I would like to share some hard data pertaining to one of the most critical characteristics associated with an investment bubble. Even though the usual cheerleaders for paper assets and the "debt is wealth" mindset would most likely dismiss the evidence as anecdotal, the uniqueness of the data set should give it extra weight, in my opinion. The consistent element I am referring to is retail investment participation. Why the information forthcoming is of particular worth is not only does it underscore the low participation rate of retail investors in precious metals, but the source of the information comes from an investment environment that renders meaningless the typical excuses for investors to not have taken a position in gold and silver.

The bull market cycle that never was

It has been well documented for over a decade that many of the most savvy international investors, assorted sovereign wealth funds and numerous central banks have been building considerable positions in gold. Additionally, a host of analysts, who coincidently had the faculties to foresee danger in the dot.com, derivatives, and real estate market, have been advocating the acquisition of gold and silver throughout the same period. I will not go on to list these various individuals and institutions as it would be redundant for those tuned into the goings on of the precious metals market and easy enough for newcomers to learn with the ease of a Google search.

Even though it would appear simplistic to point out that big investment successes are hallmarked by entering a particular bull market cycle early and exiting before it tops out, this most basic of action plans is consistently lost on the emotionally driven masses who historically pile in at the end. While there is no question that a minority of the financially astute have taken steps to fortify their portfolios with precious metals, by no means have a large majority of financial professionals entered the trade, let alone a significant percentage of individual investors. Because of this absence of a substantial percentage of investors in this gold bull market, I question the validity of those calling a top in gold and silver, despite prices for both having risen greater than 400% this past decade.

Hard facts, not hearsay

There is plenty of commentary in the precious metals world about investor behavior particular to this gold bull run. These observations are coming from seasoned precious metals professionals whose gut instinct and historic perspective provides valuable insight. The consensus view is that a significant enough percentage of retail investors have yet to embraced precious metals as would be typical at market tops. Contrary to crowding into the precious metals market in a quest to ride gold and silver's unparalleled price appreciation, the vast majority of individual investors have dismissed the entire market sector as if taking direct cues from the mainstream financial media. Following is a sampling of excuses that individual investors are often heard to make regarding their reluctance to consider precious metals:

• I did not know I could buy precious metals.
• I do not know how to buy precious metals.
• My advisor said precious metals are too volatile.
• My other investments are down and I am waiting for them to come back.
• I have no money to buy precious metals.
• I did not have time to open an account to buy precious metals.
• I would buy precious metals but I might need the money for other things.

Targeted analysis of a unique data set

To really measure the degree of investor apathy and antipathy toward precious metals to date, I sought to mine data from an environment that nullifies legitimate reasons for pushing back on acquiring this time tested form of wealth preservation. The statistics forthcoming have been extracted from an investment environment meeting the criteria desired. Let's call this a "no excuse" environment. In the end, I believe you will concur that the results unequivocally bolster the views espoused by most precious metals professionals. Namely, investor behavior and sentiment has not emulated that which is customary at a market top.

Gold and the self directed IRA

To help me gauge the extent of non-participation by individual investors, I contact Carl Fischer, President of CAMA Plan (www.camaplan.com). CAMA Plan is a long established administrator of self directed IRA's. For those not familiar with self directed IRA's, these plans allow for the purchase of many IRS approved investments which are not made available to clients of traditional investment firms. A few examples of the alternative investments available to owners of IRA's with a firm such as CAMA Plan are: real estate, notes, tax liens, private placements, and precious metals.

Why do I consider self directed IRA accounts "no excuse" accounts? Because:

• Funds are in place and available to invest.
• The account is established, no need to transfer from another firm.
• Monies in place are for long term investing.
• Holders of the accounts are made aware of the precious metals option.
• Virtually all competing investments, including those in most IRA's, have grossly underperformed in comparison to gold and silver over the preceding decade.

Now, from data provided by Carl, let's see how the so-called "gold bubble" manifested itself over the course of the last decade amongst the owners of self directed IRA's.

Check Point 1 - Beginning of gold bull market

Gold closing price on December 31, 2000: $274.24 per oz
Overall percentage of investment assets in precious metals (aggregate ofall accounts):

Check Point 2 - Eight years into the great gold bull run

Gold closing price for 2008: $869.75 per oz
Gold per oz dollar gain from 2000 close: +$595.30 (+217%)
Overall percentage of investment assets in precious metals (aggregate ofall accounts): 1%

Note the following:

• The amount of new investment dollars into precious metals was even less consequential than illustrated since the majority of the increase in the overall percentage was achieved by the gain in value of the existing precious metals investments.
• In calculating overall percentage of assets in real estate, most "notes" and "private placements" are secured by real estate thus bringing investor participation in real estate related assets to greater than 60%.

Check Point 3 -Ten years into the great gold bull run

Gold closing price for 2010: $1,405.50 per oz.
Gold per oz dollar gain from 2000 close: +$1,131.05 (+412%)
Overall percentage of investment assets in precious metals (aggregate ofall accounts): 2%

Despite an approximate decrease in real estate values of approximately 25%+, the overall amount of investment assets (Real Estate, Private Placement, and Notes) allocated to real estate remained constant since the real estate sector's collapse. This would indicate that new money continues to pour into real estate in the belief that the debacle at hand is a buying opportunity.

Conclusion

Coming from a professional background that included time with a Wall Street broker dealer, merchant banker, and M&A firm, I have seen several investment manias first hand. If this great gold bull market were to wither away now, without the traditional blow-off top characterized by a flood of new participants feverishly bidding up the spot price, it would be a historic anomaly. More likely, analysis seems to indicate that only a minimal number of investors have benefited from the rise in gold and silver so far. Further, this strongly suggests that the bullish trend for precious metals remains in place, and there is still room for substantial appreciation over the long term.