The Finance Thread

[Stive Pesley]

19 minutes ago, ValeRam said:

 The constant need to spend more and more time and money on non-value added activities like pension provisions, collecting money on behalf of the state for free, giving new parents loads of time off when clearly there are no resources to replace them ( and being forbidden to replace them anyway).  As an example, it's actually not in their interests now to employ women of a child-birthing  age - surely that is madness and can never have been intended by legislation ?

Madness or illegal. You can't knowingly discriminate like that. Funny that the things you point out are all things designed to protect workers rights and futures. To see you slating them as bad things and non-value makes me wonder what kind of person you are? Then I saw you said you were a Finance Director...hahaha

[ValeRam]

2 hours ago, StivePesley said:

Madness or illegal. You can't knowingly discriminate like that. Funny that the things you point out are all things designed to protect workers rights and futures. To see you slating them as bad things and non-value makes me wonder what kind of person you are? Then I saw you said you were a Finance Director...hahaha

Oh dear......

[GeneralRam]

6 hours ago, ValeRam said:

What do people think about the relative financial/economic  impact of the referendum ?

personally I'm not sure it will make that much difference. It's not as though , if we leave the union, we are suddenly no longer part of Europe ? What actually would change ?

and the fact that we have never been part of the Euro currency has almost been a precursor to us not being part of the full Union anyway ? 

I'm a finance director to a handful of SMEs across the East Midlands, mainly manufacturers . I can't see that their fortunes will be adversely affected by us leaving. What really screws them, however, is the ever-growing nanny state perpetrated by both the euro Union and our own government. The constant need to spend more and more time and money on non-value added activities like pension provisions, collecting money on behalf of the state for free, giving new parents loads of time off when clearly there are no resources to replace them ( and being forbidden to replace them anyway), filling in ridiculous forms.  As an example, it's actually not in their interests now to employ women of a child-birthing  age - surely that is madness and can never have been intended by legislation ?

I think the economic impact will be if the banks in London stay. A big reason why they're in London is due to access to the EU market. If we leave you can guarantee Germany (Frankfurt?) Will be laying out the red carpet to intice them to come.

[SillyBilly]

7 hours ago, ValeRam said:

What do people think about the relative financial/economic  impact of the referendum ?

personally I'm not sure it will make that much difference. It's not as though , if we leave the union, we are suddenly no longer part of Europe ? What actually would change ?

and the fact that we have never been part of the Euro currency has almost been a precursor to us not being part of the full Union anyway ? 

I'm a finance director to a handful of SMEs across the East Midlands, mainly manufacturers . I can't see that their fortunes will be adversely affected by us leaving. What really screws them, however, is the ever-growing nanny state perpetrated by both the euro Union and our own government. The constant need to spend more and more time and money on non-value added activities like pension provisions, collecting money on behalf of the state for free, giving new parents loads of time off when clearly there are no resources to replace them ( and being forbidden to replace them anyway), filling in ridiculous forms.  As an example, it's actually not in their interests now to employ women of a child-birthing  age - surely that is madness and can never have been intended by legislation ?

Yesterday was a bit ridiculous (and I daresay disingenuous) regarding the reaction to the drop in the pound against the dollar. The BBC typically splashed a headline that the pound is in freefall due to the threat of an EU exit. For the typical reader I amount that to scare-mongering. For people like me who watch the currency markets daily and have been short Sterling for several months (incidentally nothing to with the E.U) then its quite frustrating to see the issue politicised on the back of one day's trading. For clarity sake, the E.U vote won't help the pound but will likely exacerbate an already well-established downtrend. I am still of the opinion the pound will continue to weaken much further against the dollar and I expect it will be blamed solely on the E.U vote, ignoring the elephant in the room.

Theoretically there is no business consequence in leaving a political union. We get a free trade agreement and carry on. We continue to adopt pretty much all E.U business law through British law (as does Norway, Switzerland etc.) but opt out here and there where it really does not suit us. The only potential concern IMO is whether the E.U wish to make an example of Britain (be stupid to say this is not a risk) and make things difficult. This will come short of putting up trade barriers which they would not do on accounts of their own sickly finances. I am really tired of the business argument to be honest, it is plain idiotic IMO to say you need political union to do business, quite frankly it works better for me to ignore this view entirely now and let them get on with this EU project. If big business and big government want to politicise trade, which they are doing, then I see that as a real point of concern, not just in this vote, but as a wider trend of things to come.

