What if I told you that there was a mutual fund that has had the following rate of return over the last several years:

Year to Date: 12% versus 9% on the S&P 500

Last Year’s Return: 39%

And an Average Annual Rate of Return of 27% versus only 14% for the S&P 500.

You would think most investors would want to invest in a mutual fund with these kinds of returns, right?

You would be wrong. This fund, the Tocqueville Gold Fund (TGLDX) only has $1.1 billion under investment.

In the realm of mutual funds, a billion dollars under advisement is pretty much nothing.

But how could it be that investors aren’t throwing their money at this gold fund?

Investors are still leery about the metals sector. Either they don’t understand it or they mock it. As John Hathaway, Tocqueville Gold’s manager recently said in a Barron’s interview:

Here you have an asset class that has been outperforming for some time, and yet it is still treated skeptically. What do you make of that?

Gold’s bubble lies ahead. It has got a long way to inflate. So much about gold has very little to do with gold. It is more about capital-markets psychology. If we are entering a period of difficult markets, which was averted from happening earlier because the Fed pulled this 1% short-term money stunt and bought us a few more years, it is going to change psychology, and that will open the door for more people thinking about gold. What was needed to put gold in overdrive was the scent of fear.

His most interesting comment: That gold’s bubble still lies ahead. This is absolutely correct.

There will be a mania for the metals at some point in the future. I don’t know how soon it will get here. It’s not here yet (as is evidenced by the paltry billion dollars invested in his outstanding fund.)

Gold is still a contrarian investment. It doesn’t become a bubble until everyone is in it. We are a long way from that. People will still mock you if you say you own gold or gold mining stocks.

When gold has respect, that’s when this bull will be over.

Watch the Yellow Metal.

They don’t call them “precious” for nothing. While the stock markets have been having convulsions over the credit crisis, gold has been meandering between $650 and $700. It sold off last week as the stock market did- but it wasn’t a huge sell-off.

Gold and silver will provide safety for many investors in the coming months. Mark O’Byrne, Director of Silver & Gold Investments said in an article on CBSMarketwatch:

“During the Wall Street crashes of 1929 and 1987, gold also fell in price during the actual days of the stock crashes but sold off by less than stocks and very soon recouped the initial losses and then surpassed its recent highs.”

If the dollar continues to sell-off, you will see a flight to the safety of gold.

Silver has also been hovering close to the $13 level for quite some time.

How do you invest in these sectors? There are gold and silver ETFs where you can own the commodity directly- the Gold ETF (GLD) and the Silver ETF (SLV). Or you can buy the gold miner index ETF ticker GDX. Some of the natural resource mutual funds or metal mutual funds have seen great returns in recent years. They likely own a combination of gold and silver companies.

The gold mutual funds aren’t doing all that great so far this year. For instance, the Tocqueville Gold Fund (TGLDX) is up less than 1% for the year.

But watch for gold and silver investment to pick up in the future. In times of market volatility and inflation, investors will be flocking to the certainty that is the yellow metal.