If silver continues its upward trend, it could easily outperform goldduring 2010. While the price of gold increased by more than 30 percentlast year, silver prices increased by more than 60 percent.

"Even though I am a firm believer in gold, I think it isimportant for investors to include some silver as well as gold in theirprecious metals portfolio," says David Levenstein, a leading preciousmetals analyst with Lakeshore Trading.

"In fact, at current levels it looks extremely undervaluedand I would not be surprised to see it trade as high as $25 per ouncethis year."

Gains of 45% expected

On this basis, Levenstein expects silver to appreciate a further45 percent this year, while he expects gold to increase by another 30percent.

He says that when it comes to investing in silver, many investors couldbe misinformed or have no knowledge of how to participate in thismarket.

"I think investors in South Africa are totally clueless whenit comes to silver. This is not surprising because for years they havenot been able to participate in this market and have had no way ofgetting correct information about this market. Their perception ofsilver is that it is some metal used to make grandma's tea set."

Even though there is some truth in this, this is not the entire picture at all.

Silver myth

"The argument made by many uninformed equity analysts is thatthe demand for silver will disappear due to the declining demand forsilver in the photographic industry, which is nothing but a myth.

"Silver has many different industrial applications. It is also used inthe manufacture of jewellery and bullion coins. And, more recently wehave seen unprecedented investment demand for the metal via the silverexchange traded funds."

According to Levenstein, silver will also benefit from manynew industrial applications - in particular silver-zinc batteries,solar panels, water and even medical applications.

Getting in on the action

On the question of how investors in South Africa can get involved insilver, Levenstein says: "There is nothing like owning the physicalmetal, and buying bullion has been the traditional way to do this. Nowthat investors in South Africa can own silver bullion, they can, atlast, participate in this market.

"However, they must not expect to make a big fortune from a small one overnight.

"This will not happen. Investors must be prepared to keep their holdings for several years."

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