The Finance Thread

[Zag zig]

10 hours ago, Wolfie said:

This thread never fails to cheer me right up.

Not intended as a criticism of you Wolfie but if it cheers you up, you could always do something productively good like go plant a productive tree somewhere, one of the concepts of transition towns.

Oh just to really cheer you up on that note, ever been to Germany? Only ask as lots of roads post WW2 when being reconstructed were planted with fruit or nut trees, so if WW3 came along fleeing refugees would at least have food to survive parts of the year, disaster planning at its best 

[Stive Pesley]

14 hours ago, SillyBilly said:

For 5000 years, prosperity has always been with he who owned the gold.

True - yet in the 21st century it feels like somewhat of an anachronism to hold a precious metal as the backstop to hard currency.

I've not really read up on the history of gold but I assume that it was a chance commodity which happened to be scarce enough to yield value, whilst being just plentiful enough to use as a source of currency.

But now what good will 5000T of gold do you? It doesn't really serve a purpose. Surely the world powers would see more value in things like power sources...I don't know..say oil? Oh

[SillyBilly]

10 hours ago, StivePesley said:

True - yet in the 21st century it feels like somewhat of an anachronism to hold a precious metal as the backstop to hard currency.

I've not really read up on the history of gold but I assume that it was a chance commodity which happened to be scarce enough to yield value, whilst being just plentiful enough to use as a source of currency.

But now what good will 5000T of gold do you? It doesn't really serve a purpose. Surely the world powers would see more value in things like power sources...I don't know..say oil? Oh

It has a clear and reasoned purpose in my view. Would you hold all your wealth (if you were China) in a country's debt market that intends to inflate away its liabilities at your expense. I have shown before on this thread, a 10% devaluation in the dollar is $120 billion of cash (imagine that in a shipping container) moving from China to the USA. Just 2% inflation (Fed target) every year for 20 years is a 50% destruction in your nation's accumulated wealth. Would you hold all your wealth in a country that can pay its debt to you in dollars it creates on a compute or would you be concerned that your whole nation's prosperity is siting in a pile of computer bits that one day everyone will see through?

Or, would you hold some of that debt and then start diversification, holding assets that hold value over time and preserve purchasing power. And serve as a hedge if the currency your other assets are held in goes to the wall. China basically sells its US securities (inflation IOUs) then buys a hard asset whose buying power has always stayed relatively constant. E.g. a house will always roughly cost the same amount in gold ounces, yet a house priced in fiat currencies will move toward infinity with time. It is wealth preservation and gives confidence to international investors that could suggest the Chinese are more trustworthy than the West (they could back any Yuan wealth with something of value - well that is the theory).

You may think the Chinese are wasting their time, I personally think they are playing an incredibly smart long term game! Where does the money go when the world realises the emperor has no clothes...China.

 

[Zag zig]

11 hours ago, StivePesley said:

True - yet in the 21st century it feels like somewhat of an anachronism to hold a precious metal as the backstop to hard currency.

I've not really read up on the history of gold but I assume that it was a chance commodity which happened to be scarce enough to yield value, whilst being just plentiful enough to use as a source of currency.

But now what good will 5000T of gold do you? It doesn't really serve a purpose. 

Sacrilege!

 

 

[GboroRam]

On 15/04/2016 at 20:03, SillyBilly said:

It has a clear and reasoned purpose in my view.

 

I thought the question was about why gold inherently holds value when it doesn't do much.

Arguably air and water have far more practical value but they are far more plentiful so hold little cash value. 

[Zag zig]

On 21 December 2015 at 20:41, Chris Mills said:

Anyone able to share what Brokerage accounts they use?

Low fees is good for me, not interesting in "full-service" accounts.

For any would be traders, this may be of interest. The annual p.i who's who of the investment world. 

https://www.ukinvestorshow.com

Sure there are a few larger than life characters, some might be characterised as brigands by the odd person and clearly this is in part to attract (or subtract) cash from the investing public. As with everything a case of sorting the wheat from the chaff, there are a couple I rate and know. It is a fairly good way of making comparisons and meeting like minded people for those interested.

[Stive Pesley]

17 hours ago, GboroRam said:

I thought the question was about why gold inherently holds value when it doesn't do much.

Arguably air and water have far more practical value but they are far more plentiful so hold little cash value. 

Exactly. I know it's purpose, just seems odd that it still holds value above all else, after all these years

[SillyBilly]

On 17/04/2016 at 15:03, GboroRam said:

I thought the question was about why gold inherently holds value when it doesn't do much.

Arguably air and water have far more practical value but they are far more plentiful so hold little cash value. 

