In the recent times of insecurity, investors have been flocking to gold in spades. The SPDR Gold Shares (NYSE:GLD) has quickly become one of the largest exchange traded funds on the market, with assets under management approaching $50 billion. While gold can be seen as the ultimate hedge against uncertainty and king at fighting inflation, the metal doesn't do much else. It has industrial uses, but unlike Palladium, they are few and far between. Investors should keep a portion of their portfolios in the metal as hedge, especially with the debt problems facing Europe. However, the poor man's version maybe a better play on industrial demand. (Learn more about precious metals, see: A Beginner's Guide To Precious Metals).
IN PICTURES: How To Make Your First $1 Million

In the Forefront
As an investment, silver has done pretty well over the past 20 years. The metal has risen in price from a low of $3.51 in 1991 to the current high of around $18, giving investors an annual return of about 9%. Investors may find that, due to its industrial uses, going forward it should continue to outperform. The metal has established uses in automotive sector, electronics, solar and photography. New technologies such as silver oxide batteries, silver conductive inks and various silver based nanotechnologies in medical applications are all quickly becoming standards in their industries. Consumption from China, which accounts for 70% of the world's total industrial, is on the rise.

Investors are also seeing the metal as a safe haven, similar to its more valuable cousin. Net investment in the metal rose to 137 million ounces, up over 184% versus 2008. Purchases of silver coins jumped nearly 21%. Analysts predict that, despite the nearly 280 million ounce surplus of silver, investment in the metal will remain strong as the severity of the Europe's sovereign debt crisis is still unknown.

A Sterling Portfolio
There are several choices for investors wanting to add an allocation to silver to a portfolio. Several large diversified miners like Rio Tinto (NYSE:RTP) include silver production, and can be seen as one-stop shops for commodities exposure. However, there are some real direct ways to play silver and its growth.

Aside from owning silver bars and coins and storing themselves, investors wanting to participate in holding physical silver bullion can do so with the iShares Silver Trust (NYSE:SLV) or the ETFS Physical Silver Shares (Nasdaq:SIVR). These funds represent a share of physical silver stored in a vault on an investor's behalf. The iShares fund is the older of the two ETFs, and currently has nearly $5.5 billion in assets under management and trades nearly 10 million shares daily. The SIVR offers investors a cheaper expense ratio of 0.30% and stores its bullion in a Swiss custodian vault.

Investors wanting to use futures contracts to add silver exposure can do so with the PowerShares DB Silver (NYSE:DBS). The fund features a strategy that protects against contango and seizes the benefits of futures backwardation. (Learn more about gold and silver futures; see: Trading Gold And Silver Futures Contracts.) Investors wanting to add leverage to their silver investments can do so with the ProShares Ultra Silver (NYSE:AGQ).

Additional leverage and benefits can be found with buying the companies that physically mine commodities. The New Global X Silver Miners ETF (NYSE:SIL) follows a portfolio of 25 different miners who receive most of their revenue from silver production. While new, the fund has managed to a decent following, trading about 300,000 shares daily. The ETF charges 0.65% in expenses.

The Bottom Line
While gold is getting all the attention from investors, silver should not be forgotten. The metal's industrial uses and increasing demand should continue to suit and reward investors. The previous exchange traded funds offer investors several different ways to profit from the long term thesis. However, if investors disagree with the metal's outlook, they could always add the ProShares UltraShort Silver (NYSE:ZSL), which shorts the metal.

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