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Tuesday, 23 January 2018

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  • in reply to: Is PBR a good choice for the portfoilio? #27361

    CLIVE R.

    PBR and Gazprom are both interesting ideas from Rob and I am pleased to read the rationalization for owning them. I immediately discounted PBR because of their form of government corruption, but Gazprom is much more interesting to me. I did not buy it when it was first recommended but I am tempted now. The reason I have not yet bought is because I think gas prices will decline once the US and European markets start to de-lever. There will be a lot of people who can’t pay their bills and that could quickly turn ugly in Europe. We are seeing the beginning of hostility in Ukraine now. I think the US is mistaken in picking a fight with Russia (not that they will actually do anything) when the real threat is China. Russia could easily shut off those nice pipes that go to Europe through Ukraine and divert the gas to China, then the US can sell its excess gas to Europe, nice move. It will then be hard to get any money out of Gazprom.
    So, I am not yet a buyer because I see too much risk. After the US and European markets decline, we will be able to get a better perspective on Gazprom. In the meantime it is on my watch list.

    in reply to: Inflation, Deflation gold and reality #18161

    CLIVE R.

    Threre must be… ?

    Citizens of the Central African Republic have food, clothes, a mud hut, a cell phone and an ox cart for an ambulance. They also have war, famine and some ethnic problems.

    The US enjoys the advantages of having the reserve currency and still being the center of the world economy, the safe haven, but that does not mean we have a healthy economy. We have one that has been manipulated and now at great risk. The stock market is reflecting all good news.

    We are at the end of the credit cycle which has favored the financial “industry”. The productive economy in the US is not doing so well, in spite of QE. Some FOMC members are resisting continued QE, so in the short term we still have lowered interest rates, but they have to rise over time… and they will. QE is not working, at least it is not making new “jobs”.

    Once the market starts to correct, even the desirable biotech companies will be big losers. It seems to me that all the markets are declining now, and on very little volume. I think the big guys are out.

    Be patient. Hold your cash.

    in reply to: Is Russia Cheap enough? #27331

    CLIVE R.

    Interesting question … to which I have no good answer.
    Rob has made such a good case for owning Russian stocks, especially Gazprom, the seemingly no brainer investment for supplying energy to Europe. Syria seems to be a bottleneck for now, and possibly for a long time as the power changes hands in the Middle East.
    Corruption is the way of the world. It is very evident in Russia and China, Argentina and Africa. It is less so in USA and Switzerland, but certainly not missing, just different. It makes investing in anything on the stock market like gambling in a magic black box. How can we take the manipulations of the Feds seriously, let alone a hedge fund pumping and dumping a smaller company? And how about that SEC?
    My feeling about Russian stocks is that the whole world is deflating and as the Reserve currency moves back to the USA for “safety”, the rest of the world, the emerging markets, will take a hit, as they are now. The US market is primed for a hit too. When that happens, the emerging markets will get hit again.
    That’s when we can deploy some of that cash. Don’t lose it before then. “Investing” in corruption is for chumps, fools and suckers. Choada was another place to lose money. China is also a problem when it comes to the all important ingredient for money (or any) relationships: TRUST.
    Putin seems okay. The pussy riot girls have another opinion. Magnitzky is right … and dead. He risked pointing out corruption.

    in reply to: SENIOR VS JUNIOR GOLD MINERS #18135

    CLIVE R.

    I wouldn’t buy any mines now. If the gold price declines further (which I think it will) most mines can not survive because their costs are too high. The mines expanded in anticipation of higher gold prices and now they are stuck with over production and huge losses.
    I believe the world is deflating, so all commodities, including gold, will decline further, especially if interest rates rise which is likely at this point.
    That said, I did buy just 1000 shares of LYDIF for amusement when it was in the 65c range, but I am not keen to add to that position. IVN looks so tempting, but too dangerous for my taste.
    I stick to my position of holding the dreaded and feared fiat reserve currency for all the reasons I have written previously. I’ll buy your gold when it is cheap!

    in reply to: QE HOLIDAY THOUGHTS. HOW JOLLY. #27118

    CLIVE R.

