Our economy continues to seesaw and investors are constantly searching for safer places to put their money. If you ask people out on the street what their favorite investment is, chances are you'll get a majority claiming gold as their favorite buy.

Gold has wildly outperformed the S&P 500 over the past decade, but I don't think it gives you as great a return potential as another metal I have in mind.

This mystery metal is none other than palladium and it may deserve a spot in your portfolio.

Palladium is getting increasingly more rare and is gobbled up with regularity by the automotive, electronics, and jewelry industries. Russia and South Africa provide roughly 80% of its available stock and there has been speculation that Russia's reserves are shrinking drastically. With such dominance of the global resource base coming from only two sources, there is heightened potential for a supply-side-caused price shock.

The automotive industry consumes approximately half of all palladium yearly for use in catalytic converters. Although platinum is the most commonly used element in catalytic converters, as platinum rises in price, manufacturers will make the switch to palladium, which is less expensive and just as effective. Also, in case anyone missed it, the auto industry has bottomed and is on the rise, meaning palladium demand should be on the rise as well.

The electronics industry makes up another sizable portion of yearly demand with palladium being used in everything from TVs, to iPods and Blu-ray discs.

Palladium has numerous uses, but how should you invest in it?

Let me introduce Stillwater Mining (NYSE: SWC), the largest U.S. miner of palladium and platinum metals.

According to its most recent annual report, Stillwater has 20.6 million ounces of proven and probable palladium and platinum reserves. With approximately 3.5 times more palladium than platinum, and using recent metals closing prices, Stillwater has about $18 billion currently in the ground under its Montana mine.

Despite this, Stillwater is trading at 15 times forward earnings and the lone analyst covering the company is looking for 2009's revenue to double by 2012. Unlike competitor North American Palladium (AMEX: PAL), Stillwater turned an operating profit last year and looks on track to do it again in 2010.

You don't have to dig too deep these days to find a winner in the mining sector, but focusing on palladium could give you a huge advantage over other metals and the overall market moving forward.

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Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name UltraLong. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.