By far the largest group would identify with the phrase “go along to get along.” They invest in “ideas” from their broker and mainstream financial rags. If feeling adventurous, they tune in to Cramer’s Mad Money for a hot tip.

There is, in our view, much wrong with that approach. For starters, a broker is paid to move stock and generate commissions, a built-in conflict of interest. And once a stock gets written up in Forbes or shouted up by Cramer, it is the exact opposite of a “hot” story.

The second group are the dice-rollers. They buy touts from telephone salespeople and haunt the financial chat rooms looking for “home runs.” In their youth, they were the “opportunity seekers” who sent away for the kit guaranteeing a six-figure income from the comfort of a living-room chair. There isn’t much one can do for them. They will either learn their lesson on the cheap and reform, or lose all or most of what they have.

You rarely get hurt paying less for an asset than it is worth… and just because no one seems to want it at the moment doesn’t mean it’s worthless.

Risk and reward are linked. While not all risky ventures hold the promise of high returns (e.g., sending money to a Nigerian bank in the hope of receiving a fortune is all risk and no potential return), all investments offering high returns carry higher risk. Understanding this link, savvy speculators do their homework to understand the risk side and, where possible, reduce it.

Think contrarian. That is the polar opposite of getting your investment advice from mainstream media. When Doug Casey first spotted the spectacular upside for uranium stocks in 1998, nuclear power was being universally shunned. But Doug saw what others didn’t -- that (A) nuclear was the only practical mass power alternative, (B) uranium had fallen so out of favor, and its price beaten down so low, almost no exploration was being undertaken, even though (C) supplies were being drawn down to critical levels.

There is one final tenet to keep in mind about speculation.

Most people invest 100% of their money in the hope of earning a 10% return. A rational speculator, on the other hand, looks to invest just 10% to 20% of their money in investments that hold the potential for a 100% or better return.

Over the last two weeks, I’ve heard from two old acquaintances whose retirement nest eggs – millions in all – were wiped out by a series of bad trades in traditional stocks recommended by their mainstream brokers.

A rational speculator, even after a complete wipe-out, would still have 80% to 90% of his money to start over with.

Now let me bring all these points together in a way that could hand you returns most investors would consider outlandish. In fact, it may be the best contrarian speculation of your lifetime. It starts by answering a simple question…

Will Precious Metals Continue to Soar?

When asked about the outlook for the economy, most investors will answer something to the effect of… “My broker at XYZ Securities thinks the broad U.S. stock market still has a good run ahead of it.” In other words, they leave their thinking about the future to their brokers, the individuals who tend the myth of the permanent bull market (perhaps gently interrupted by occasional “soft” landings).

Which brings me to the speculative opportunity.

Remember, the potential is so great that no more than 10% to 20% of your portfolio is required. Here’s what you’ll be betting on.

1) That the Fed won’t be able to juggle the Mt. Everest of debt, the deflating housing bubble and the potential stampede out of the U.S. dollar by foreigners. Something has to give, and we think it will be the dollar… inevitably good for precious metals.
2) That because -- for the first time in history -- the unbacked currency of one nation (the U.S.) is the de-facto reserve currency of all the world’s central banks, a collapsing dollar will lead to a global monetary crisis.
3) That the current war in the Middle East will have serious and long-lasting consequences that require massive new infusions of money on top of already out-of-control government spending. And the fighting may trigger a larger conflagration that sends oil over $100… a highly inflationary outcome.

But There’s More…

Your contrarian bet gets even more compelling when you consider that, historically, gold bull markets last a minimum of ten years. Gold bottomed in 2001, so we are just a bit over 5 years into the current bull market. And, based on the historic dislocations in the global economy, we don’t think that this bull market will be anything close to “average.”

One important early result of the bull market in gold and silver is that the junior exploration sector has been energized by an infusion of new capital. Serious exploration and drilling programs are already running on serious targets.

It has taken time and patience, but that patience is about to be rewarded, as exploration programs head into their advanced stages – where we can actually see which companies have found deposits big enough and rich enough to be mines. In that regard, 2007 should be a banner year… and you definitely want to place your contrarian bets before the newest crop of discoveries are announced in the weeks and months just ahead.

Historically, when you match up a bull market in precious metals with major mining discoveries, you get the kind of roar that can turn your speculation into a fortune.

The mere fact that you are reading this hints that you are thinking about jumping on the precious meals bandwagon -- but don’t stop thinking like a contrarian. Keep this most important point in mind: not one in ten U.S. investors currently owns a single gold stock. They know nothing about them, but they do have brokerage accounts and they do like a good story.

Early pays. Early pays big. So the time to act is now, before the stocks get pricey -- not when you are hearing about junior precious metals explorers in Forbes or from the mouth of Jim Cramer on Mad Money. At that point, the tide will already be cresting, and we’ll be cashing in on what now is shaping up to be the speculation of a lifetime.

David Galland is the Managing Director of Casey Research, LLC., publishers of Doug Casey’s International Speculator, one of the nation’s oldest and most respected publications dedicated to identifying rational speculations with the very real potential to earn 100% or more in a year or less. Do you have what it takes to be a rational speculator? Learn more about a risk-free 30-day trial subscription to the International Speculator – click here now.