The E.U is a two-phase project. Monetary union was supposed to be the pre-cursor to political union. Britain wants nothing to do with the first (monetary) and very little to do with the second (political). Britain just wants guaranteed access to a free trade market which makes us quite unpopular as we're seen to be a drag on the integration of the rest. The Euro countries are committed to deeper union; a political union can't survive without federalisation of member state debt. That is what needs to happen. Incidentally, this is partly the reason the Euro is so flawed as there has been very little political will to do this (in 2008/09 they pushed pretty hard). The key issue is Eurocrats in Brussels want and need this union to come together at a quicker pace than national electorates can accept. I don't think it has legs as a union for centuries to last, its foundations are extremely weak on a monetary, political and cultural basis.

[Zag zig]

1 hour ago, SillyBilly said:

Yesterday was a bit ridiculous (and I daresay disingenuous) regarding the reaction to the drop in the pound against the dollar. The BBC typically splashed a headline that the pound is in freefall due to the threat of an EU exit. For the typical reader I amount that to scare-mongering. 

Not getting into the political debate but the BBC are about as subtle as a brick!

Cringeworthy in their attempts to con the sheeple that they choose yesterday to run a story on the big camps around Calais being disbanded, following some poor migrant woman split up from her husband who is in the U.K and she's been stuck there, now being bused off with others around France. Migrants saying trying to get to the U.K is just too hard and applying for asylum in France instead.

Hmm, now just a darn gone pickin minute, just exactly what are they wanting us to believe here, let's think about this one.Whooah, I'm starting to think this migrant crisis is disappearing because our political masters have it under control, almost like we are taking no **** from these bloody foreigners, not telling us who can come into our country, nor letting them in! 

All a bit predictable by the ministry of propaganda isn't it.

[ValeRam]

16 hours ago, GeneralRam said:

I think the economic impact will be if the banks in London stay. A big reason why they're in London is due to access to the EU market. If we leave you can guarantee Germany (Frankfurt?) Will be laying out the red carpet to intice them to come.

Fair enough - what then do you make of HSBSs recent decision to stay put in London - irrespective of the outcome of the referendum ? An interesting pointer , perhaps ?

[GeneralRam]

1 hour ago, ValeRam said:

Fair enough - what then do you make of HSBSs recent decision to stay put in London - irrespective of the outcome of the referendum ? An interesting pointer , perhaps ?

If I recall correctly HSBC's main market is Asia/China (even though it is on the FTSE), which is why it's suffering quite badly from the lack of growth from China.

If we leave Europe and the banks leave London, the UK is ****** - all our eggs are in one basket. If they don't leave London, I think the UK will generally be OK.

 

[LesterRam]

I cant believe in 2016 we are praising the immoral banking system we currently have, in late 2007 the banks were pumping billions of tax payers dollars into sub prime mortgages in the USA, " so Randy we can offer you a home loan of $250k for your new house and you'll pay $100 per month on your mortgage for 6 months, you don't need to read the small print Randy because everything will be fine" 6 months later the inbred **** needs to pay $1000 per month, but I don't have a job Mr Banker !!!

Dohh!!

[Stive Pesley]

54 minutes ago, GeneralRam said:

If I recall correctly HSBC's main market is Asia/China (even though it is on the FTSE), which is why it's suffering quite badly from the lack of growth from China.

 

Don't underestimate the amount of capital required for a bank to perform a wholesale geographic move of operations. The costs would be in the billions. Do have banks have that sort of money sloshing around to invest? If they did they'd rather lend it out to poor punters or give it to themselves as bonuses

Unless moving out of the UK had a solid business case that led to increased medium term profits - it won't happen

[ValeRam]

2 hours ago, StivePesley said:

Don't underestimate the amount of capital required for a bank to perform a wholesale geographic move of operations. The costs would be in the billions. Do have banks have that sort of money sloshing around to invest? If they did they'd rather lend it out to poor punters or give it to themselves as bonuses

Unless moving out of the UK had a solid business case that led to increased medium term profits - it won't happen

Blimey, thats a little bit mercenary isn't it SP  ? Surely they have a moral and charitable duty to do right by everyone in this country, continue to support every worthy cause conceivable and generally to act as society's do gooders for the good of all ? How does the need to make a profit come into it ………………..?

