NEW YORK (MarketWatch) -- The selling in the equities markets has been brutal and the commodities markets, including gold and silver, have not faired all that well either. The widespread selling has been indiscriminant and almost reckless.

When the dust settles and the smoke clears many of the commodities that were performing so well before the sell off may be even more attractive at their new levels. One of those commodities is silver.

More precious than gold?

Silver has always stood in the shadow of the gold market and clearly from a dollar standpoint will most likely never be more precious than gold, but it does have other value.

"Many in the investment world are unaware of this part of silver's story. Industrial demand has been outstripping mining supply for the past 15 years..."

Silver is as much a precious metal as it is an industrial metal. Silver has many unique properties which, makes it ideal for use in the photography, technology, defense, and electronic industries.

Currently, there is about 200 million ounces in above ground silver. Due to current supply/demand trends, the amount of silver above ground is projected to shrink to a critically low level in 2010.

As supply shrinks, prices will keep rising steadily to new highs. Many in the investment world are unaware of this part of silver's story. Industrial demand has been outstripping mining supply for the past 15 years, driving above ground supply to historically low levels. This has been a major factor for the rising prices of silver to date.

However, this is only part of the story. As investors seek to hedge against financial crisis, rising inflation, and currency devaluations, investment demand for silver has also been rising rapidly the past few years. Investors bought heavily into the first Silver exchange-traded fund, iShares Silver Trust /quotes/comstock/13*!slv/quotes/nls/slv (SLV 16.24, +0.18, +1.13%) , when it launched in April last year. Another silver ETF recently launched that's composed of futures contracts on silver, the PowerShares DB Silver Fund /quotes/comstock/13*!dbs/quotes/nls/dbs (DBS 29.60, +0.36, +1.23%) .

Going forward, rising global investment demand in conjunction with global industrial demand will become the key factor, driving silver to new highs.

Wiping the tarnish off

The silver market is currently in a transitional period where investment demand is starting to have a real impact on silver prices. Much of the new demand comes from iShares Silver ETF mentioned above. The fund has so far attracted 120 million ounces of silver investment thus far. It's important to understand that silver market is relatively small -- estimated at only 300 million ounces, according to commodities research firm CPM Group.

That means the ETF alone accounts for more than one-third of the global market, and growing investment into the iShares ETF could drive prices much higher. I believe more money will pour into the silver market from investors around the world, bringing silver to new highs in the near future.

The silver market has had its ups and downs over the years. Even worse, many traders remember how it sat in a narrow stagnant trading range for years and years.

But now all that has changed. Today investors are surrounded by many different ways to trade silver, whether it be shares in a miner like Rio Tinto /quotes/comstock/13*!rtp/quotes/nls/rtp (RTP 169.82, +2.30, +1.37%) , using silver futures and options on the New York or Chicago markets, trading the silver ETFs or even one of the silver hedge funds looking to come online in 2007.

Silver has definitely come full circle and is once again showing up on traders' radar screens as the metal that may well lead the next rally in the precious metals markets.