• Sponsor: World Gold Trust Services LLC, a “wholly owned subsidiary” of The World Gold Council
• Trustee: The Bank of New York Mellon
• Custodian: HSBC. (Named after its founding institution, The Hongkong and Shanghai Banking Corporation Limited, back in 1865.)

Investing in the mining sector in an attempt to profit from the bull market in precious metals can be successful for those investors who understand the industry. Others may come up on the lucky side simply due to the overwhelming price advances of gold and silver.

In past precious metal markets, the mining company stocks have tended to move in the same direction of the underlying metals, but their volativity have far surpassed that of the metals – sometimes causing exponential price fluctuations compared to the price changes in metals.

This is largely due to the fact that investments in miners are essentially investments in the stock market. Hence, they are vulnerable to anything affecting the general economy and can move in the opposite direction of the metals, depending on circumstances.

The mining stocks are particularly vulnerable to political climates and even environmentally-motivated uprisings in countries where the companies are mining. For example, Hugo Chavez announced that he is nationalizing Venezuela’s gold miners. And in Peru, after the latest round of elections, the newly elected president, Ollanta Humala, would definitely like to have a share of the miner industries’ profits in his country, but it isn’t clear if or how that may happen. Nevertheless, just the rumors of government intervention of any kind can send a stock down dramatically.

Between the threats of government intervention or increasing mining taxes and environmental concerns, one walks a tight rope in determining companies in which to invest.

On top of these factors, the investor must decide which market-cap range is the best area of investment.

• Large Cap (Market Capitalization in Billions of dollars & well established)
• Mid Cap (Market Capitalization in high Millions of dollars)
• Small Cap (Market Capitalization in low Millions or unestablished)

Large caps can be more stable, but not have much growth potential. In fact, most large caps depend on buying up small and mid caps in order to sustain growth. Some small caps can yield huge returns. But some are risky because they can run out of cash and go belly-up before any significant find is established. The trick is knowing which ones have the greatest potential.

So it is worth repeating…if the investor doesn’t know the industry, then perhaps a better label for the activity of investment would be gambling.

But there are knowledgeable people in the industry. And one way to take advantage of that knowledge is to invest in minor-related ETFs and Mutual Funds. These types of funds hold baskets of various stocks, chosen by the funds’ management.

Below is a table of some precious metal equities, but it should be noted that these are not recommendations – each investor should initiate his/her own investigations prior to making any investments. The table is provided for informational purposes only.

Disclaimer: The author either owns, has owned, or is contemplating owning the listings in this table.

Large Caps
AEM	Stock – AgniCo Eagle Mines Ltd
EGO	Stock – Eldorado Gold Corp
GG	Stock – Goldcorp
KGC	Stock – Kinross Gold Corp
PAAS	Stock – Pan American Silver Corp
SLW	Stock – Silver Wheaton Corp
SVM	Stock – Silvercorp Metals Inc
AUY	Stock – Yamana Gold Inc
TGLDX	Mutual Fund – Tocqueville Gold
USERX	Mutual Fund – U.S. Global Investors Gold & Precious Metals
UNWPX	Mutual Fund – U.S. Global Investors World Precious Minerals
GDX	ETF – Market Vectors Gold Miners
Mid & Small Caps
CA:AMM	Stock – Almaden Minerals Ltd
CA:BYV	Stock – Bayfield Ventures Corp
CA:CGT	Stock – Columbus Gold Corp
CA:EAS	Stock – East Asia Minerals
FSM	Stock – Fortuna Silver Mines
THM	Stock – International Tower Hill Mines Ltd
CA:TWD	Stock – Trade Winds Ventures Inc
XRA	Stock – Exeter Resource Corp
AG	Stock – First Majestic
GDXJ	ETF – Market Vectors Junior Gold Miners

But the relative ease and convenience of an ETF doesn’t necessarily mean they are safe investments. In fact, quite the opposite – they can be quite volatile. And since they are a derivative of the underlying asset or financial instruments, every investor should understand that the ETF does not yeild any ownership of anything but a share of stock. (It is not as if the underlying asset or financial instruments are being purchased.) At best, any ETF can only propose to have similar price-performance compared to the underlying instrument.

While it is true that some ETFs provide for the exchange of stock shares for the underlying assets, this option is closed to most investors simply due to the minimum number of shares necessary to execute such an option.

Any investor wishing to participate in the precious metals bull market by utilizing the ETF arena should understand that it is not the same thing as owning precious metals. Instead, it’s a paper asset and should be treated as such. It should also be realized that all ETFs are not managed the same, nor are they even structured the same. On top of that, given any specific ETF, there will always be varying opinions among different analysts regarding the validity and expected performance of that same ETF. As an example, here’s an article discussing and comparing some of the prospects of the GLD, SLV, PHYS and PSLV ETFs.