    Thank you for questioning the future at the end of this year 2013 when we may feel dejected and stupid because we missed the party of rising stock prices. Well, okay, the Fed has fed its pals and the market has risen more than expected since 2009. My guess is that those who are in the market now will stay in the market and take the hit when it comes, then be miserable and disagreeable.

    The Fed’s biggest customer is us, the US Government which needs all the money, and low interest rates it can get … forever. The Fed is in a bind for all the reasons Hense poses. If they go against the government, they would face deadly consequences. So, they have done what they have done to survive and will do so until they are killed.

    What about next year, almost here?

    I suspect more of the same. What else can they do? But, the Fed is not quite as powerful as they would have us believe, or the public thinks they are. The US market is more powerful, but slower to respond, and the world market is much bigger and already responding with deflation. The world market is slowing down, with trouble spots all over the place. The US market is displaying clues of doubled interest rates in the last year, slow “growth”, declining population, fear and distress too in spite of almost universal optimism in the financial markets where they are happier than even in 1928.

    Prices that are built on a hollowed out economy will not last. The Fed will keep pumping, but the optimism will not last. We may see another six months of rising prices, or six weeks, or at any time natural reality will come back to its senses and take back the false positions of what we have now. It may start slowly, but once it gets going it will go fast as the hedge and mutual funds “de-lever”. The event that triggers the turn is not important, but it will be what is blamed.

    I think B&P are wise to be so cautious. Cash may not be very exciting, but it does have wonderful buying power when the opportunities present themselves. The alternative of being caught by a serious market downdraft may leave no exit strategy, and no cash. Then you are out of the game. It is very difficult to make new money, especially once the market declines because then there won’t be any work either.

    With cash, you will be able to buy low, the prerequisite for selling high if any gains are to be made. Surviving is more important than gambling. On New Year’s Day, you can watch the sun rise and not worry about the computer ticker. That is happiness.

    Thank you B&P for doing the right thing and not the opportunistic thing. 2014 will bring new adventures and new surprises.


    in reply to: Ivanhoe #27090

    CLIVE R.

    I don’t know what Rick thinks now, but I can give you my opinion. IVN has increased about 40% since it was revealed to us. It must be because of the “go ahead” in DRC (Congo) for their copper deposit. Rick’s recommended gold mine in Armenia LYDIF has declined by 50% because of political hazard, in spite of the rich gold deposit and Armenia’s need for money. I guess somebody wants more of a cut.
    The other part of IVN, other than Cu, is the platinum group metals mine in South Africa. The deposit is enormous, but the value to investors is troublesome. The mine unions in South Africa are striking. Mines are closing, particularly old, marginal gold mines. There is no relief in sight. At current prices of PGM the mines cannot afford to pay miners more and the unions are playing unrealistic politics with their demands. Apparently the unions don’t care if their members lose their jobs forever in mine closures.
    Will the price of PGMs increase? Probably some time, but there is a lot of PGM stored in Europe. Will China, a potential large consumer of Pt/Pd, regulate its air quality by installing Pt/Pd converters into car exhaust systems and smoke stacks? They are desperately needed, but it is unlikely they will do so. Communist countries are notorious polluters. China is no exception.
    Will either Cu or Pt increase in a world wide market decline? I don’t think so. I think it may be a few years before these mines in IVN become profitable. Dr. Copper won’t like “slow growth”.
    I would like to know from anyone who has an ear to the regulators in China if there is any real thought about introducing “converters”. Anyone tuned in there?

    CLIVE R.

    That simple eh? Mmmmmm

    in reply to: Headed For Another Crash? #18089

    CLIVE R.

    Timing tops is tricky. I thought 2000 was the top, and that 2008/9 would be a weak rally.

    I think Rita makes very good points, that the market is rigged with QE, that the financial system is still very fragile in spite of the happy propaganda. If anything happens to either, the consequences to investors could be very serious as more wealth is transferred to insiders. All we know for now is that the Fed is doing all it can to pump up the banks and that they will issue enough money to buy all the housing, all the stocks and all the bonds, if necessary. Reserve currency allows great purchasing power and great gifts. It suits the insider banks and the biggest debtor, the US government, but not anyone who is trying to create real wealth. The public is largely unaware of what is going on.

    Imagine what will happen if the market declines and the public then demands cash from mutual funds which are 90% “invested” in the market (by mandate). They will have to sell into a feedback loop of declining prices. It could get ugly really quickly. Chris reminds us daily of the weak underlying reality.

