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Deflationary collapse and the Reflation Cycle to Come.


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6 minutes ago, afly said:

Yeah, they only buy back at spot price,  If you have a nose on places like ebay you'll see them changing hands for similar amounts to what you're paying (not that I would recommend selling them on ebay!)

I've sold a few tiny little gold bars - took plenty of photos of them pre and post packing and sent tracked recorded.

No drama but I wouldn't shift a lot in one transaction on there.

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Rather than put my thoughts in other threads about how i see the end of this cycle playing out i thought a thread dedicated to this would be a much better idea.Many other posters here have some great

How convenient.

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3 hours ago, afly said:

Yeah, they only buy back at spot price,  If you have a nose on places like ebay you'll see them changing hands for similar amounts to what you're paying (not that I would recommend selling them on ebay!)

so realistically i would have to be selling for 23% more than the purchase to break even at spot price.   

ebay fees 10% paypal 3.7%+postage cost

so at least 30% rise just to break even really if you are selling a lot.  

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Although as we know hope isn't a strategy, my hope is that silver will become more widely accepted as is. Sort of like bitcoin but tangible:lol:

If not, then that it rises enough to offset the costs you mention (no argument with them)

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Chanced upon the DB "Long Term Asset Return" study yesterday (2017 edition), and thought of this thread: http://www.tramuntalegria.com/wp-content/uploads/2017/09/Long-Term-Asset-Return-Study-The-Next-Financial-Crisis-db.pdf

Comparison with 2016 edition makes for interesting reading: https://wikileaks.org/berats-box//fileid/40233/17208

2016 edition is long on the "global labour market trends" theory of everything, but that barely comes up in 2017 edition

 

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On 4/4/2018 at 7:48 PM, wish I could afford one said:

Thanks so much for the hat-tip Thorn.  It puts a smile on my face knowing my musings have brought you value.  Wishing you much success as you develop an investment strategy that works for you.

Ok so reading away and my SIPP is now 20% bonds but the rest a nice mix I like of shares, mainly cheap trackers- your book is like a formula to avoid fees by the way- class, some DOW and defensive but divi- paying picks along the lines of this thread after DYOR, and pms and miners. 

Now just going to let it be and add bits with new income I reckon. Some feeling watching wee divis appear in the HL account instead of before I found this thread saw nothing and it went mainly to the IFA.

Glad to be started as you advised WICAO thank you again. 

There’s no knowing what will happen- Big Crash or Melt-Up. 

Can I ask you to explain again about if you are rebalancing or adding more in, how and why do you add more to the poorly performing bits..?

Edited by Thorn
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48 minutes ago, Thorn said:

Ok so reading away and my SIPP is now 20% bonds but the rest a nice mix I like of shares, mainly cheap trackers- your book is like a formula to avoid fees by the way- class, some DOW and defensive but divi- paying picks along the lines of this thread after DYOR, and pms and miners. 

Now just going to let it be and add bits with new income I reckon. Some feeling watching wee divis appear in the HL account instead of before I found this thread saw nothing and it went mainly to the IFA.

Glad to be started as you advised WICAO thank you again. 

There’s no knowing what will happen- Big Crash or Melt-Up. 

Can I ask you to explain again about if you are rebalancing or adding more in, how and why do you add more to the poorly performing bits..?

3

There's some good reading on rebalancing at monevator http://monevator.com/rebalance-with-new-contributions-to-save-on-grief-and-cost/

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I've used Silver-to-go / Coininvest before and the service was good and I thought their price was the best, and they often get a recommendation on here. But I've just spotted the price at goldsilver.be is quite a bit lower, despite having to pay in EUR. Have I missed some small print and their price is much lower for a reason?

These are 2018 Britannias I'm looking at, so presumably tubes of mint coins from both vendors. Today's prices, all taxes included, are £13.95 each for 50 at GS, £15.04 each for 50 at STG.

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36 minutes ago, Anonymous said:

I've used Silver-to-go / Coininvest before and the service was good and I thought their price was the best, and they often get a recommendation on here. But I've just spotted the price at goldsilver.be is quite a bit lower, despite having to pay in EUR. Have I missed some small print and their price is much lower for a reason?

These are 2018 Britannias I'm looking at, so presumably tubes of mint coins from both vendors. Today's prices, all taxes included, are £13.95 each for 50 at GS, £15.04 each for 50 at STG.

Cheaper shipping also. Never used them before though 

My very vague understanding with the German imports is that they are subject to VAT but in Germany VAT is only due on the sellers margin rather than the whole order which is why it's effectively vat free. No clue with Belgium. Probably worth an enquiry.

