Deflationary collapse and the Reflation Cycle to Come.

[Errol]

It's a Yuan oil contract convertible into gold. The idea is that you generally just stick with Yuan but the option for gold convertability is always there if required.

 

De-Dollarization Accelerates: China Readies Yuan-Priced Crude Oil Benchmark Backed By Gold

http://www.zerohedge.com/news/2017-09-02/de-dollarization-accelerates-china-readies-yuan-priced-crude-oil-benchmark-backed-go

Edited September 13, 2017 by Errol

[Gigantic Purple Slug]

20 minutes ago, doahh said:

Can you explain the reasoning behind that please? You seem to be saying that every gold backed currency throughout history is worthless. I assume that trading oil for gold means that the gold can be repatriated back to the oil supplier when they want. You only need to trust that the country will do the physical transfer, and if they don't then they be left without oil in the future.

Yes. The country that provides the currency with the gold backing can withdraw the gold backing at any time. So you amass a large amount of currency X, believing that it has value because it is gold backed, only to find that the backing is only a promise to make good and nothing that can be enforced (in other words exactly the same as non gold backed).

If you don't amass a large amount of the currency, you don't need the backing in the first place.

[bricor mortis]

Been following this thread since its inception and I would now be interested in opening and account and putting some cash in TLTs . Dont know much about this, so, questions for those that do know, firstly are TLT etfs  compatible with an ISA ? Secondly which Fund would you recommend ?, precise name of fund please. Many thanks.

[TheCountOfNowhere]

5 hours ago, Errol said:

Whenever the world has been in this situation before it has always ended in war. No exceptions.

We are headed towards that now.

I thought this 5 years ago now.

Buying a house in the UK is a mugs game now, need to be able to secret yourself away somewhere to see out the war growing spuds and drinking red wine.

[TheCountOfNowhere]

36 minutes ago, Social Justice League said:

The whole financial system is an utter joke ran by halfwits very clever 1000 year old famillies.  It will fail and by the look of it, quite soon.

The rest of us are the half wits for going along with it.

[Social Justice League]

6 minutes ago, TheCountOfNowhere said:

The rest of us are the half wits for going along with it.

The 99% need to stop consuming.  Then it's over for these 1000 year old families.

[durhamborn]

8 minutes ago, bricor mortis said:

Been following this thread since its inception and I would now be interested in opening and account and putting some cash in TLTs . Dont know much about this, so, questions for those that do know, firstly are TLT etfs  compatible with an ISA ? Secondly which Fund would you recommend ?, precise name of fund please. Many thanks.

TLT is not ISA compatible,but can go in a SIPP or fund and share account.

https://www.ishares.com/uk/individual/en/products/272124/ishares-usd-treasury-bond-20-yr-ucits-etf

The above is ISA compatible.

Both funds are pretty much the same.

The only thing to say about buying dollar bond funds is that you are buying them because you think there will be a crash/big slowdown/sterling tops out soon and goes back down.The bond bull is 36+ years old.I think it has one last big uptick before it then starts a big bear market.If thats wrong and we get inflation before a deflation it would be a bad call.Holding them at this stage is a hedge (myself im about 18% in them),not an all in situation.Everyone needs to decide on the make up of their portfolio.Its a very difficult time to get it right.Half right will do me the way things are.

[doahh]

1 hour ago, Gigantic Purple Slug said:

Yes. The country that provides the currency with the gold backing can withdraw the gold backing at any time. So you amass a large amount of currency X, believing that it has value because it is gold backed, only to find that the backing is only a promise to make good and nothing that can be enforced (in other words exactly the same as non gold backed).

Yes, that is true. However, I think the important point is that assets are beginning to be convertible into gold without passing through the dollar. How many of the oil suppliers will be happy to hold Yuan? Given they want away from the dollar, what is the incentive to move to a different fiat? I guess it could simply be that they want to stop the American's spreading their tentacles around the world, but I would have thought the real attraction is the direct convertibility to gold.

Edited September 13, 2017 by doahh

[bricor mortis]

2 hours ago, durhamborn said:

TLT is not ISA compatible,but can go in a SIPP or fund and share account.

https://www.ishares.com/uk/individual/en/products/272124/ishares-usd-treasury-bond-20-yr-ucits-etf

The above is ISA compatible.