    I would like to add that I have noticed that credit seems to flow from the developed world to the “emerging” world. While this is going on there is a supportive feedback loop that encourages talk about de-coupling. However, now that the credit is declining, the developed world is spending less, so money flows back to the center. The “submerging” markets no longer talk about de-coupling and there is a feedback loop which shows the situation we are seeing now where the peripheral markets are declining… in spite of all the money pumping and bravado actions of the Fed. Eventually the “emerging” markets will probably rise faster than the developed world, but I don’t think that will happen in the next five years.

    I think that commodities will decline with the decline of the US and European markets. Rick Rule pointed out the fabulous newly found deposits of copper, gold and platinum to our group. The share prices look like a bargain and it is so tempting to buy, as it is with Rob’s recommendations in Russia and Asia (maybe even Choada will shine again). I especially like the platinum prospect as many years ago I worked with the chief geologist near that area and know what is in many of the boreholes. There is a lot of metal there… but if the price of Pt drops, as I think it will, the political problems will be severe in Africa. Cleaning up dirty smoke stacks and stinky cars with platinum will be low on the list of priorities for the Chinese leaders who will be interested only in holding onto power. Communist countries are notorious for environmental pollution. A slowing economy will only make conditions worse.

    Bill’s crash alert flag is flapping in the advance winds. This may be pointing to a top. It looks like it to me.

    Does anyone think money/savings is safe in the stock market? How about in any bank, or brokerage house? Will Federal insurance be able to protect our savings/investments in a “market event”? If there is a collapse, does spreading the risk over several stocks help? In a banking melt down will spreading the assets around different banks help?

    Bearded Ben thinks he is saving all these institutions and that he will save us all, but history tells us he is being very, very naughty and that there may be bad consequences. Unfortunately, I think they will fall on us and not on Ben.

    in reply to: Bill’s real estate bet #27066

    CLIVE R.

    Diversification has been a standby for generations. I wish it were that simple now. 

    The problem is that every asset class I look at looks like a mess, and they are all related, from Jackson Pollock paintings to Treasury bonds. When one crashes the rest will follow. I see no place to hide. Cash is a terrible option, but the best of the bad lot.

    Yesterday, a friend sent me two charts. They certainly got my attention.

    One chart showed the increase in the money supply of over 2000 % since 2008. WOW!!! It was about flat before 2008. It shows as an increase in banking reserves, not loans to businesses.

    The other showed the velocity of money since it was first recorded in 1959.  It looks as if it has fallen off a cliff, starting about 2000. It is in free fall now and much lower than at any time since 1959.

    Those two pictures were very alarming to me and support the concerns that I have from other ways of looking at what is happening. Munch’s “The Scream” comes to mind.

    The two charts show me that the money from monetizing is going into the banks and financial assets, but not being lent into the “real” economy. There is no multiplier effect and no underlying strengthening of the economy and also no increasing tax revenue. Chris’s report this week about the BIS is saying the same thing. The central banks’ only trick of monetizing is simply not working. FIscal policies have made things even worse.

    Inflation? Mandated costs are up and optional prices are down.

    Keynesian economics? Boo. Abused and discredited. Not working, other than to support moribund industries and insiders, punishing healthy businesses. Krugman and Friedman need to shut up. They are not helping.

    The emerging economies are already reflecting this in their stock markets. Russia looks so good when Rob analyzes it, but it too is crashing, like everywhere else.

    My suspicious side says that the real estate market in the US is being pumped by “funds” with funny money, government money (yours and mine), in an attempt to lure the public into the real estate game again. It ain’t working. When the monetizing stops the real estate speculation pump will spring a leak. The de-leveraging could make some really bad days in all the markets. I see no good reason for the stock market to be as high as it is now. Future earnings? C’mon. Future losses is more like the reality.

     The photo of all those people in China standing outside a “gold” shop leads us to believe that they are all there to buy gold “on the dip”. I think they may be there to sell it if they have housing debts to pay off as the Chinese real estate bubble pops.

    The bond market looks set for flat lining or rising interest rates.