 

I did see they only have a EURO bank account though so you'll either be paying international wire transfer fees or using a service like transferwise 

Edited by afly
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Bloomberg:  China's Rapid Response to Tariffs Raises Treasuries Risk, for Some

I've been thinking about what would happen if China were to stop buying Treasury bonds:

1.  This would be further dedollarisation of the world economy so I think the Federal Reserve would increase the federal funds rate.

2.  This reduction in demand for Treasury bonds would cause bond prices to fall and so yields to rise.

It looks to me that these would cause a deflationary collapse, but with falling Treasury bond prices.

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9 minutes ago, Will! said:

Bloomberg:  China's Rapid Response to Tariffs Raises Treasuries Risk, for Some

I've been thinking about what would happen if China were to stop buying Treasury bonds:

1.  This would be further dedollarisation of the world economy so I think the Federal Reserve would increase the federal funds rate.

2.  This reduction in demand for Treasury bonds would cause bond prices to fall and so yields to rise.

It looks to me that these would cause a deflationary collapse, but with falling Treasury bond prices.

China has been taking the p1ss as far as trading with the West goes.

At the moment, the Chinese are behaving like a naughty school boy and admitting it.

Maybe itll stop at that and trade will balance out a bit.

Maybe theyll have a paddy and start syaing they stop buying treasuries and actually stop.

I dont know. US dont know. China doesnt know - its that sort of setup.

If it does, US yields will go up. And so will UK ones.

 

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14 hours ago, Bricks n' mortar said:

This was good.  Can't work out where he gets the last sentence from though.  Debt forgiveness?

https://www.theepochtimes.com/the-menace-of-debt-deflation-2_2480484.html

Sounds like it was written by someoneon here

'First, we must understand deflation. Most economists consider only average inflation according to some measure such as the consumer price index. Averages are less important than extremes. An average of stable prices might conceal that some prices are rising fast and others are falling fast.

Furthermore, most measures of inflation or deflation used by economists ignore asset prices—the “Wall Street” economy as opposed to the “Main Street” economy. Thus, the dull gray averages economists obsess about often hide more than they reveal.'

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Forces of credit deflation building up........

CRE-loads of banks in line for losses.

https://wolfstreet.com/2018/04/10/defaults-of-retailers-hit-all-time-high-in-q1-moodys/

'Among those that Moody’s rates, there were nine defaults in the first quarter, an “all-time high,” as Moody’s put it, “reflecting the fallout of changing consumer behavior and advancing e-commerce for traditional brick-and-mortar retail.”

These nine retailer defaults accounted for nearly one-third of the 28 total corporate defaults in Q1, which was up 22% from Q1 last year.

Not all defaults lead to bankruptcy. In some cases, these retailers were able to come to an agreement with their creditors and restructure their debts without going through bankruptcy court, as the threat of bankruptcy motivates the creditors to negotiate. This type of debt restructuring can be considered a “distressed exchange” of debt, and thus a default on the terms of the original debt. '

 

Inventory build up-US

https://www.themaven.net/mishtalk/economics/wholesale-inventory-build-continues-as-retail-sales-flounder-9pklJuABc0Kc2-pz4oD4mQ/

' Total inventories were up 5.5 percent from the revised February 2017 level. '

 

 

Subprime Auto Debt Is Booming Even as Defaults Soar

https://www.bloomberg.com/news/articles/2018-02-02/never-mind-defaults-debt-backed-by-subprime-auto-loans-is-hot

A boom in sales, a pickup in defaults, and risk premiums keep on dropping.

It’s all happening in the market for subprime auto bonds, where loans to American consumers with some of the patchiest credit histories are packaged into securities to be sold to big investors. A decade after risky mortgage lending toppled the U.S. financial system, the securities have rarely been so popular. But the collateral behind the bonds is getting less safe: car-owners are increasingly falling behind on bigger loans with longer repayment terms made against depreciating assets.

 

 

Chapter 11 bankruptcies up 63% yoy-more loans going bad.

https://wolfstreet.com/2018/04/09/chap-11-bankruptcies-spike-63-from-year-ago/

' New Chapter 11 bankruptcies in the US spiked 63% year-over-year in March to 770 filings, the highest number of filings for any month since April 2011 (when there had been 789 filings as companies were still trying to emerge from the Great Recession).

This is a sign that the economy has arrived at the end of the “credit cycle.” The Fed is trying to push up interest rates and tighten financial conditions. Weak companies are starting to have a harder time refinancing their debts. And those that succeed face higher borrowing costs. Some sectors are getting hit harder than others, such as brick-and-mortar retail, which had a terrible March. But this is now spreading in other sectors, such as specialized subprime auto lenders. '

 

In Toronto’s Housing Market, The Party Really Is Over, Latest Data Shows

https://www.huffingtonpost.ca/2018/03/01/toronto-housing-market-february-2018_a_23374797/

'The once-unstoppable juggernaut that was Greater Toronto's housing market has slowed to a crawl, with preliminary data for February showing sales taking a deep dive and prices well off last year's highs.