[Ramarena]

U.S service sector data pointing to a contraction, here comes the first signs of the slowdown in the West that the MSM will slowly start to pick up on, we've known it's been coming, but the data's been playing catch up.

I'm starting to wonder what's going to happen to the U.K this summer. If we follow the U.S with our debt laden recovery turning towards recession, the Pound taking a beating (it's been on the slide for a year or so, but the E.U ref will accelerate the slide).

We could enter recession with a further big drop in the pound at the same time, no real ammo to fight it, NIRP will not be any use with a currency crisis, the only way they can save the currency will be interest rate rises which will tank the economy further as the debt zombies fail to service their loans. A QE variant such as helicopter money would add to inflation, on top of the currency devaluation adding to the price inflation of imported goods, as we are a net importer. 

Is this the perfect storm?  

 

[SillyBilly]

This is my take on it Ramarena. It may be apparent already but I like cycle theory (which is why I like some of Armstrong's work). I believe capitalism can be trended through its expansion of credit (creating inflation) leading to sustained growth, periodic recessions (working off the excesses of this credit fuelled growth) and eventually after a few of these cycles a more significant depression (credit is generally larger at the start of each new cycle before it begins to expand again).

A few people will have heard of a Russian bloke called Kondratieff. He was given an assignment to prove communism trumps capitalism. He went away and concluded capitalism will be very much more unstable (boom and bust) but overall more prosperous. Stalin promptly executed him for his blasphemy. Anyway, he devised K-waves. In each one of his waves which spans about fifty years, you can sub-divide the wave into four phases.

Four Phases:

SPRING - Inflationary Growth Phase - Check

SUMMER - Stagflation (Recession) - Check

AUTUMN - Deflationary Growth (Plateau Period) - Currently in IMO

WINTER - Depression - Next phase

I like Kondratieff's work and so do a lot of others (some people think it is crap but they are generally Keynesian central banker types in my experience who believe boom and bust capitalism can be defeated or tamed via monetary policy). I believe they just delay it and make it worse but hey ho.

We without doubt have inherent deflation at the moment. QE has distorted the visibility of this but the weak global economy and crashing commodities confirms it. Consider if we have 3% "natural" deflation and 3% inflation caused by money printing. What is the net result...almost zero inflation. Which is where we are at now. People say QE has no effect on inflation...I disagree. Would the Western world be seeing negative inflation (deflation) if we weren't increasing the money supply at a ridiculous rate? I know what I think and I think we're deflating now and they are fighting it with everything they have.

I now do believe NIRP is coming and when it does I expect that to light the torch under gold. Notice gold's rise started coincidentally the same time Japan went NIRP. It only went down on the expectation of US rate hikes, we now know they're more likely to go down than up again. NIRP and more QE will help hide deflation from the "read-out" economic figures BUT it will won't diminish the fact the economy can't grow at previous rates due to us being at the end of this MASSIVE credit expansion. The debt needs to be liquidated and that suggests a deflationary depression. I really hope I am wrong by the way. The alternative to a depression is obviously hyperinflation, just erode the debts overnight by making the currency worthless. I think that is less likely in the West so I haven't really considered it other than acknowledging its a small possibility.

[GeneralRam]

@SillyBilly How would you suggest to invest in gold? Buy it physically or is it just as safe to buy in a ETF

[Zag zig]

2 hours ago, GeneralRam said:

@SillyBilly How would you suggest to invest in gold? Buy it physically or is it just as safe to buy in a ETF

How much is a piece of paper gold worth if the piece of paper cannot be traded? Sorry if that's cryptic, but I'm asking think about why would you hold paper gold over physical other than for security reasons.

[GeneralRam]

3 hours ago, Zag zig said:

How much is a piece of paper gold worth if the piece of paper cannot be traded? Sorry if that's cryptic, but I'm asking think about why would you hold paper gold over physical other than for security reasons.

Because if I bought gold it would be to to make a profit and not have something valuable in case the entire monetary system collapses.

[SillyBilly]

8 hours ago, GeneralRam said:

@SillyBilly How would you suggest to invest in gold? Buy it physically or is it just as safe to buy in a ETF

GR, can probably search back in the thread exactly what my allocation is in gold and silver. To be short, I have nothing in an ETF, that is pointless to me as too many paper claims per ounce and all it does is track the underlying price. I might as well have physical and so I have a smallish relative amount (just an insurance policy, I don't really expect to sell it unless the price went mental). I want to multi-bag my money so I go stocks most of the way. A rise from $1000 to $1900 in gold price in a stock would be a 5 bagger in most majors and more in riskier smaller plays (I invested when companies were trading around SPs of 20% of 2011 highs, saw limited downside as I saw $850 dollars as the low). Of course can extrapolate down on the downside too with stocks.