    I am not a doomsday thinker. I don’t have cans of beans or guns stashed away. I do have some cigars and whiskey, but not more than a month’s supply. I am just trying to look at the reality of what I see and don’t want to be a Pollyanna about it. This situation is worse than I have ever seen. The propaganda machines are in full blast good news mode trying to turn things around. Nothing is working.

    That’s why I think everything is headed for a massive deflation. Cash is trash says the propaganda machine, buy gold, buy anything, diversify, be a good American and spend, spend, spend. 

    I don’t buy it. I think that cash is the one thing everyone will not only want, but need.

    Governments and central banks? Like the poor, I’m afraid we are going to have them with us for a long time. Bitcoin? Nah. Maybe a bit.

    in reply to: HOW DO WE FOOL A GOLD THIEF W/ A METAL DETECTOR? #27046

    CLIVE R.

    The false bottomed toolbox is a good idea. Replacing steel tools with nasty aluminum tools might balance the weight to avoid suspicion. Problem is that If the tools are nice, they will steal the whole box for the tools.
    Metal detectors and humans tend to look down, or up to about six feet from the ground. So hide things in a place that requires a ladder to reach, but don’t forget to tell someone that it is there because if you die, it will be found only when the building comes down, or the electrician finds it. Mark the box “radioactive”, sterilization guaranteed.
    One of my friends bought all the books in an estate for $500. As he went through the books they yielded the much despised paper money, $67,000 in cash hidden between the pages, all printed by the Fed.

    The “find” was much better than gold which would have had to be explained at the time of conversion into cash… and taxed as all profit.
    A big pile of cash has its virtues during deflationary times. Argentine pesos or Cypriot £s are probably not a good choice, but the reserve currency, US$ are my choice. Where is my pile? I’m not telling you, but my trusted friend knows where it is.

    Gold is a better choice if a revolution is expected, but as the developed world devolves, and Middle East troubles become more troublesome, I think the US$ will buy some bargains in a few years. I might even buy some gold when it is $1000.

    in reply to: Is there a lot of downside in US equities near term? #27036

    CLIVE R.

    The “financial industry”, cheap money from the Fed, the reserve currency. Without it deflation would be much more obvious.

    in reply to: Are we blinded by our sense of justice? #18041

    CLIVE R.

    Feeling righteous about what should be and what is “just” is a way to become frustrated and ill. Take it easy! It is good to recognize a con game, but you can’t control it. People have different interpretations about what is right, and doing the right thing. There is of course a right way. It is called natural principle, but Nature is very patient (and cruel), so men think they can play with her. That is what the insiders are doing now. They are playing on the confidence, with the emphasis on the first syllable, of people’s belief in the paper currency. The Fed has no limit to what they can “print” with a few strokes of the computer keyboard. They truly feel like masters of the universe, giddy with power. They can BUY the whole stock market, all the housing and all resources. What they can not do is make ANYTHING real. Making things is hard, requires real imagination, skill and time. For now, the insiders are extracting the money out of the system, protecting the government and the banks. That takes little skill, little imagination and only one tool: monetization. That’s the only hat trick they know, really tedious.
    The Fed thinks it is doing the right thing by making “jobs” and “growing” the economy. That is their paradigm. I think it is an out of date paradigm based on cheap energy, but I am not in charge. When I am, things will be different. They have old money interests to protect so they are shooting the bullets and all we can do is jump to avoid being killed in the crossfire between the Feds and the rest of the world. The opportunism of the current value system will eventually have to answer to the justice of natural forces. When? Don’t ask me. That’s Bill’s, Chris’s and Rob’s job. We pay them. They better get it right, otherwise my sense of justice will make me give them all a good whipping (I actually think that they are doing a great job).

    in reply to: Is the Chinese property bubble real? #27027

    CLIVE R.

    The US buys about $600 billion of stuff from China a year. China in turn buys stuff from the EU (that’s Germany), like transport systems and elevators for their new towns, and lots of cement and copper. When the US stops buying because the public is short of cash or credit, China takes a hit … and then Germany takes a hit. It seems like the US buyers are slowing down. Bankers bonuses for a few does not make a big market for Chinese goods.

    So what if we stop buying?