When it comes to ETFs based on precious metals, there are a variety of different types:

• Standard ‘bull’ ETFs linking the price of one share to the price of a specific amount of a precious metal. The price of the shares tend to move more or less in synch with the underlying metal’s price movements.
• Standard ‘bear’ ETFs also linking the price of one share to the price of a specific amount of a precious metal. Only the share price tends to move in the opposite direction of the metal. (The share price goes up if the price of the underlying metal goes down.)
• Leveraged ETFs seek to give double (or sometimes triple) exposure to share price movements of twice (or more) the amount of the underlying metal. Again, these can be either bull or bear type exposure. (Incidentally, these leveraged ETFs are becoming quite a concern to market regulators in Washington. A derivative of a derivative of the underlying asset doesn’t seem so friendly to free markets. This related article discusses the dangers of the derivatives market.)

Below are some of the more popular ETFs in the precious metals space. Please note that this list is not comprehensive and these are not recommendations, but provided for informational purposes only.

The technology available in today’s world certainly makes things more convenient. Using the Internet, everyone can now transact just about anything online. This includes the purchase and storage of precious metals.

In evaluating the different online precious metals services, one must consider at least the following criteria:

• The service provider should have a track record that can be verified. Make use of the world-wide-web and search for news about the provider that may indicate financial or fraudulent activity. For providers in the U.S., you can check with the Better Business Bureau to see if anyone has lodged complains or if there are any lawsuits pending. In any case, do the homework and due-diligence necessary prior to investing. (And that is true for any investment.)

• Geographically speaking, where does the provider store the metal? What are the political environments like in those countries where their vaults are located and what are the chances of government seizure of the precious metals held in those vaults? Some providers offer several different vaulting options, thus providing for geographical diversification and exposure to more than one country-specific market.

• What are the fees associated with buy and sell transactions? It is normal for companies to charge commissions and fabrication fees, but excessive fees should be guarded against. A combined transaction fee of less than 5% is reasonable. Anything larger, depending on the situation, should be questioned. The fee structure should be understood prior to making any investments.

• What are the storage fees? And on what basis (monthly or annual) are they charged. What form do the storage fees take? (Do they require a cash deposit to be held, or do they simply deduct a portion of the metal stored in their vaults from your account?

• How closely to the provider’s spot-rate quotations for the prices of their metal compare with the overall precious metals market? This varies greatly among providers and should be understood prior to investing.

• Another thing to look for is that the provider should regularly be publishing results of independent audits showing that they do indeed hold the precious metals they claim on behalf of their clients.

• Finally, and this one is extremely important, there should be some method the provider offers to allow the cutomer to take physical delivery of the metal if desired. Not all providers offer this, which would make them an electronic-only bullion dealer. The terms under which a physical delivery can be requested as well as the fees involved should be completely understood prior to making any investment.

There may be other considerations depending on the investor’s needs, but this should serve as a necessary first line of thought to be given to this type of investment.

Below is a table comparing the author’s personal experience with 3 of the more popular and reputable precious metal online storage providers.

