are being squeezed.

The Italian debt and Latin American currency crises have not only not gone away but they are getting worse.  As long as the reports don’t hit the headlines, the problems do not exist for moronic daytraders and hedge fund computer program news spiders.

Economically in the U.S. the bold propaganda-laced, heavily “adjusted” Government-manufactured economic reports continue to diverge from the economic and financial reality on Main Street.  Housing, auto and retail sales are deteriorating now as the majority of U.S. households have found themselves stuffed like a French goose readied for foie gras production.

Of course, the smart money is not hanging around for Part Two of what’s to come.  The “smart money index” shows that professional money is leaving the stock market at a rate that has only been equaled in the last 20 years in 2000 and 2008…

There’s no telling how much longer this insanity can persist this time around.  But it brings to mind Hemingway’s description of how to bankrupt as conveyed in “The Sun Also Rises” – “Two ways: gradually then suddenly.”

By the way.  Keep an eye on gold. The majority of the market looking to the sky for stocks and down over the cliff for gold, we could get a surprise move higher in precious metals and mining stocks.

3 minutes ago, Yellow_Reduced_Sticker said:

OMG --> A BLAST FROM THE PAST...Terry Thomas 1 of my all time FAVORITE actors RIP.

SP YOU must be around my AGE   LOL  "You're an absolute shower"

Yeah but I had a tough paper round.look a lot older than my 40 odd years

[DurhamBorn]

5 minutes ago, JoeDavola said:

Yeah my plan 5 years ago was to buy my first (and last) house outright by 35. Price increases have changed that. No desire to retire as I've got a nice job at the moment but would like to be in a position to retire by 50 if things changed, which as a frugal mortgage-less 35 year old, I would have been.

I hated working.I used to get severe anxiety.I worked for some of the best companies in the country (and world),but needed to escape so used to get the jobs then make sure i was selected for redundancy,great way of making capital .My own little business i am import manager,QA manager,logistics manager,sourcing manager etc etc yet get no anxiety at all.Any problems i fix it.I actually get offered jobs all the time,but turn them all down.Tax allowance a year is enough for me from my business for a few hours work and running several portfolios for family and myself.

 

[A_P]

42 minutes ago, JoeDavola said:

I'm hoping this topic can end up being a knowledge base of sorts as well as tracking what's currently happening so that we can try and make the most of what's coming.

I've got £170K savings, a £40K income, and no house (I rent @ £500/month).

I'm not too keen on spending £200K+ for a house at the moment (and that wouldn't even be a nice house; a nice one would be £300K+), because doing so would land me with at least £200 a month in bills that I currently don't have....more like £250 a month actually. So I'd be £200K down and maybe £250 better off a month if I'm lucky.

My wages aren't likely to go up, and I don't stand to inherit much money so it really matters what I do with this. If this get inflated to fuck all by the time I'm 40 in 5 years, it'll be like starting anew when I was 20....except I'll be fucking 40

Where are you looking to buy in NI Joe? My mum moved back to NI circa 18 months ago, bought in Grimgormley (as that where some other family lives). My partner and I have been considering moving over and could buy a nice 3 bed detached for near on half the price of a crap 2 bed terraced where we live now. Our quality of life would go up signifcantly (currently renting a 1 bed aprtment) in a fast paced area, although perhaps the weather may take a bit of getting used to overall it I think it would be great.

Biggest stumbling block thus far is the field that my partner works in is very specialised. Only one place she can really work in NI and although did secure a job offer earlier in the year, they wouldn't offer enough salary for what she was willing to work for. The whole process of negotiating the salary was quite embarrassing on their behalf really...but that's a story for another day . So it's kind of knocked it on the head for the short-term. But we would have been looking to buy in the Newtownards area (or even further out by the coast) and £200k seemed to go pretty far (from online property searches). We are thinking If a job for her doesn't come up within a few years we will come over and just pay cash and knock career work on the head. Happy to work where ever and only earn up to the personal allowance. Just have to hope in the meantime our cash doesn't get inflated away, but like many here, who want to learn and trying to take precautions to protect ourselves.

[UnconventionalWisdom]

1 hour ago, Banned by HPC said:

In a similar position but wouldnt touch cryptos.

Got all my money out the stock market before the last crash and been too hesitant to jump back in ever since.

Seems this thread is saying buy a UK property if you have significant savings which is pretty much enough to buy a house, as they'll be wiped out in the coming few years.

 

I've dabbled a tiny bit in crypto- heard 0.5% of your wealth is a good approach- that way if it shoots up, great, but if you lose it all, it's not the end of the world. 

[A_P]

48 minutes ago, JoeDavola said:

How do you buy silver/gold?

Im currently holding a gold ETFS in my SIPP. As @DurhamBorn said bullionvault is an option for holding physical and can put into a sipp but not as easy as an ETF. Another option is to actually buy physical. Silver is best to be bought in the EU as no VAT. Gold bought in the UK has no VAT and no CGT. From my research earlier in the year they all have their pros and cons. It's worth diving into!