    Well, what will the central planners do with all those workers who were supplying goods to the US, and a bit to Europe? Sell to Africa? Not likely. Without jobs, the workers can not buy expensive condos in new cities. With no jobs and no place to put all the stuff the workers might like to buy, the central planners have a problem on their hands. From most accounts, there is a surplus of housing. The planners better like their properties because they may own them for a long time.

    Modern economists think that creating demand is the front end of an economy. What better than to push people into breeding boxes (houses) where they can store stuff they buy? What modern economists have not worked out is that there is not enough cheap energy for such a huge population to live like middle class Americans with suburban lawns, traffic jams and imported stuff. They can not afford it.

    Yes, the Chinese property bubble is a problem. The unfulfilled raised expectations of a lot of people has a habit of turning ugly. The central planners have a Magilla on their hands and we need to avoid ruin because of what they have done. This is a global problem.

    Everything seems so calm … except for the politicians everywhere. They look anxious.

    in reply to: Understanding Politics & What Mkt "Tells" It Might Offer #18038

    CLIVE R.

    Only 5000 points on the DOW? An optimist for sure. Perhaps you mean the DOW will be 5000. J

    I like your observations.

    When I was at university, I learned some engineering, some economics of the Samuelson sort, some Chemistry, basic stuff. It helps a bit in knowing what will happen when pulling certain levers and mixing smelly ingredients, but I learned the most in the “classics”. For two years, my professor was Dr. Michael Arnheim, Cambridge don and only a few years older than I was then. He taught me, amongst others in class, how to read Cicero”s Caesarian orations, the political speeches of the great general Julius Caesar … great in that he conquered other tribes, aggrandized himself, stole their wealth and enslaved their people. We learned that what was said was not necessarily what we heard, and certainly not what he meant, at least from a literal reading. Knowing more about the context, who he was talking to, when and why he said it revealed more complex messages. From thinking that Caesar was a great leader, we started to think he was a great self centered manipulator who destroyed many peoples lives for his own glory. Brutus and the boys did the right thing. Many “leaders” were not stopped soon enough … Khan, Napoleon, Hitler and many current examples come to mind.

    Dr. Arnheim became a friend and visits me for a few days a year. He practices as a barrister in London and recently wrote a Dummies book on the US Constitution. It is certainly not for dummies. It is a funny and clear explanation of concepts such as the Second Amendment, a subject he will talk about to a group when he visits me this month.

    I still call him first when I need clarification of any political speech or situation. He continues to reveal things I never think of. He also has some choice words for politicos and bankers who manipulate our economies, and some very nasty words for the Supreme court Justices who manipulate our laws (lives).

    Thank you Hense for reminding us that we need to watch what our leaders do, not listen to what they say. President Obama and Chairman Bernanke are both smart men, probably better informed than we are, even with Bill’s, Chris”s and Rob’s help. They know what we know and more. They have their positions to uphold, legacy businesses to support (pay off), things that have little to do with doing the right thing for the common good of the nation. Avoiding ruin in their world is not easy.

    These are the ingredients that make investing so interesting. The Family Office long term view which includes our behavior patterns and the values we pass on to our descendants about how we balance immutable natural forces against the short term manipulations of our “leaders” is a delicate business. Surviving our leaders plans is key. The unified manipulations of the world’s central bankers is impressive, backed by politicians and the propaganda of Wolf, Friedman (T.L., not Milton). Market reactions are remarkable. I believe that natural forces of a world wide market are still more powerful than the manipulations of the Davos dilettantes. Sudden downdrafts are really dangerous for balloons and bubbles. The banks have been making some money on US fossil fuels, an explosive bubble, but the rising cost of energy is likely to be a game changer. Fricking fracking is a short term scam, good up front for a while and economically disastrous over time, like within this year.

    in reply to: A Family Conundrum #27014

    CLIVE R.

    I am impressed that Bill will lend money to Maria for her venture. The Family Office would be rash to invest in such a risky plan, but for Bill to do it as personal support for his family member is great. I assume he would to whatever is needed for his other children too, each in their own individual interesting way.
    One of the more odious traits of old money fuddy duddies is that they are “cheap”, stingy. They wear Saville Row suits with holes in them and pretend it is charming. It’s usually because they are afraid, so cling to what they have. The real power behind money is having the ability to make it, not just have it.
    Being generous with money is the sign of a big man, one who is not afraid. Life is nothing if not a risky adventure.

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