What should I invest in? Precious Metals??

The key is exactly what you've said: stay diversified. You might try allocating a fraction: perhaps 5 to 25%, depending on your risk tolerance, to precious metals. One way to do this is by dollar-cost averaging into a precious metals mutual fund that invests in the shares of companies in that sector,and allows small initial investments and small monthly investments. That way, you won't try to "time" the market, with its attendant risks.

Here's one suggestion - US Funds, which has two precious metals mutual funds - both because they have a decent long-term track record, and because they allow $100 minimum initial investments and $50 minimum per month (although you can always invest more):

http://www.usfunds.com/funds/goldshares_doc.asp

http://www.usfunds.com/docs/html/abc_plan.asp
(their ABC Plan for dollar cost averaging)

More funds in this sector:

http://www.eaglewing.com/

If you truly have an extremely high risk tolerance, my personal take is that the "junior" sector - small mining companies - and specifically one part of that sector - companies that are developing known mineral deposits, seeking to increase their resources from further exploration, and then to do extensive feasibility studies, with the goal of creating economically-viable mines - has the best risk-reward ratio in the entire precious metals spectrum.

The junior mining sector has been hammered, with many companies' shares seeing declines of as much as 40-60% from November 2007 through May 2008 - even though the spot price of gold and silver has actually gone up over that period - and there are many, many compelling values in companies in that sector right now.

To find recommended companies in that space, one place to look is Bob Moriarty's property visit reports:

http://www.321gold.com/archives/archives_authors.php?author=Bob+Moriarty

While he's got a decent nose for value, he's just one person with opinions, however, and you might look around for views from other respected analysts in this sector.

Another place to start is by looking at the lists of junior, mid-tier, and senior precious metals companies that individual investors in this sector have chosen in this 2008 investment contest, sponsored by investment newsletter writer Eric Hommelberg:

http://www.golddrivers.com/alt/contest2008.asp

Note that companies in this sector are *highly* volatile, and you should only invest what you are willing to lose outright. At most, of $10K, you might put perhaps $1-2K into this sector, along with other more conservative investments.

A word of caution: To invest well in this sector, you'll need to do a lot of homework. It can take months or even years of study to begin to feel comfortable choosing individual companies in which to invest; otherwise, you'll be just choosing an investment on someone else's say-so, and even if they're smart and have done their research, they won't always be right with every pick. You should pick your investments, rather than relying entirely on someone else's take.

If you don't have the time, interest, and inclination, you'll want to stick to diversified precious metals-oriented mutual funds, or to surrogates for precious metals themselves, such as the Exchange Traded Funds (ETFs) that trade much like stocks, and closely track the prices of precious metals: GLD or IAU for gold, and SLV for silver.

Finally, along with others' suggestions of emerging market funds, or specifically China and India-oriented funds, here's another relatively new, regional fund in that sector you might consider:

T. Rowe Price Africa & Middle East Fund
http://www.troweprice.com/fundbook/snapshot/0,,ticker=TRAMX,00.html

This fund has a high concentration in the Persian Gulf right now. Might be a good one to mentally store away for a future time, when that region becomes out of favor ...

All of these are high risk, as well, but would complement and help diversify investments that are primarily concentrated in US equities.