Silver is performing. What's next?

So far, so good for silver, so what do we do now?
Besides wait and watch there are some things we should be looking at.
Let's start by examining where we are.
First nothing has changed to derail my overall "big picture" view of hard assets. If anything the new "stimulus" package strengthens my prediction for a weaker dollar moving forward. I still like TBT which is an ultra short position against Treasuries and the Dollar. This is a long term play, whereas I see people fleeing the dollar when the effects of the stimulus take hold and we flood the world with our currency.
So logically, since we are positioned to benefit when that happens, we are going to be selling into that price strength. But here is the rub, once we sell our position in TBT, we are going to be sitting in a cash position. The key word being cash.
You may be asking, "Well didn't you just say that you don't like cash?
I'm glad you asked.
We want that time frame, when our cash exposure is the greatest, to be very short. Having an escape plan is vital. But it's not enough to just have a selling strategy, because in this case, the asset class we are betting against, is the medium of exchange we must use to settle the trade. So where do we go to grow and protect our wealth.
More gold and silver?
Maybe, but maybe not.
The problem is that, if the dollar slides, as I believe it will, gold and silver will be much more expensive too. And they can't go higher forever. They will have to top out at some point and go the other way. So increasing our exposure to the metals, will start to appear very risky. It all depends on how deeply the damage to the dollar goes. Remember many things can happen that we don't expect. So view this as a broad and flexible plan.
The problem is determining value.
What is an apple really worth?
If it costs a dollar today for one apple, then what's it worth when, because of inflation, it costs 10 dollars?
That's the beauty of silver and gold.
Today one ounce of silver will buy you a crate of apples. When inflation hits in ernest, maybe it will buy a truckload of apples, maybe not. Who knows, there might be a shortage of apples that year or maybe a glut. The point is, that we need to identify, at that time, what value is.
For some time, I have been feeling that real estate will be that truck load of apples. If real estate continues to fall as I believe it will, it will be falling in conjunction with a falling dollar and creating a massive, once in a lifetime, buying opportunity for real estate. A perfect storm of low price relative to the dollar, a weaker dollar, and overvalued precious metals. It is at that point that you will probably be getting as sick of me writing about real estate, as you probably are, sick of me writing about silver now.
If real estate turns around before the run on precious metals, so be it. There will be a buying opportunity in some other, under valued, tangible asset at that point.
I believe that commodities like food and clothing as well as energy and materials will retain or grow their value in the future and will appear to be very expensive, but in actuality, will be fairly valued.
Real Estate will appear to be fairly valued but will actually be dirt cheap and no one is going to want to touch it. That's when we will start accumulating, with the profits from our positions against the dollar.
So from here, this is where I am concentrating my efforts; I will be increasing my knowledge about real estate and I will begin to value properties and real estate investment vehicles in terms of silver, instead of dollars. For instance if a property is valued at 300 thousand dollars, I will refer to it as being worth about 22 thousand ounces of silver. Or if you prefer, that same 300 thousand dollar house is worth 320 ounces of gold.
By doing this I will get a better idea of the true value of the investment and where it sits relative to a true measure of wealth.
I don't believe that the dollar can be counted on to be a good yard stick anymore.
One more thing, with houses being foreclosed on in record numbers, the need for rentals is going to increase, be it houses, condos or apartments, I'll be educating myself on these markets as well. Particularly apartments. All those displaced homeowners are going to need a place to live and most likely a cheap place. This may be a good interim investment before housing and commercial comes back.
Remember I am looking at long term strategies here, so I am not purchasing anything yet. Just as I am not selling anything yet. I am still accumulating real tangibles and moving decidedly out of the dollar.

Good luck and Godspeed

JT

Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.