Think you have answered the question. Scarcity has value. Why it is coveted so much...humans want what other humans can't have I guess, even if its a lump a metal or a certain allotrope of Carbon.

As for it doesn't do much, with my Chemist hat on for a moment I'd disagree on that. It doesn't do much in practicality because it is too expensive. Industry therefore finds cheaper less expensive make-do alternatives. It has some neat properties, only platinum is less reactive for instance. I wouldn't use gold as a corrosion inhibitor though..

[LesterRam]

http://www.bbc.co.uk/news/business-36099314

The government borrowed £74bn in the year to March, £1.8bn more than George Osborne's borrowing target.

The Office for Budget Responsibility had forecast government borrowing of £72.2bn for the 2015-16 financial year.

However, the figures are subject to revision and the OBR said the true picture of the public finances was unlikely to be reflected in Thursday's numbers.

Public borrowing in March fell by £2.6bn from a year earlier to £4.8bn.

Public sector net debt, excluding public sector banks, jumped £47.5bn to £1,594bn for the year to the end of March - the equivalent to 83.5% of gross domestic product.

[LesterRam]

http://www.bbc.co.uk/news/business-36099390

Retail sales volumes dropped 1.3% in March, compared with February, a bigger fall than was expected.

However, the figures from the Office for National Statistics (ONS) also found volumes were 2.7% higher in March from a year earlier, the 35th consecutive month of annual growth.

Average store prices, including petrol stations, were 3.0% lower in March compared with a year earlier.

That indicates inflation in the UK will continue to remain low.

The amount spent in the retail industry slipped by 0.1% from a year earlier, and was down 1.3% from February.

Growth in online sales continued to outstrip sales from physical outlets. The value of online sales was 8.9% higher than a year ago.

Keith Richardson, from Lloyds Bank Commercial Banking, said the figures showed the impact of an early Easter, as well as bad weather from Storm Katie: "The four-day Easter weekend normally brings with it bumper sales of food, spring fashion and plenty of DIY and gardening goods as families use the extra days off to spruce up their homes.

"Not only did Easter come too early for people looking to refresh their spring wardrobes, but it also coincided with bad weather sweeping across much of the UK, dampening any enthusiasm for gardening equipment."

The British Chambers of Commerce said the figures confirmed the picture of a weakening UK economy.

Its chief economist, David Kern, said: "Although longer-term comparisons show that sales are still expanding, the pace of growth is slowing.

"These figures reinforce our view that UK economic growth slowed in the first quarter of 2016."

[Phoenix]

Ok, you finance gurus and Actuaries. What's the plot with BHS?

£571 million black hole in the pension pot.

Is big Phil another Maxwell? I remember he took over Sears Group (I worked for them at the time), and sold bits off to his chums at giveaway prices, but this is big bucks by anyones standards.

I'd appreciate some informed comment on this as I'm struggling to comprehend what's happened.

[GboroRam]

4 minutes ago, Phoenix said:

Ok, you finance gurus and Actuaries. What's the plot with BHS?

£571 million black hole in the pension pot.

Is big Phil another Maxwell? I remember he took over Sears Group (I worked for them at the time), and sold bits off to his chums at giveaway prices, but this is big bucks by anyones standards.

I'd appreciate some informed comment on this as I'm struggling to comprehend what's happened.

I know Private Eye has been very critical of Green and the sale to relatively inexperienced and baggage-laden buyers.

[Phoenix]

...and an amusing little offering from our friends at the Daily Mirror.

http://www.mirror.co.uk/news/uk-news/bhs-boss-philip-green-built-7834089

[King Kevin]

On 4/14/2016 at 18:54, SillyBilly said:

It would be interesting if things deteriorated at the very point of the white house keys changing hands. Exactly as it did 8 years ago. Obama walked into a **** storm. You can't ignore politics here considering it is government and central banks who effectively control the markets these days (or in the case of Japan increasingly own the market). I can't see anything happening for a while personally but I am watching the American election very closely.

International imports of gold though regular channels into China are traceable and as such China had to update its gold reserves in 2015 to 1750T+ (though didn't for years anyway). But what about internally gold mined? China mines about 450T a year and none of it leaves China. The government is almost certainly buying the vast majority if not all of it. And has been doing so for years. I don't think it is a conspiracy theory to plainly acknowledge China is sitting on at least 4000-5000T now and possibly a lot more. They will set the price when they hold it, the West used to set the price because we held it. They could hit the West where it hurts when the time is right for them (least one would assume that is what they are covertly doing). Systemically moving their reserves out of dollars (and weakening the dollar standard in the process) and moving it into gold (and strengthening the credibility of Yuan with more gold backing) is clearly a state policy. Inclusion in the SDR another. Whether people think gold is a relic or not, the West is taking a huge gamble as India, China and Russia are buying everything we have. For 5000 years, prosperity has always been with he who owned the gold.