[UnconventionalWisdom]

34 minutes ago, DurhamBorn said:

I hated working.I used to get severe anxiety.I worked for some of the best companies in the country (and world),but needed to escape so used to get the jobs then make sure i was selected for redundancy,great way of making capital .My own little business i am import manager,QA manager,logistics manager,sourcing manager etc etc yet get no anxiety at all.Any problems i fix it.I actually get offered jobs all the time,but turn them all down.Tax allowance a year is enough for me from my business for a few hours work and running several portfolios for family and myself.

 

Sounds like the dream DB- your own boss to do what you think is important to move forward. I work in a micro SME (only 6 of us) developing new technology. We often work with big companies and it's crazy the paperwork and hoops their staff need to jump through to get things done. Big cog in a small system is better than a small cog in a big system.

[JoeDavola]

33 minutes ago, DurhamBorn said:

I hated working.I used to get severe anxiety.I worked for some of the best companies in the country (and world),but needed to escape so used to get the jobs then make sure i was selected for redundancy,great way of making capital .My own little business i am import manager,QA manager,logistics manager,sourcing manager etc etc yet get no anxiety at all.Any problems i fix it.I actually get offered jobs all the time,but turn them all down.Tax allowance a year is enough for me from my business for a few hours work and running several portfolios for family and myself.

Yeah I can relate actually. I suffered from anxiety and full blown panic attacks from the age of about 15. Spent 6 years in a hyper-stressful software environment in my 20's and realized I couldn't spend the rest of my life like this. Found a new software job that I'm very good at with realistic deadlines but doesn't pay as well as I'd like. And to get more pay I'd have to move to management which is full of back stabbing, duplicitous types all trying to fuck each other over, which means I'd be back to a high-anxiety environment.

Many office environments are very toxic, so I understand why many people want out of them after a decade or two.

[King Penda]

18 hours ago, ThoughtCriminal said:

That's Mr former HPC cunt to you.....

all we need now is ronnie pickering has a mod.

[JoeDavola]

17 minutes ago, Admiral Pepe said:

Where are you looking to buy in NI Joe? My mum moved back to NI circa 18 months ago, bought in Grimgormley (as that where some other family lives). My partner and I have been considering moving over and could buy a nice 3 bed detached for near on half the price of a crap 2 bed terraced where we live now. Our quality of life would go up signifcantly (currently renting a 1 bed aprtment) in a fast paced area, although perhaps the weather may take a bit of getting used to overall it I think it would be great.

Biggest stumbling block thus far is the field that my partner works in is very specialised. Only one place she can really work in NI and although did secure a job offer earlier in the year, they wouldn't offer enough salary for what she was willing to work for. The whole process of negotiating the salary was quite embarrassing on their behalf really...but that's a story for another day . So it's kind of knocked it on the head for the short-term. But we would have been looking to buy in the Newtownards area (or even further out by the coast) and £200k seemed to go pretty far (from online property searches). We are thinking If a job for her doesn't come up within a few years we will come over and just pay cash and knock career work on the head. Happy to work where ever and only earn up to the personal allowance. Just have to hope in the meantime our cash doesn't get inflated away, but like many here, who want to learn and trying to take precautions to protect ourselves.

Hello Admiral, welcome to the site!

I work in south Belfast and rent in Belfast city centre. It's brilliant as I can just walk or cycle anywhere. Was put off buying an apartment because of high maintenance charges and dodgy finances in many of the blocks. Ideally I'd like to live within a walk/cycle of work because I'm an oddball who likes living without a car ...so it was Belfast I was looking in. You're right, some of the commuter towns are more affordable.

And while I think Belfast is overpriced, I realize that the folk in England, especially the south, have it much worse!

[ThoughtCriminal]

11 minutes ago, stokiescum said:

all we need now is ronnie pickering has a mod.

"Do you know who I am?"

 

No, who are you?

 

"I'M RONNIE FUCKING PICKERING!!!"

 

Classic. Good old Ronnie.

[leonardratso]

3 minutes ago, ThoughtCriminal said:

"Do you know who I am?"

 

No, who are you?

 

"I'M RONNIE FUCKING PICKERING!!!"

 

Classic. Good old Ronnie.

some young punk kicked his arse in a pub a few months later.

[A_P]

2 minutes ago, JoeDavola said:

Hello Admiral, welcome to the site!

I work in south Belfast and rent in Belfast city centre. It's brilliant as I can just walk or cycle anywhere. Was put off buying an apartment because of high maintenance charges and dodgy finances in many of the blocks. Ideally I'd like to live within a walk/cycle of work because I'm an oddball who likes living without a car ...so it was Belfast I was looking in. You're right, some of the commuter towns are more affordable.

And while I think Belfast is overpriced, I realize that the folk in England, especially the south, have it much worse!

Thanks for the welcome

Kind of sounds like we are thinking along the same lines. I've been without a car for a year and everyone thinks I'm nuts . It's driving my mum so crazy she keeps trying to ship me her car . I don't need one though, i have everything in my close vacinity. Driving has become such a pain with crappy roads, speed cameras, running costs etc. I just can't be bothered. Plus the money I save can now be invested and working towards my FIRE goal, which is another thing very few seem to get.

