Despite the drop in gold prices and silver prices today, these precious metals have been a great investment in 2008. Silver has gained a phenomenal 27 percent, while gold has climbed 17 percent. Matt Badiali says we’re on the brink of a global inflation crisis and that an investment in precious metals now is a great low-risk hedge…

I think precious metals are a pretty low-risk investment in general right now. We’re on the brink of a global inflation crisis.

I’m no economist, but I know inflation when I see it. The price of oil is incredibly high. Oil affects the price of everything. Plastics are made from oil. Trucks, trains, and boats that move goods from point A to point B burn oil products. No matter what it is, if you bought it, you paid an “oil tax.”

That’s not an American phenomenon, that’s worldwide. High oil prices mean price inflation on a global scale.

Take a look at Asia, where Indonesia’s inflation rate is 10%, the Philippines’ is 10%, and India’s is 12%. Those countries are indicative of much of the developing world, where food and fuel prices have a bigger impact on the economy than in the West.

However, even in places like England, inflation is skyrocketing. The Financial Times reported inflation rose to 3.8% in June alone. The head of the Bank of England forecasts 4% by the end of the year – which now looks like a conservative estimate.

Global inflation is going to drive the price of gold and silver through the roof and into the sky. When inflation raises its ugly head, investors buy gold. Gold and precious metals are impossible to create from thin air (as opposed to paper and ink currencies). So as governments run printing presses night and day, the value of gold and silver soars.

The safest bet for silver bugs is a big silver exchange traded fund like PowerShares DB Silver Fund (DBS) or iShares Silver Trust (SLV). These funds are designed to track changes in the price of silver. Another possibility is the PowerShares DB Precious Metals Fund (DBP), which tracks both gold and silver.

However, I like the big silver miners. The recent market correction clobbered the entire sector. Many big silver stocks are sitting at 52-week lows. Any boost in the silver price will send them flying.

However, mining companies are risky. They can have problems with mines or striking workers. These problems can leave your shares flat while the rest of the sector soars. The best way to avoid this is to own shares of several mining companies. I don’t know of a silver mining ETF, so you’ll have to do it yourself.

Source: Commodity Q&A: The Best Time to Buy Silver is Right Now