Credit deflation and the reflation cycle to come.

[DurhamBorn]

56 minutes ago, Barnsey said:

@DurhamBorn Been reading a lot regarding the near future of a cashless society, is this accounted for in your estimates for the silver price circa 2025?

No,but i would see that as a plus,but all things like that are just noise really.The main reason for a silver bull market are clean energy,solar becoming the main energy source, and investment demand against a flat or declining production base.

A lot of the big new copper mines that might/will enter production over the next cycle dont produce any/much silver.An increase in price would see investment bars sold in normal times,but we think that the demand will be rising just as people start to lose faith in currency/inflation and will be buying,not selling.I think $100-$200 or even in an extreme higher silver price might land in the next cycle.The risk reward looks very strong.

[Majorpain]

Bubbletastic tech baby!

Party like its 1999.

Quote

just the Top 4 stocks, Amazon, Microsoft, Apple and Netflix have been responsible for 84% of the S&P upside in 2018

 

[Democorruptcy]

4 hours ago, DurhamBorn said:

Most of Vods debt is done through a shelf programme ,and that is where the average 2% rate comes from probably.The new debt is to buy Liberty International assets.

Vods shelf programme debt is here

https://www.vodafone.com/content/index/investors/debt_investors/european-shelf.yes.html?

 

 

I listed the shelf program for this debt but don't understand how it's as low as the 2% quoted?  

Quote

On 30 May 2018, Vodafone closed a six-tranche US$11.5 billion SEC-registered fixed and floating rate bond offering with an average life of 14 years and effective average euro rate of 2.0%

US$2,000,000,000 3.750% notes due 16 January 2024

US$1,500,000,000 4.125% notes due 30 May 2025

US$3,000,000,000 4.375% notes due 30 May 2028

US$1,000,000,000 5.000% notes due 30 May 2038

US$3,000,000,000 5.250% notes due 30 May 2048

US$1,000,000,000 floating rate notes due 16 January 2024

[Castlevania]

11 minutes ago, Democorruptcy said:

I listed the shelf program for this debt but don't understand how it's as low as the 2% quoted?  

US$2,000,000,000 3.750% notes due 16 January 2024

US$1,500,000,000 4.125% notes due 30 May 2025

US$3,000,000,000 4.375% notes due 30 May 2028

US$1,000,000,000 5.000% notes due 30 May 2038

US$3,000,000,000 5.250% notes due 30 May 2048

US$1,000,000,000 floating rate notes due 16 January 2024

Possibly entered into a cross currency swap? Vodafone would then pay EUR rates and receive USD rates with the counterparty to the swap. Then use the USD rates to pay the coupon on the bonds. Whilst feasible, I’m not sure why you’d borrow in USD if you were planning on doing that. 

[DurhamBorn]

Just now, Castlevania said:

Possibly entered into a cross currency swap? Vodafone would then pay EUR rates and receive USD rates with the counterparty to the swap. Then use the USD rates to pay the coupon on the bonds. Whilst feasible, I’m not sure why you’d borrow in USD if you were planning on doing that. 

I think there must be some form of derivative use and perhaps some form of tax advantage in paying Liberty a certain way.Does Vod still have a US tax loss maybe?.

[Democorruptcy]

34 minutes ago, Castlevania said:

Possibly entered into a cross currency swap? Vodafone would then pay EUR rates and receive USD rates with the counterparty to the swap. Then use the USD rates to pay the coupon on the bonds. Whilst feasible, I’m not sure why you’d borrow in USD if you were planning on doing that. 

I wondered if the " effective average euro rate of 2.0% " meant something different to the average borrowing rate. Especially because the shelf is in USD. In recent times borrowing in one currency compared to another hasn't always worked out but I assume Vodaphone must know what they are doing.

I was thinking 'Financial Engineer' might be a good forum name these days.

[sancho panza]

1 hour ago, Majorpain said:

Bubbletastic tech baby!

Party like its 1999.

 

I agree MP it's jsut a case of when they roll over.There will be massive downside.I was looking at a few Hulberts Digest type newsletters the other day and it was amazing how many of the top performers over the last decade all bought Apple circa $1.Fair play.

Having said that,I wouldn't be buying the dip when the cheap free fed money disappears.

 

In other news

Uk builders going through what looks like a replay of 2007

As ever,worth noting the ever shrewd Tony Pidgeley offloaded £60mn in 2017

Decl-short Barratt and TW

[sancho panza]

47 minutes ago, Castlevania said:

Possibly entered into a cross currency swap? Vodafone would then pay EUR rates and receive USD rates with the counterparty to the swap. Then use the USD rates to pay the coupon on the bonds. Whilst feasible, I’m not sure why you’d borrow in USD if you were planning on doing that. 

That seems the most logical expalanation without the knowledge of someone familiar with the particulars.

http://www.interestrateswapstoday.com/interest-rate-swap-education.html

[Inoperational Bumblebee]

1 hour ago, Castlevania said:

Possibly entered into a cross currency swap? Vodafone would then pay EUR rates and receive USD rates with the counterparty to the swap. Then use the USD rates to pay the coupon on the bonds. Whilst feasible, I’m not sure why you’d borrow in USD if you were planning on doing that. 

