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Carver, HSBC is more Hong Kong than China. China may be recovering but Hong Kong is not. If you want to be in China investment trusts are probably the best bet.
Fres will bounce back in time. Not much silver available in London.
I wouldn't touch banks in the current climate. They have fallen 80% over the last 15 years. Falling GDP, rising inflation, house prices expected to fall, none of it good news for banks. Despite all this analysts remain bullish, with the exception of HSBC.
I think HSBC could be broken up. In these hard times do they have any decent products on offer? The way it's going people will be safer storing their money at home!
Sold mine yesterday. 2 days a go I had a nice profit, being a recent new comer to FRES. but had to leave at a slight loss. Glad i did, different story today.
HSBC is very much at historical low and they can certainly go up if they can avoid huge fines and also eek out some money from negative interest rates.
Let's make a little race. Let's see who gains 50% from here first. HSBC or FRES. 460p for HSBC and 1840 for FRES. Winner pat himself on the back and loser smash an egg on his face.
Good luck nuri, but the various legal actions they are facing could spell a lot of trouble.
Can't see Fresnillo share price moving beyond the highs it achieved earlier this year. Sold all mine and invested everything in HSBC - seeing as China is recovering rapidly form the pandemic.
Debt does not always get repaid. Ask Russian or Argentinian bond holders from last century or bond holders in busted companies. I do not expect Gvt debt to be repaid or at least not in present value fiat currency. We are told inflation is low but asset prices betray this.
Carvegyber, all good points and you put forward a strong case for inflation. I agree that we are running out of road for many of the factors which, in the past, have kept a lid on price rises. Trump or Biden; I expect we will have to redefine our relationship with China and globalisation in general.
Your 4% inflation prediction in 4 years seems very ‘goldilocks’ and it would certainly help the western world as it would slowly eroded away our current debt. I am more pessimistic. I expect public debt to rocket in the next few years and how we deal with that debt is what concerns me.
Eventually debt has to be repaid. Just as fiat currency is created out of thin air when someone borrows money, the flip side is that it is destroyed when debt is repaid. Sooner or later the debt must be repaid and when it does the velocity of money is greatly reduced.
Inflation or deflation; we will have to see. It’s always good to consider both sides of the debate and to prepare oneself for one outcome and exclude the possibility of the other is a risky strategy.
Holding shares in gold/silver miners is a good decision in times of high inflation but I believe it may be the least bad option in times of deflation. Deflation would be terrible news for the stock market and a complete nightmare for those holding a large amount of debt.
Looty, very good analysis of inflation only up to a point. You are right that future is uncertain and all you have listed are perfect rationale but they were only historic. For example, 2008 the money printed went straight to banks balance sheet. RIGHT. BUT Where has the money printed gone this time? Straight to the people and business. Velocity of money remember? More is to come.
You were also right that globalisation has pushed costs of almost everything down for 2 decades. Also historic. If you kept up with the big trends, you will know that the gains (or cost savings) from further globalisation has plateaued and it appears that we are reversing. Big push has been in the last 2 years with US China Trade Wars. Everyone seems more nationalistic these days.
Therefore in a background of no further cost savings from globalisation and increasing liquidity in the consumers, I strongly suspect that inflation is imminent. Starting mid 2021. I think we will hit 4% in 4 years' time (guess of course). I import watersports goods as a sideline. I am seeing and increase in my costs and every other brand has put their list price up by at least 10% this year. My shipping costs have also gone up by 20%.
Another trend is that Covid has killed off a lot of businesses which makes the remaining ones much less competitive. This will give them much more pricing power. The savings we have had from switch to online has also been accelerated so when covid ends, the cost saving trend due to online can no longer head down.
Next input costs. All commodities are currently at very low point compared to last decade. Iron, copper, coal, oil. Only direction seems to be up. No one can keep making goods below costs?
Low inflation is a fact in just about every consumable in our day-to-day lives and this has been the case since the mid-nineties. There may be less discounting in shops since the Covid hysteria but it remains to be seen if this will cause anything other than a blip to the inflation figures. High oil prices may also cause inflation but then again, they may not; the oil price was consistently around $100 per drum in the early 2010’s yet inflation remained stubbornly low.
You may be right that we are about to enter a period of high inflation but it is far from the certainty that you have proposed. Central banks in both Japan and the Euro area would be happy if this were the case but most central bankers today consider the threat of deflation, and not inflation, to be the greater concern. I certainly would not encourage anyone to take on high levels of debt at this time in the hope that it will be inflated away in the coming years.
Your view on the relationship between money printing and inflation is overly simplistic. Most economists attribute inflation to ‘money velocity’ with ‘money growth’ being significant only in that it sometimes (not always) feeds into ‘money velocity’.
Trillions of $ in fiat currency have been printed since the 2008 financial crisis but this money has gone straight to bankers who have allocated this cash into the non-productive parts of the economy such as real estate and asset prices. Relatively little of this cash has found its way to industrialists, entrepreneurs and into the hands of working people. As a result, ‘money velocity’ has been lower than hoped and wage inflation has been mostly non-existent.
As an alternative view, I propose that the post-Covid economy will be characterised by deflation rather than inflation. Once the mania subsides, then comes the realisation that we have burdened our economy with mountains of debt. Consumers will rein in their spending, industry will cut back on investing in innovation and the ‘velocity of money’ will fall further as everyone seek to service their debt. As prices begin to fall (for both assets and consumables) people will delay spending further in the expectation of even lower prices in the future and thus a vicious cycle in which deflation feeds on itself is established. This may not necessarily be a bad thing.
Inflation has already happened. In case you haven't noticed, supermarkets stopped discounting and costs of most things are edging up. Not down. If and when oil goes up, petrol will go up and that will feed into everything else. The figures are a con!
Japan has been trying to stoke inflation for thirty years and it still hasn't happened. The Fed is not doing anything that the Japanese haven't tried already.
I think your BTFD is still ways off. When inflation takes off over 4% and you can't easily print any more money without going into hyperinflation is when BTFD will happen. When they can still print at will, they can rescue anything. They are talking about $2.5tr as if it is nothing..... and everyone is egging them on.
Held FRES for a year now & am up 100%+ in that time. With the stock sitting at a 32-month high, & expecting a sizeable market correction before the end of the year, I've taken some off the table & am essentially now playing with the house's money.
This is now my fourth stock where I've taken profits recently in order to build a war chest to BTFD (should it materialise). I may do likewise with some of my other holdings if I can take profits & exit near a medium-term high.
GLA.