Both funds are pretty much the same.

The only thing to say about buying dollar bond funds is that you are buying them because you think there will be a crash/big slowdown/sterling tops out soon and goes back down.The bond bull is 36+ years old.I think it has one last big uptick before it then starts a big bear market.If thats wrong and we get inflation before a deflation it would be a bad call.Holding them at this stage is a hedge (myself im about 18% in them),not an all in situation.Everyone needs to decide on the make up of their portfolio.Its a very difficult time to get it right.Half right will do me the way things are.

Thanks DB.

[BadAlchemy]

2 hours ago, durhamborn said:

TLT is not ISA compatible,but can go in a SIPP or fund and share account.

https://www.ishares.com/uk/individual/en/products/272124/ishares-usd-treasury-bond-20-yr-ucits-etf

The above is ISA compatible.

Hi DB. Someone else mentioned the "IBTL" ETF upthread and I put a little of that into a H&L stocks and shares ISA recently. The one you've linked there seems to be called "IDTL" and seems to be a USD version of "IBTL" ( which is in GBP ). Can't seem to find "IDTL" on the H&L website. Hmmm....

I have no idea what I am doing really so that's why I'm only putting  a little bit in and learning as I go along... hopefully !

[durhamborn]

4 minutes ago, BadAlchemy said:

Hi DB. Someone else mentioned the "IBTL" ETF upthread and I put a little of that into a H&L stocks and shares ISA recently. The one you've linked there seems to be called "IDTL" and seems to be a USD version of "IBTL" ( which is in GBP ). Can't seem to find "IDTL" on the H&L website. Hmmm....

I have no idea what I am doing really so that's why I'm only putting  a little bit in and learning as I go along... hopefully !

We are all learning as we go along,a little bit is a great way to do it,skin in the game.I actually got some silver this week,physical coins.Beautiful.My partner was wanting to open her new born granddaughter a bank account with £100.I changed her mind to 5 1oz silver coins instead.I know the VAT on them is naff,but when you hold them you know they are money.

[Inoperational Bumblebee]

2 hours ago, BadAlchemy said:

Hi DB. Someone else mentioned the "IBTL" ETF upthread and I put a little of that into a H&L stocks and shares ISA recently. The one you've linked there seems to be called "IDTL" and seems to be a USD version of "IBTL" ( which is in GBP ). Can't seem to find "IDTL" on the H&L website. Hmmm....

I have no idea what I am doing really so that's why I'm only putting  a little bit in and learning as I go along... hopefully !

They're the same thing, just IBTL is GBP-denominated and IDTL is USD-denominated. IBTL is unhedged so it makes no difference to you as the underlying security is the same thing.

Edited September 13, 2017 by Inoperational Bumblebee

[thehowler]

6 hours ago, TheCountOfNowhere said:

Buying a house in the UK is a mugs game now, need to be able to secret yourself away somewhere to see out the war growing spuds and drinking red wine.

There is nowhere to hide. Only the oceans, and that's a lonely game.

[Majorpain]

Interserve put out a trading update this morning, their share price has halved on the news.  Things are really not looking good at the minute.

From 600p in November 15 to 80p today...

[stuckmojo]

9 minutes ago, Majorpain said:

Interserve put out a trading update this morning, their share price has halved on the news.  Things are really not looking good at the minute.

From 600p in November 15 to 80p today...

ouch. though this looks like they were hyped on poor strategic choices and the downside is butchering them. 

[durhamborn]

44 minutes ago, Majorpain said:

Interserve put out a trading update this morning, their share price has halved on the news.  Things are really not looking good at the minute.

From 600p in November 15 to 80p today...

I would say the equity will go to zero.Far too much debt as usual.Anyone with high debt looking for lumpy contracts is dead in the water i think.

[Dogtanian]

Meanwhile John Lewis profits down by 50%+ from inflating costs and shrinking margins.  

[Ash4781]

2 hours ago, Dogtanian said:

Meanwhile John Lewis profits down by 50%+ from inflating costs and shrinking margins.  

