Precious metals coins provide investors with diversification and a refuge from the current volatility of stocks.

With the prices of gold and silver falling during the past five years by 14.81 percent and 40.86 percent, respectively, the timing may be good to consider such purchases. It also would be in keeping with tradition for investors to use precious metals coins as a safe haven when the market slumps.

However, when venturing into the purchase of precious metals, investors need to tread carefully and use reputable coin dealers. For guidance, I contacted coin dealers who have rich experience in helping investors navigate the opportunities and pitfalls of buying and selling precious metals coins.

Silver or Gold?

“The trend for gold and silver has been for silver to appreciate or fall by a greater percentage than gold,” said Patrick Heller, communications officer at Liberty Coin Service in Lansing, Michigan.

Gold and silver prices began climbing at the end of 1999 until they peaked in 2011, Heller said. The price of gold rose 563 percent by jumping from $288.25 an ounce in 1999 to $1,911 an ounce in September 2011. Silver soared 824 percent from $5.41 an ounce in 1999 to $50 an ounce at the end of April 2011, he added.

However, from those peaks to today, gold is down 30 percent (from $1,911 to $1,331.50) while silver has dropped 67 percent (from $50 to $16.34).

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Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce,Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz.