The Next Bull Market in Precious Metals

Updated with recent gold price movements

NEW YORK (TheStreet ) -- Gold prices have popped 9.7% year to date after reaching a record intraday high of $1,264 an ounce, and the next bull market is in rare earth metals, says one analyst.

James Dines, editor of The Dines Letter, uses mass psychology to identify bubbles before they burst. Although he is a self-proclaimed expert, Dines reportedly urged subscribers to buy mining companies in 2001 to take advantage of a coming bull market in gold.

Since then, gold prices have popped 353% while large-cap miners like Randgold Resources(GOLD) -- although the company didn't list on the Nasdaq until July 2002 -- and Newmont Mining(NEM) have risen 618% and 246%, respectively.

Now Dines says rare earth metals will see the next big bubble, and he is recommending that investors buy them. Reportedly, three of his current stock picks have skyrocketed 813%, 1,148% and 3,775% since September 2008. It's impossible to know if his assertions are, in fact, accurate because he refuses to reveal the names of these picks, but he is not alone in his bullish thesis.

For example, Jason Hamlin, president and founder of Gold Stock Bull said in his premium newsletter in September 2009, "I haven't been nearly as excited about the investment opportunities in a new sector as I am about rare earth metals." And Jim Jubak, MSN Money columnist, also identified this space as a rare opportunity in mining stocks.

I spoke with James Dines to give investors a snapshot of the rare earth metals story, which offers investors a way to speculate on resources beyond gold and silver.

First of all, what are rare earth metals?

Dines: Rare earths are a series of 17 elements that have very exotic uses but quintessentially so. They're very little understood, and I've been studying them for several decades and finally announced a major bull market on them in May two years ago when they were completely in the cellar, in the dog house, and the stocks were selling for pennies.

What I realized was that China controlled 96% of the [world's] output and that they are absolutely essential. For example predator missiles, you can't build one without a rare earth metal ... [One] windmill requires two tons of rare earth or it won't work... And you can't build a Prius without rare earths.