I should be honest and say I actually right now have my finger on the sell button on Barrick Gold (my largest gold holding) as to be almost doubling my money in 6 months you have to expect a comedown. I now want to bank my original investment and put it into Majestic Silver Corp when I'm as confident as I can be its at or near the bottom. Silver to gold ratio makes silver very attractive to me and more of an outside chance of a serious multi-bagger.

Basically what every technical trader is now looking at in gold is whether the bottom is in. That is to say when this rally stops and it retreats, will it bounce back from a higher low or will it take out the $1050 low? It would be very, very bullish if it hits the middle $1100's or something and bounces off, I'd be doubling down if it does and sacking off all trading (just hold the full amount). For now, I am watching for confirmation. BTW all of this means nothing on any reasonable investment timescale (5 years).

Edit: Just sold half now. See if this works or out for me!

 

[GboroRam]

20 minutes ago, SillyBilly said:

BTW all of this means nothing 

 

to me (Oh Vienna)

[GeneralRam]

31 minutes ago, SillyBilly said:

GR, can probably search back in the thread exactly what my allocation is in gold and silver. To be short, I have nothing in an ETF, that is pointless to me as too many paper claims per ounce and all it does is track the underlying price. I might as well have physical and so I have a smallish relative amount (just an insurance policy, I don't really expect to sell it unless the price went mental). I want to multi-bag my money so I go stocks most of the way. A rise from $1000 to $1900 in gold price in a stock would be a 5 bagger in most majors and more in riskier smaller plays (I invested when companies were trading around SPs of 20% of 2011 highs, saw limited downside as I saw $850 dollars as the low). Of course can extrapolate down on the downside too with stocks.

I should be honest and say I actually right now have my finger on the sell button on Barrick Gold (my largest gold holding) as to be almost doubling my money in 6 months you have to expect a comedown. I now want to bank my original investment and put it into Majestic Silver Corp when I'm as confident as I can be its at or near the bottom. Silver to gold ratio makes silver very attractive to me and more of an outside chance of a serious multi-bagger.

Basically what every technical trader is now looking at in gold is whether the bottom is in. That is to say when this rally stops and it retreats, will it bounce back from a higher low or will it take out the $1050 low? It would be very, very bullish if it hits the middle $1100's or something and bounces off, I'd be doubling down if it does and sacking off all trading (just hold the full amount). For now, I am watching for confirmation. BTW all of this means nothing on any reasonable investment timescale (5 years).

Edit: Just sold half now. See if this works or out for me!

 

I much appreciate the input  Thank you!

[Zag zig]

3 hours ago, GeneralRam said:

Because if I bought gold it would be to to make a profit and not have something valuable in case the entire monetary system collapses.

If the entire monetary system then so to will your paper etf as S.B alludes, so if your goal is a safety net against it, etf's would be nothing but a paper claim against physical protection, pointless to be frank.

F. w.i.w I'm a paper trader for profit too, my feelings on p.m markets are similar if slightly different trading vehicles to S.B's. Not as you asked for trading instruments, positions, companies etc, as i wouldn't reveal them on a website as this (wrong forum), but like S.B I believe Silver is more likely to outperform Gold at some stage for a variety of reasons including historical ratios, industrial usage, investment demand and scarcity etc. If you are looking at ETF's as an example I trade both LSIL and SSIL. These are are more high octane leveraged long and short plays on the Silver price. However, the big caveat is that they should be used as short term plays only, simply because there may be some element of contanago and backwardation in play, so holding over longer time periods can be dangerous, plus the fact being leveraged if they go the wrong way you can suddenly become massively underwater, whilst if they go right it is wise to bank some profit as downside protection and a sudden swing, even if you think it's likely to keep going the way of your trade.

Hope I'm not coming across as telling grandma how to suck eggs, just giving an opinion and backing up with an explanation 

 

[GboroRam]

3 minutes ago, Zag zig said:

contanago and backwardation

 

Aha! Caught you making up words! This whole thread is just a long prank, yes?