Good job Gordon got a great price for ours.

[LesterRam]

http://www.bbc.co.uk/news/business-36137226

Austin reed also enters administration.

 

[SillyBilly]

3 hours ago, King Kevin said:

Good job Gordon got a great price for ours.

Criminal. Arguably the most inept act of any chancellor in the history of parliament.

[SillyBilly]

4 hours ago, Phoenix said:

Ok, you finance gurus and Actuaries. What's the plot with BHS?

£571 million black hole in the pension pot.

Is big Phil another Maxwell? I remember he took over Sears Group (I worked for them at the time), and sold bits off to his chums at giveaway prices, but this is big bucks by anyones standards.

I'd appreciate some informed comment on this as I'm struggling to comprehend what's happened.

Sir Philip Green is one of the business titans we're to listen to in the up-and-coming EU vote. I guess he won't be the poster boy anymore!

I know nothing about BHS and very little about retail stocks in general so can't comment on this individual case. My wider observation on retail (bricks and mortar) is that, generally, it hasn't responded robustly enough to the rise in internet shopping. Having said that, like housing costs, I attribute the ridiculous price of real estate (commercial leases) to a large part of this problem. This is what happens when commercial retail units are for the most part a line on a balance sheet. What is more valuable, an empty unit at £6000 per month or an occupied unit at £3000 per month? The unoccupied unit if you're clever with accounting. Is the fund/proprietor/insurance company who owns the unit going to lower the lease cost and see the discounted future value drop...no, that could make them insolvent. Better to maintain unrealistic prices (drive some tenants to the wall if they do occupy). It is like putting your house up for sale at £1M when the market price would be £500k, having no takers but maintaining (to yourself primarily) the value of your investment remains at £1M (that is what, in theory, your liabilities could extend to after all). You can do it for so long. Booking a discount with a massive mortgage could obviously finish you in that example. A lot of shops will go bust, a few new victims will replace them (most don't last longer than a year if you notice). Eventually unless they sort out rents I expect it will signal a faster death of the high street than needs be. It needs a more level playing field with the internet. Why have so many empty units at stupid prices? Councils don't help the situation either.

 

[Phoenix]

I'm not sure how true this is but apparently when he sold the business for £1, he's been drawing £11 million in rentals.

When I was at Sears, it was built up by Charlie Clore, particularly the British Shoe Corporation. He'd make an offer for a shoe chain, say Dolcis, then borrow the money against the property, or rather, sell the property (like 600 shoe shops) to a big insurance company then rent them back at hugely discounted rents for 25 years. All the butt end stuff the Insurance co didn't fancy was 'force-sold' to the Pension scheme. (Actually, we did rather well out of that as it happens).

Then another chain. Then another. There must have been about 7 or 8 chains in the company. All shoe shops. We had about 3000. Then there was the rag trade added to that.

25 years on, after Charlie had died, the Insurance Companies, not surprisingly, wanted the going rate. This gradually brought about the demise of a huge retail empire.

Enter big Phil, stage left.

[Inglorius]

4 hours ago, LesterRam said:

http://www.bbc.co.uk/news/business-36137226

Austin reed also enters administration.

 

I didn't even know Austin Reed was still open until I saw that article today style guru that I am 

[SillyBilly]

22 minutes ago, Phoenix said:

I'm not sure how true this is but apparently when he sold the business for £1, he's been drawing £11 million in rentals.

When I was at Sears, it was built up by Charlie Clore, particularly the British Shoe Corporation. He'd make an offer for a shoe chain, say Dolcis, then borrow the money against the property, or rather, sell the property (like 600 shoe shops) to a big insurance company then rent them back at hugely discounted rents for 25 years. All the butt end stuff the Insurance co didn't fancy was 'force-sold' to the Pension scheme. (Actually, we did rather well out of that as it happens).

Then another chain. Then another. There must have been about 7 or 8 chains in the company. All shoe shops. We had about 3000. Then there was the rag trade added to that.

25 years on, after Charlie had died, the Insurance Companies, not surprisingly, wanted the going rate. This gradually brought about the demise of a huge retail empire.

Enter big Phil, stage left.

Not atypical from what I have read (obviously extreme example). Like I said I don't know much but I know insurance companies have a large % of the commercial property market...the noose is getting tighter.