According to Pasalis' preliminary analysis of February numbers, sales of low-rise homes were down some 38 per cent from the same month a year earlier. Things fizzled towards the end of the month, with sales down as much as 45 per cent in the last two weeks, Pasalis says. Condo sales were down 29 per cent on the month.

Avg prices should be down by roughly 12% over last year with low-rise down 17% yoy. '

 

Subprime Carmageddon: Specialized Lenders Begin to Collapse

https://wolfstreet.com/2018/04/08/subprime-carmageddon-specialized-lenders-begin-to-collapse/

'There are scores of these smaller specialized subprime auto lenders, some of them backed by private equity firms. And three of them – Summit Financial Corp, Spring Tree Lending, and Pelican Auto Finance – have now collapsed into bankruptcy or were shut down. Allegations of fraud and misrepresentations are swirling through the bankruptcy filings.

These lenders generally borrow from big banks to fund auto loans to subprime customers.'

 

Confidence? Retail Sales Down Third Month

https://www.themaven.net/mishtalk/economics/confidence-retail-sales-down-third-month-WA8Rzl6LEk-bp-lqRNpcxw/

' However, the numbers, led by autos, are not pretty. '

 

 

 

 

 

 

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2 hours ago, afly said:

Cheaper shipping also. Never used them before though 

My very vague understanding with the German imports is that they are subject to VAT but in Germany VAT is only due on the sellers margin rather than the whole order which is why it's effectively vat free. No clue with Belgium. Probably worth an enquiry.

 

I did see they only have a EURO bank account though so you'll either be paying international wire transfer fees or using a service like transferwise 

That's right, transferwise to make the paymentin EUR. I've taken a GS transaction to the point of completion and the final bill states tax incl.

Maple leafs well under £14, tempting.

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5 hours ago, Thorn said:

Ok so reading away and my SIPP is now 20% bonds but the rest a nice mix I like of shares, mainly cheap trackers- your book is like a formula to avoid fees by the way- class, some DOW and defensive but divi- paying picks along the lines of this thread after DYOR, and pms and miners. 

Now just going to let it be and add bits with new income I reckon. Some feeling watching wee divis appear in the HL account instead of before I found this thread saw nothing and it went mainly to the IFA.

Glad to be started as you advised WICAO thank you again. 

There’s no knowing what will happen- Big Crash or Melt-Up. 

Can I ask you to explain again about if you are rebalancing or adding more in, how and why do you add more to the poorly performing bits..?

I'm still adding savings to my portfolio so I just buy the most under performing asset class every time I add new money.  Rebalancing is about maintaining my risk/volatility profile, while trying to maximise my returns for this profile (note: I'm not saying maximise my returns but maximise for a level of volatility I'm happy with), to ultimately manage sequence of returns risk.  This can also sometimes give some free returns for a given level of risk -  Figure 11 in my book shows that playing out. 

This table might also tell the story a little bit.  The same asset class doesn't always zig while the same asset class doesn't always zag:

Asset-price-returns-in-2017.jpg

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2 hours ago, wish I could afford one said:

I'm still adding savings to my portfolio so I just buy the most under performing asset class every time I add new money.  Rebalancing is about maintaining my risk/volatility profile, while trying to maximise my returns for this profile (note: I'm not saying maximise my returns but maximise for a level of volatility I'm happy with), to ultimately manage sequence of returns risk.  This can also sometimes give some free returns for a given level of risk -  Figure 11 in my book shows that playing out. 

This table might also tell the story a little bit.  The same asset class doesn't always zig while the same asset class doesn't always zag:

Asset-price-returns-in-2017.jpg

Very interesting altogether.

You wouldn’t see a table like that over on the Bitcoin-heads forum.

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On ‎10‎/‎04‎/‎2018 at 7:12 PM, chronyx said:

I've sold a few tiny little gold bars - took plenty of photos of them pre and post packing and sent tracked recorded.

No drama but I wouldn't shift a lot in one transaction on there.

Do you mean those 1 gram bars?  I purchased one a couple of weeks ago.  Where did you buy it if it was the gram bar?

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2 minutes ago, chronyx said:

2.5g from Baird 

Go on Chronyx. Bet you TLT will hit 122... tomorrow. Not that I'm encouraging it on my computer like a farmer with a wee seedling...

What do you say.

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  • 433 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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