Want to invest in precious metals - here is how

There are many different ways to invest in gold. Some of the options include the purchase of gold bars and coins, gold accounts and certificates, gold futures and options, mutual funds and gold exchange traded funds, and gold mining shares. Gold exchange traded funds include names such as the iShares COMEX Gold Trust, Central Fund of Canada, and Central Gold Trust, among others. Investors may opt to borrow funding against their current gold reserves. Then, they can purchase additional gold with their increased financing. ETF Securities has created ETFS Leveraged Gold which changes by twice the percent change of DJ-AIG Gold Sub-Index on a daily basis.

Tier I companies are characterized by stability which reduces the risk of investment. Stability is achieved through the exploitation of geographically diverse operations. Diversification of projects is important given that gold is discovered in some of the most unstable regions in the world. Underdeveloped countries pose additional risks such as rivalry between political fractions, ethnically based uprisings, strikes, and nationalizations of whole industry sectors. Top-tier companies have diversified sources of income that allow them to thrive in spite of adverse circumstances. In the typical case, they own or operate more than ten gold properties. In addition, these gold explorers have proven gold reserves. Tier I companies include miners such as Barrick Gold, Goldcorp, and Newmont Mining Corporation.

The mid-tier gold producers constitute twice the number of the top-tier mining companies. They produce approximately 9 percent of the global supply of gold. Some mid-tier producers own or operate a single mine that yields an output of 0.2 million ounces per year. More often, mid-tier companies operate two or three gold properties. The mid-range miners are characterized by established gold properties and steady production volumes. Due to the huge costs of exploration, mid-tier companies are lucrative merger targets for the top range mining companies. Tier II companies are represented by producers such as Pan African Resources, Northgate Minerals, and IAMGOLD Corporation, among others.

The largest amount of gold stock is held by junior exploration companies. Most of the junior miners own or operate a single gold property. Typically, their production output does not exceed 0.1 million ounces of gold per year. Their lower comparative output does not permit further expansion and exploration of potential gold properties. Moreover, junior companies find it more difficult to raise capital via loans. Some miners in this category have commenced exploitation without extensive feasibility studies, mind engineering, and adequate exploration and planning. They may be operating at a loss because the operational costs are soaring. Due to financial difficulties, many of the junior companies hedge, i.e. they sell a portion of their future output and gold reserves at fixed prices. It can be concluded that these companies carry the highest risks for investors. Junior exploration miners include companies such as Tylor Resources, Redstar Gold Corporation, Rimfire Mineral Corporation, among others.

Since immemorial times, silver has been part of our life in various forms and for diverse purposes. Being the third most popular precious metal after gold and platinum, silver is considered a secure and quite reliable investment vehicle. This is especially true today when the shares of the silver mining companies are rising steadily, triggered by the constantly diminishing above ground supply. In addition, investors regard the market of precious metals as an island of stability in the global ocean of stagnation and constant recession.

Archeologists and historians are unanimous that the ancient people were mining silver for jewelry, and the first evidence mining activity dates back to the Bronze Age. The Turkish province of Anadolu is believed to be the cradle of industrial silver mining. Today, silver mining has developed into an extremely profitable business owing to the constantly increasing investment and non-investment demands for this precious metal. In our age of high technologies and revolutionary innovations, the application of silver is especially broad - latest research shows that this precious metal is used in virtually every segment of industry from electronics to pharmaceutics. As a result, the investors' interest in silver mining shares has grown considerably.

If you are planning to buy shares in some silver mining company, you should choose some of the first-tier silver producers such as Mexico's Industrias Penoles and Grupo Mexico, Australia's BHP Billiton (arguably the largest mining company in the world), Poland's KGHM Polska Miedz, the Peru-based Volcan Compania Minera and, of course, Rio Tinto - the world's leader in finding, mining, and processing of natural resources. Those who plan to put their free capital in silver mining stocks have to be aware that the little silver stocks are not suitable for quick trading: they are extremely vulnerable to fluctuations in the price of silver. Still, silver has a huge investment potential, and those who hold shares in silver mining companies need to be patient enough and wait until the day of silver comes.

Investors need to be particularly cautions when selecting companies to invest in. When evaluating companies, it is a good idea to find out what their production costs are relative to the price of their stock. The lower the per ounce cost of production, relative to stock price, the higher the opportunity to gain profit. In general, it is best to go for stocks that are actually producing. Such stocks can provide huge profit from increases in capital gains and in the form of dividends.

Rough calculations show that one ounce of gold has the asset value of ten ounces of silver, but as the price of gold is extremely volatile on the global market, this ratio should not be taken as a fixture. Still, financial experts have estimated that silver's upward potential is several times bigger than that of gold, and its wholesale price is expected to hit $3,500 per ounce in the long run. Some daring investment advisors suggest that to take an ultimate advantage of your silver stocks you should invest the profit in physical silver and thus close the investment cycle.