Next has upgraded their profit guidance. Interesting contrast 

[Majorpain]

13 minutes ago, Ash4781 said:

Next has upgraded their profit guidance. Interesting contrast 

Its a contrast within the company, 8% drop in sales and 33% drop in profit for the retail stores & 6% increase in sales and 6% increase in profit for the "directory" (online bit?).

Still down 40% from 2015 so I wouldn't be breaking the champagne out yet.

[Ash4781]

57 minutes ago, Majorpain said:

Its a contrast within the company, 8% drop in sales and 33% drop in profit for the retail stores & 6% increase in sales and 6% increase in profit for the "directory" (online bit?).

Still down 40% from 2015 so I wouldn't be breaking the champagne out yet.

Yeah i think updating profit guidance might look silly if they have to downgrade post Christmas.

Those John Lewis management comments are interesting - referring to cash reserves so they might be thinking margin collapse and then weather the storm? 

Have to worry about those retailers with a lot of debt. Debenhams? I don't know how far Tesco got with reduction to debt?

 

Edited September 14, 2017 by Ash4781

[durhamborn]

21 minutes ago, Ash4781 said:

Yeah i think updating profit guidance might look silly if they have to downgrade post Christmas.

Those John Lewis management comments are interesting - referring to cash reserves so they might be thinking margin collapse and then weather the storm? 

Have to worry about those retailers with a lot of debt. Debenhams? I don't know how far Tesco got with reduction to debt?

 

Debt is the killer.Look at the markets today with a sniff of an interest rate increase.This is where we should see risk off move up a gear.Margins are being destroyed.To stop that the zombie companies need to go under,kicking off the debt liquidation cycle.The key then is how big and bad it gets and what else is tied to those debts.The dollar is having a bit of a fight at 92 probably stopping the PMs a bit,but not for long i expect.As iv always said,this is a balance sheet event.You cant pay debts when earnings evaporate.A lot of companies are at that cliff edge now.Like you say John Lewis are thinking about surviving a period of margin destruction.Net cash.

[Houdini]

2 minutes ago, durhamborn said:

Debt is the killer.Look at the markets today with a sniff of an interest rate increase.This is where we should see risk off move up a gear.Margins are being destroyed.To stop that the zombie companies need to go under,kicking off the debt liquidation cycle.The key then is how big and bad it gets and what else is tied to those debts.The dollar is having a bit of a fight at 92 probably stopping the PMs a bit,but not for long i expect.As iv always said,this is a balance sheet event.You cant pay debts when earnings evaporate.A lot of companies are at that cliff edge now.Like you say John Lewis are thinking about surviving a period of margin destruction.Net cash.

If you look at Morrison's figures from today I would draw you attention to this chart

 

Morrison's more clueful management is reducing their debts as quickly as humanly possible....

[durhamborn]

1 minute ago, Houdini said:

If you look at Morrison's figures from today I would draw you attention to this chart

 

Morrison's more clueful management is reducing their debts as quickly as humanly possible....

Yes,very good managers.Instead of higher divis they are getting that balance sheet clean.I expect once that is done they will simply hand back almost all net cash to shareholders.Centrica have been doing the same diverting free cash flow to debt reduction.The ones who go into this with the stronger balance sheet will get the rewards on the other side.

[Errol]

20 hours ago, durhamborn said:

We are all learning as we go along,a little bit is a great way to do it,skin in the game.I actually got some silver this week,physical coins.Beautiful.My partner was wanting to open her new born granddaughter a bank account with £100.I changed her mind to 5 1oz silver coins instead.I know the VAT on them is naff,but when you hold them you know they are money.

Coininvestdirect seem to do some clever trick to get around VAT on silver orders. Not sure how.

[Errol]

1 hour ago, durhamborn said:

Yes,very good managers.Instead of higher divis they are getting that balance sheet clean.I expect once that is done they will simply hand back almost all net cash to shareholders.Centrica have been doing the same diverting free cash flow to debt reduction.The ones who go into this with the stronger balance sheet will get the rewards on the other side.

If the managers were even cleverer, once they get the debt to zero they would put in place a gold buying scheme. Build a vault at central office and start buying gold and other precious metals to hold on the company account. They could guarantee financial security for hundreds of years if carried out correctly.