• Jewelry is priced on its intrinsic value in precious metals and stones, not only by its weight.gold hearts image by Marek Kosmal from Fotolia.com
  
  Price increases in metals such as gold, copper and platinum have made metals attractive to investors trying to balance and diversify their portfolios. Just in 2009, the price of gold increased by 24 percent, leading many investors to buy gold. Trading in precious metals, stones and jewels has become so common the U.S. Internal Revenue Service has implemented section 352 of the USA Patriot Act to track money-laundering efforts by investors.
  
  

U.S. Internal Revenue Service

• Precious metal investors must be aware the Internal Revenue Service considers precious metal profits a capital gain and taxable income. As a result, everyone must report profitable precious metal transactions to the government. In addition, all U.S. precious metals brokers must conform to financial brokerage regulations, such as anti-money laundering programs, under section 352 of the USA Patriot Act and the federal Bank Secrecy Act.
  
  This means precious metal dealers must ask for identification, provide transaction receipts, keep transaction records and report transactions over $10,000 using IRS Form 8300. Dealers dealing with international transactions are required to report large financial transfers to foreign financial accounts or individuals. Brokers doing business in certain states, such as Michigan and Pennsylvania, are required to register as precious metal dealers with the state and local police agencies.
  
  

Precious Metal Purchase Options

• Investors can purchase precious metals as gold stocks, precious metal exchange-traded funds (ETFs) or in solid forms such as coin, jewelry and bullion. Purchasing precious metal mining stock, ETFs or mutual funds are available through most brokerage firms. These types of investments offer more liquidity than physical precious metal ownership. Investors purchasing bullion must assess the metal's value by weight.
  
  The Federal Trade Commission recommends purchasing precious metals in coin form, since many countries offer precious metal coins in a regulated coin weight. Precious metal coins have a limited liquidity since their weight value fluctuates based upon world market prices. In addition, investors must consider safe storage options, such as safety deposit boxes, to protect their investment.
  
  

Precious Metal Pricing

• Prices for collectible coins or jewelry are set based on their intrinsic historic or gem value, regardless of its total precious metal weight. For the best prices, precious metal buyers and sellers need to have coins and jewelry appraised by professionals to determine their true value. Investors are encouraged by the Federal Trade Commission to research brokers of precious metals prior to selling or purchasing precious metals, coins or jewelry.
  
  Weight determines the price of precious metal government coin and bullion. All U.S. precious metal brokers must comply with weights and measures regulatory laws when purchasing or selling precious metals. The Federal Trade Commission recommends sellers inspect the scale for the official blue and white paper sticker seal. The seal indicates the Office of Weights and Measures has tested the scale within the last 12 months.