This explanation makes perfect sense to me if they are short EUR (or other non-USD) bonds but long USD in 'company' denomination (terms may be clumsy but hopefully it'll make sense). It's effectively a carry trade that would reduce the overall EUR bond interest rate. If money floods to the USD in the event of a crash as DB is suggesting, then they'll be quids in via exchange rate too!

It's effectively the same thing we're trying to achieve by buying TLT/IBTL, but in reverse as it's debt.
I think it's a huge positive to take from that. We are doing the same trade that they've bet whopping amounts on.
It's interesting to note how little of the debt on DB's shelf trade link is USD-denominated.

[Lavalas]

You learn all sorts from this investing in precious metals lark. It’s Canada Day today init - public holiday. No wonder I’m not making any gains (losses).

[Bear Hug]

5 hours ago, Democorruptcy said:

I listed the shelf program for this debt but don't understand how it's as low as the 2% quoted?  

US$2,000,000,000 3.750% notes due 16 January 2024

US$1,500,000,000 4.125% notes due 30 May 2025

US$3,000,000,000 4.375% notes due 30 May 2028

US$1,000,000,000 5.000% notes due 30 May 2038

US$3,000,000,000 5.250% notes due 30 May 2048

US$1,000,000,000 floating rate notes due 16 January 2024

Have a read of this: https://www.investopedia.com/terms/p/parvalue.asp

Presumably these bonds were issued at a premium to par value, so investors would have paid more than $11.5 billion (par value) to buy them and therefore effective rate Vod are borrowing at is lower than any of the coupon rates quoted above.

[Bear Hug]

On 30/06/2018 at 09:32, DurhamBorn said:

Ok,i finished off building a PM portfolio for my dad last night.He wanted 12% of his portfolio in PM miners.They arent all exact 2%,some are 1.5% some 2.5% ect (HMY biggest at 2.6%).I bought from miners who are showing good technical support (Yamana etc) and ones that look like they might snap back very fast (oversold,HMY NGD etc) if we are at an inflection point in the complex.In my own portfolio i own these and a couple of others,

Harmony Gold (HMY) $1.56

Yamana Gold (YRI) $3.86

Sibanye Gold (SBGL) $2.42

New Gold (NGD) $2.06

Sandstorm Gold (SSL) $5.91

Endeavor Silver Corp (EDR) $4.10

If anyone was wanting to invest £10k in the space thats the portfolio id advise.Its a risky portfolio of course as i picked the stocks that i think will do very well IF we enter a PM metals/miners bull market.If we dont there will probably be pain in the portfolio.However its a risk/reward situation.DYOR etc etc,not individual advice etc etc,see an IFA to pay for his fees etc etc.

 

Is there a level at which you would buy any of FTSE100 miners?  And how far are they away from it?

[DurhamBorn]

1 hour ago, Bear Hug said:

Is there a level at which you would buy any of FTSE100 miners?  And how far are they away from it?

No,i bought Anglo at around £7 (and watched them hit £3),but sold them when they went over £14.I think the PM miners offer outstanding value,and i prefer having that part of my portfolio in them.Im not interested in pegging the bottom on them.

[DurhamBorn]

1 hour ago, Bear Hug said:

Have a read of this: https://www.investopedia.com/terms/p/parvalue.asp

Presumably these bonds were issued at a premium to par value, so investors would have paid more than $11.5 billion (par value) to buy them and therefore effective rate Vod are borrowing at is lower than any of the coupon rates quoted above.

Interesting,so the rate is 2%.Thats like people saying we prefer Vodafone holding our capital rather than the banks .Its incredible really if that 2% rate is correct.

[King Penda]

26 minutes ago, DurhamBorn said:

Interesting,so the rate is 2%.Thats like people saying we prefer Vodafone holding our capital rather than the banks .Its incredible really if that 2% rate is correct.

i see your logic ,myself i will just overpay my morgage and save 2.6 %,but when i used to play on the stockmarket with chump change to you guys i never took any notice of tecninal analasis charts etc i just used common sense,if petrol goes up it normaly makes things that use fuel less profatable ie airlines,playing the aim market i soon realised that any firm doing a drill would rise 10% on anticipation alone close to spud news.my best stunt was rkh i bought one of the falklands 4 around 34p and sold at 160 they actualy hit oil,has i couldnt be arsed to exit with my normal few quids profit.i am envies of the amounts you guys are playing with me mum said once id built my 1000 stake up to 12.5 k within 3 years just go for it and try buy an house outright i thought id had a good run and put my 25% deposit down ,the rest is history ...ive still got ironicly a 1000 tw, shares thats going to cover my extra overpayments should a fancy a year off.

[sancho panza]

2 hours ago, Bear Hug said:

Have a read of this: https://www.investopedia.com/terms/p/parvalue.asp

Presumably these bonds were issued at a premium to par value, so investors would have paid more than $11.5 billion (par value) to buy them and therefore effective rate Vod are borrowing at is lower than any of the coupon rates quoted above.