[DurhamBorn]

12 minutes ago, UnconventionalWisdom said:

Sounds like the dream DB- your own boss to do what you think is important to move forward. I work in a micro SME (only 6 of us) developing new technology. We often work with big companies and it's crazy the paperwork and hoops their staff need to jump through to get things done. Big cog in a small system is better than a small cog in a big system.

The tax allowance level now is really high if you are mortgage and debt free.£227.88 a week.Thats what i aim for though i usually go over by about £1k-£2k a year so end up with a couple of hundred tax and a bit of NI (enough to get state pension credits).If i need any extra i take it from my ISA dividends,though so far (8 years) i havent needed to very often.I used to earn around £40k,for the north thats a very high wage.Much happier and better off on £12k.I often get job offers and turn them down.When they say can we ask how much your earning now and i say £12k they dont know what to say.I turned Pfizer down for £50k a year + benefits.It has crossed my mind a few times to do maybe three more years and SIPP everything over £12k,but iv already got enough in my SIPP to draw the tax allowance out every year between 55 and 65 and then 1 year on ESA and  year on the dole  (limit for none means tested) so see no point.My state pension and small works pension is the tax allowance level from 67 so dont want any extra income apart from out of an ISA.

Plus we know how the next cycle is going to play out and lots of easy pickings 

 

[Talking Monkey]

5 hours ago, DurhamBorn said:

@sancho panza i bought SBGL.PPLT is closed off to us now.

SBGL seem as if they want to buy up the entire Plat/pall market outside of Anglo American.They have a lot of debt because of this and the low rand gold price is making life tricky so they might sign a streaming deal for rhodium maybe,but i think they must see what we see for Platinum.I see $1400+ by 2020.I got back in at $2.60 and have owned them several times over the years and they have been very kind to me.Likely il be holding longer this time.

I also bought some more Harmony Gold and some Anglogold Ashanti.I think Greenstone open pit mines in Africa will replace the deep mines over time and they are the best two plays for this.

The pattern in gold is almost the same as 1999-2001 and after that we saw $240 up to $1920 so pointing to $7000 by around 2026 is possible.We see a nice rounding bottom in gold from around 2013 and would now expect a rounding top in equities (US).We expect a break above $1370 then the $1500 area as very likely.95 was our target for the dollar bounce,maybe 96 at most then down.If that is right it should add fuel to the miners.Hardly anyone is interested in the space and its hardly owned.People will probably regret that down the road.

DB in the deflation wouldn't the dollar do really well, so why do you expect the dollar to go down from the 95/96 area. Or am I assuming wrong that we are not yet at the cusp of the deflation.

As to the dollar weakening would that be across the board so would you expect GBPUSD to go back to the 1.43 level we saw recently

[Alonso Quijano]

How great to see some quality posters arriving from ToS.

It still amazes me how TPTB managed to keep the plates spinning all this time defying gravity.

Isn't our economy house prices, massive consumer debt, and general spivvery? At least we have the black hole that is the glorious NHS.

It will be interesting seeing it unravel against the current social backdrop.

[BurntBread]

Wow, what a coup! We've got the most interesting people, and definitely the best thread, across from ToS! I suppose that now we've caught one corner of the thing in the DOSBODS mechanism, though, there's a danger we'll suck the entire site across, which would be ... well ... a mixed blessing.

I guess it's going to be a different place here from now on, whatever. No danger of an "eternal September", fortunately: we have too much in common, but the average age is probably going to go down a bit, and it won't feel like quite such a small village. I might have to metaphorically lock the front door when I go off to work. There may be less drinking and swearing, though.

[Majorpain]

15 minutes ago, Alonso Quijano said:

It still amazes me how TPTB managed to keep the plates spinning all this time defying gravity.

It boils down to something simple IMO, people are naturally greedy and want to consume as many resources as possible.  Add this to credit being cheap and its enabling consumers to continue spending long past the point most people expected it to stop.  Those low monthly payments for new shiny toy are sooooo tempting.....

Its not really a big consipiracy, central banks just hooked the world economy up to QE economic heroin and rode the high.  Now the drugs are wearing off, do they go for cold turkey or overdose?  Fed is saying cold turkey.

[BurntBread]

3 hours ago, DurhamBorn said:

I hated working.I used to get severe anxiety.

I wonder how common this is? Everyone has to put on an act, so I guess there may be a huge amount of stress and misery hidden beneath the surface in seemingly functional workplaces. I used to be in the same boat ... but by various events which cauterized out a lot of the person I once was, and by making some changes in external circumstances, I'm currently rather enjoying work, even in a traditional company.

Also surprised to see so many people on this site who have given up on cars (as well as TV, of course). I should probably start a "no car" thread - although I've no idea what we'd talk about.

Anyway, welcome, one and all, to Spunko's kingdom. It's great to have you here.