Positives:SilverSaver® is unique in that it offers its customers Rewards, which is a program that pays people for signing up friends and family. Every time a referred client makes a purchase, the SilverSaver® Rewards program ensures that the referrer gets a small ‘kick-back’ (in gold or silver). SilverSaver® stores it’s metal at First State Depository located in Wilmington, Delaware. Easy sign-up. Adding bank accounts for transfers is easy too! Customers can purchase either gold or silver on a one-time basis or on a recurring schedule. Customers can sell their precious metals for cash at the daily SilverSaver® Base Rate without any fees or commissions. This is much better than other providers & dealers, which typically take 3-10% of the final sales amount! Customers can take delivery of their gold or silver in many different forms (each having their own associated fabrication fees).   Disclaimer: The author of this article is using the SilverSaver® Rewards program and if you click through these links provided to SilverSaver® and create an account there, the author will benefit, but there is no extended cost to you.
Negatives: SilverSaver® seems to be only available to U.S. and Canadian customers. The storage fees seem reasonable (0.02%/month), but their premium (the amount the customers pay on top of the price of the physical metal in order to cover expenses and commissions) is based upon a graduated scheme, currently ranging from 2.99% to as much as 7.49%. But this amount is a combined amount over a two month period, so the more the customer buys, the premium rate gets better. The SilverSaver® Base Price changes every business day according to the real physical market. SilverSaver® indicates that it is “historically comparable to internationally recognized silver prices such as the London Daily Fixed and the Handy & Harman Daily Fixed prices.” When a customer places an order, he/she only has an approximation of the Base Price they will end up paying for the metal. This is due to the fact that when an order is submitted, the actual Base Price for the date of purchase hasn’t been established yet. This may not be suitable for all investors, but for those wishing to utilize Dollar Cost Averaging during this precious metal bull run, it is a good investment mechanism.
Positives:Once past the initial hassle of getting a GoldMoneyaccount set up (see below), the investor is rewarded with a vast array of investment options. It is possible to invest in gold, silver, platinum & palladium. Trading markets and vaults are globally dispersed – located in London, Zurich & Hong Kong. Two different vault depository companies are used – VIA MAT and G4S. Metals can be moved from one geographic location to another or from one type of metal to another (for a fee, of course). Buying and selling metals can be done with a wide assortment of currencies – USD, CAD, GBP, EUR, CHF, JPY, AUD, HKD, NZD. Premiums charged for precious metals depend on the geographical location of the market as well as the amount of metal being purchased. Most are reasonable expectations, given the variety of options. Physical delivery is possible and in multiple forms. Storage fees are mostly reasonable, but note that they vary according to geographic location and vault.
Negatives: Setting up the intial account requires verification steps, which include creating photo copies of two forms of identification and submitting to GoldMoney prior to funding the account. This could also be viewed as a positive feature as it serves to protect both the investor and GoldMoney, but it is a bit time consuming. GoldMoney is headquartered in the British Channel Islands (UK). So for most investors outside the UK, it is necessary to initiate an international wire transfer prior to purchasing any precious metals. Since this is considered a “foreign financial account” by the U.S. Department of the Treasury, if the account has a value of $10,000 or more during the year, US investors must file form TD F 90-22.1 (FBAR), which is separate from the federal income taxes filed to the IRS. (More accurately, the $10,000 is an aggregate amount for the total sum of all foreign accounts the U.S. investor may own. If the total is $10,000 or more, every foreign account will need to be listed on the form above.)
Positives:Again, after the initial account set-up, Bullion Vaultoffers the investor a unique precious metals trading platform. Trades can be made for either gold or silver. Exposure to London, Zurich & Hong Kong markets. The Bullion Vault web platform allows the investor to see live streaming markets in each geography. Bid & offer prices as well as market depth are visually displayed. The investor is able to easily make trades instantly or may even place bid or sell offers, which is something other providers lack. Storage fees are reasonable and are transacted using the available cash in the account.
Negatives: Initial account set-up is time consuming and involves making copies of at least two forms of identification and submitting them to Bullion Vault. Bullion Vault is headquarted in London, so an international wire transfer is necessary for most investors prior to purchasing any metal. The same foreign account U.S. regulations apply as already mentioned above using form TD F 90-22.1 (FBAR). Changing a funding bank account is not convenient. One must basically go back through the account set-up process again. Supposedly, this is to fight against money-laundering and to protect the customer as well as Bullion Vault. Taking delivery of the precious metal is only possible if it becomes absolutely necessary due to bank insolvency or some similar catastrophe.
Information as of September 7, 2011

There are a few different ways to invest in precious metals. Each investor needs to give serious thought to these ideas and select the option(s) that best suit their own needs.

Below is a quick reference to different investment vehicles available to the average investor interested in the precious metals market.

Investment Vehicle	Description
Physical Metal	Buying physical precious metals requires the investor to take delivery of their gold and/or silver bullion in coin or bar form. This also requires self-storage (using either a home-safe or a bank safety-deposit box). Every serious precious metals investor should have at least some percentage of their entire investment portfolio in this form of physical ownership.
Online Storage	The world wide web makes it possible to do online investing as well as purchase and remotely store precious metals. For those investors that are unable to personally store their metal, this option can be extremely convenient. With the added benefits of having global access to storage facilities in the U.S., Europe and Asia, this option can also build in geographical diversification – always a good thing in today’s political climates.
ETFs	There are Exchange Traded Funds (ETF) which trade just like stocks in the stock market. These are by far the most convenient, but also perhaps a bit more volatile than the actual physical market itself. This method of investing should not truly be considered an investment in the physical metal, since delivery of the metal would be difficult for most investors.
Mining Companies	If you’re ultra-wealthy and you want to preserve that wealth, it can be extremely difficult to acquire all the physical metal your money can buy. This is mostly because hitting the market with huge buy orders can make the price spike up and upset the market. For this reason, the elite classes usually buy up their own mining companies. The smaller investor can still participate via publicly offered shares in large, mid and small-cap mining companies listed on stock-exchanges.