Thanks for that.This thread has been a real learning curve today.Your explanation makes perfect sense as it's exactly what happens with govt bond sales ie the primary dealers/big banks bid on them

2 hours ago, Bear Hug said:

Is there a level at which you would buy any of FTSE100 miners?  And how far are they away from it?

They look a little pricey to me.

[sancho panza]

9 minutes ago, stokiescum said:

i see your logic ,myself i will just overpay my morgage and save 2.6 %,but when i used to play on the stockmarket with chump change to you guys i never took any notice of tecninal analasis charts etc i just used common sense,if petrol goes up it normaly makes things that use fuel less profatable ie airlines,playing the aim market i soon realised that any firm doing a drill would rise 10% on anticipation alone close to spud news.my best stunt was rkh i bought one of the falklands 4 around 34p and sold at 160 they actualy hit oil,has i couldnt be arsed to exit with my normal few quids profit.i am envies of the amounts you guys are playing with me mum said once id built my 1000 stake up to 12.5 k within 3 years just go for it and try buy an house outright i thought id had a good run and put my 25% deposit down ,the rest is history ...ive still got ironicly a 1000 tw, shares thats going to cover my extra overpayments should a fancy a year off.

It's not how much you play with that matters but what it means to you.

People's savings are people's savings.

Thsi thread is all about the learning curve not what you've got.

[King Penda]

4 minutes ago, sancho panza said:

It's not how much you play with that matters but what it means to you.

People's savings are people's savings.

Thsi thread is all about the learning curve not what you've got.

i had nothing i started with 350 quid,it was important to me ironicly i knew nothing better and started out with tw. at 32p sadly i got them certificated has well i was new to it.i know better now but ive never realised at the time,either way im due a 110 quid divy this month and my shares are worth 175 each.the other irony is they are basicly free due to past divi payments.i was a hit and run merchent when i had a share dealing acount ,i had at one time 6000 tw, shares but they rose 5p and i took my 180 quid minus dealers fees.i am what i am if i suspect i can make a few quid i will take it ive not got the inteligence or cash you guys have

[Cosmic]

22 minutes ago, sancho panza said:

Whats up with this chart compared to googles? 

 

[sancho panza]

10 minutes ago, Cosmic Apple said:

Whats up with this chart compared to googles? 

 

We owned Broken Hill and Billiton from the late 90's.The google chart is far more reminiscent of my experience.

They merged in 2001 according to Wiki.I remember there was some sort of reorganisation -possibly related to the dual listing-through that time but can't remember exactly.

[leonardratso]

8 hours ago, stokiescum said:

i had nothing i started with 350 quid,it was important to me ironicly i knew nothing better and started out with tw. at 32p sadly i got them certificated has well i was new to it.i know better now but ive never realised at the time,either way im due a 110 quid divy this month and my shares are worth 175 each.the other irony is they are basicly free due to past divi payments.i was a hit and run merchent when i had a share dealing acount ,i had at one time 6000 tw, shares but they rose 5p and i took my 180 quid minus dealers fees.i am what i am if i suspect i can make a few quid i will take it ive not got the inteligence or cash you guys have

doesnt matter much, theres ideas and analysis on here, it is your cash to do as you will with it. Not much by way of hit and run here, but eves mattress is one that might fit the bill, fell 50% yesterday, shit company by the look of it, but might bounce - risky though, might not. Ive done some hit and run in the past, dixons carphone last year when it tanked, also cna, but ive started to build a position in cna now same with drax, i dont see myself selling out on the ones i have now, more likely to just forget about them and get on with my life.

[Majorpain]

@DurhamBorn

Renminbi is crashing, hope your fully stocked up for the time being!

[DurhamBorn]

47 minutes ago, Majorpain said:

@DurhamBorn

Renminbi is crashing, hope your fully stocked up for the time being!

The Fed rate hikes are putting lots of bombs under the world economy.The Chinese need the RMB lower and i would expect they would like it at maybe 7.

[DurhamBorn]

2 hours ago, leonardratso said:

doesnt matter much, theres ideas and analysis on here, it is your cash to do as you will with it. Not much by way of hit and run here, but eves mattress is one that might fit the bill, fell 50% yesterday, shit company by the look of it, but might bounce - risky though, might not. Ive done some hit and run in the past, dixons carphone last year when it tanked, also cna, but ive started to build a position in cna now same with drax, i dont see myself selling out on the ones i have now, more likely to just forget about them and get on with my life.

Same here.Im more interested in re-building a portfolio than delivers around 9% a year compounding.The PM part of my portfolio isnt in those calculations.Its a different part.Im active at the moment,but very likely il be holding what i already have for around 8 years.(apart from the PM miners,that depends on what they do)

[Barnsey]

Thought I'd share this tweet:

Ties in nicely with the distinct possibility of a similar 1970's-esque high inflation period to come, but with the added bonus of QE.

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp