By Stephen Leeb
The Complete Investor

        We've long trumpeted gold as our top overall investment pick. But this doesn't mean you should ignore those other precious metals, platinum and silver - which during periods of inflation and economic growth will likely outshine even the Midas metal.

        Beauty may be in the eye of the beholder, but a heckuva lot of beholders throughout the millennia and right up through today have agreed that gold is a thing of beauty. While gold has useful chemical properties, other metals can substitute for its industrial uses. But gold's intrinsic beauty is unique. Resistant to oxidation, gold doesn't tarnish, while its malleability makes it wonderfully suitable for everything from jewelry to gold bars to coins to expensive decorative materials. All this helps explain why gold has long been viewed primarily as a store of value, not as a mere utilitarian metal.
        Still, gold isn't the only precious metal. And while so far this decade gold has surged more than the others, this could change. We have been urging investors to buy gold for years, and no one should be disappointed with the results. Gold remains one of our top investments, offering protection against deflation and inflation alike. But here we want to expand your precious metals universe and draw your attention to platinum and silver as well. They, too, will be must-have investments as we move into the next decade. In fact, because of their capital industrial applications, during periods of global growth and rising inflation they will likely outperform gold - while gold will star during the deflationary bouts that almost surely also lie ahead. Let's look at why all three metals have so much potential for investors.
        One factor making all three metals "precious" is their relative scarcity - far less is mined per year than is true of more common metals like copper and zinc. But metal prices, like all prices, reflect demand as well as supply. And demand, particularly for gold, rises when economic events make people lose faith in paper currencies.
        Today's world clearly offers abundant reason for such a loss of faith. Consider, first, that the total value of gold both above ground and below is about $6 trillion. This is wildly dwarfed by the notional value of money in circulation and by any other monetary metric such as total worldwide debt. Since 1980, when gold last peaked, money supply (M3) in non-inflationary countries (which still include the U.S.) has grown 15-fold, while the value of gold has stayed relatively constant.
        Moreover, looking just at aboveground gold, its total value in dollar terms has approximately doubled since early 1980, as additions to above-ground supplies have increased by about 75 percent and the price has inched up about 25 percent. This means the ratio of the value of money to gold has climbed more than sevenfold.
        Clearly just a marginal loss in confidence in paper currency would easily translate into demand for gold that far exceeds supply. No wonder gold has risen steadily for nearly 10 years, or that we look for strong further gains ahead. It's a sign of the times that recently, for example, India's central bank bought 200 tons of gold for its foreign exchange reserves, clearly blessing gold as a monetary reserve of growing importance.
        The demand calculus for silver and platinum is somewhat different. These two precious metals, if not as intrinsically beautiful as gold, come close. But unlike gold, both have chemical properties that make them important, and sometimes irreplaceable, in critical industrial applications. This cuts two ways. While industrial uses create demand, they also can deter holding the metals in preference to currencies. One reason central banks will likely favor gold over silver or platinum is that these latter metals might be called upon for industry, making it hard to classify them as permanent reserves.
        Platinum is the most expensive of the precious metals and by far the most rare. Only 200 tons of platinum and related metals are mined a year compared with more than 2,000 tons of gold and about 20,000 tons of silver. The major industrial use for platinum is as a catalyst, a substance that facilitates a chemical reaction. Platinum is essential in both catalytic converters (devices in autos to clean up emissions) and in fuel cells, which have been touted as clean alternatives to the internal combustion engine.
        Silver happens to be the best conductor of heat and electricity as well as an antibacterial agent. These properties give it wide-ranging applications in areas ranging from solar energy batteries to water purification. And, of course, these industrial uses come on top of demand for silver for jewelry and as an investment.
        About half of the platinum and silver that is mined goes to industry. While both metals are recycled, growth in the developing world, which means more cars, batteries solar energy, and electrical connectors, ensures that industrial demand for each will continue to grow.
Here's a rundown of our Top Precious Metals Plays: Note that when it comes to investing in platinum and silver, your choices are somewhat limited. Because so little platinum is mined, there are very few miners: the two main players are Impala Platinum (IMPUY, $22.28) and Anglo Platinum (AGPPY, $90.25). Impala, with its relatively low cost structure, is safer; Anglo, with its higher fixed costs offers greater upside.
        Silver offers a few more choices, though fewer than you'd expect given that 100 times more silver than platinum is mined in a year. One factor is that silver is often a byproduct of mining for other metals, such as copper and zinc. Two pure silver plays are the ETF iShares Silver Trust (SLV, $16.92) and the company Silver Wheaton (SLW, $14.88). While the ETF faithfully tracks silver's price, Silver Wheaton trades like an aggressive miner, though it mines not an ounce. Rather, it buys silver at fixed prices from mines that produce silver as a byproduct, including Goldcorp (GG $43.09) and Barrick Gold (ABX, $41.87). These life-of-mine contracts ensure Silver Wheaton a steady flow of silver at a fixed price. In other words, it's essentially a leveraged miner without the risks of mining. Like any leveraged miner, it's not for the faint of heart: in 2008's market crash, the stock fell 80 percent before almost fully recovering. Over the long haul we expect the stock to outperform silver by about 10 percentage points a year (while it would lose more than silver should silver decline). Because of our confidence in silver, Silver Wheaton was added to our Growth Portfolio.
        One other name on the list we want to draw your attention to is Peru's Buenaventura (BVN, $36.91). This widely diversified and rapidly growing miner derives about 10 percent of its revenues from silver - not a high percentage, but significant given that Buenaventura has one of the best growth profiles of any diversified precious mining company around, with anticipated growth of 20 percent a year for the next several years.
        Finally, if you want to obtain a diversified precious metals portfolio with just one purchase, we'd suggest either ASA Ltd. (ASA, $79.00) or Tocqueville Gold (TGLDX, $56.13). Both funds are always on the lookout for mines not widely followed and that offer exceptional upside potential. For instance, both weight TCI favorite Randgold Resources (GOLD, $79.63) more heavily than they do better known names.

Buying the Juniors

        When it comes to mining stocks, there are two broad groups: a handful of majors, with producing properties and frequently strong finances, and the riskier - but potentially highly rewarding - junior miners. Now investing in small gold and silver miners has gotten a whole lot easier, via the just-introduced exchange-traded fund Market Vectors Junior Gold Miners Index (GDXJ).
        The fund holds a fixed portfolio of up-and-coming publicly traded small- and medium-cap companies. To be included, a company must generate at least 50 percent of its revenue from gold and/or silver mining, hold real property with the potential to produce at least 50 percent of the company's revenue from gold or silver mining when developed, or invest primarily in gold or silver. And the stock must have a market cap above $150 million, daily average trading volume of at least $1 million, and at least 250,000 shares traded per month over the last six months.
        Many of the fund's holdings produce little revenue and operate at a loss, making them highly risky. Still, you're spreading that risk across the ETF's nearly 40 stocks, so problems with one won't jeopardize your entire investment.
        Another plus is the fund's global scope: while most of its holdings are North American names, it also own companies from Australia, China, South Africa, and the United Kingdom, giving you access to stocks it would be hard to research or buy individually. The fund's annual expense ratio is capped at 0.6 percent.
        Though we're all for diversification we can't resist our two favorites from the fund's holdings: NovaGold Resources (NG, $5.20) (Small-Cap Value) and Gabriel (GBRRF.PK), with rights to one of the developed world's largest gold deposits. If Romania okays mining, the stock will soar.
        Editor's Note: Stephen Leeb is editor of The Complete Investor, P.O. Box 248, Williamsport, PA 17703, 1 year, 12 issues, $72. Dr. Leeb, using his two unique key indictors, has predicted nearly every major market movement during the past 30 years. Because of this, he has had the distinction of being named America's #1 market timer by the Timers Digest. He was editor of Personal Finance for 13 years, and is routinely a winner or the runner up for the top NEPA financial journalism awards. He is the author of six best-selling investment books. For more information on The Complete Investor and a Special Offer visit www.completeinvestor.com.