Funds can be physically backed by the metal itself, it can have ownership of futures contracts to buy the metal, it can hold companies involved in the mining and production of a metal. [Copper ETN: Forging Ahead?]

A fund that is backed by the physical commodity has the metal stored in a vault. Investors should note that these funds have storage fees calculated into their expense ratios. Also, physical bullion trades are taxed by the IRS at the collectibles rate of 28% instead of the long-term equity rate of 15%. Investors should still consult their tax experts for specific advice, though. [What’s Driving Platinum and Palladium ETFs?]

  • SPDR Gold Shares (NYSEArca: GLD)
  • iShares COMEX Gold Trust (NYSEArca: IAU)
  • iShares Silver Trust (NYSEArca: SLV)
  • ETFS Physical Gold (NYSEArca: SGOL)
  • ETFS Physical Silver (NYSEArca: SIVR)
  • ETFS Physical Platinum Shares (NYSEArca: PPLT)
  • ETFS Physical Palladium Shares (NYSEArca: PALL)

Funds may also own futures contracts to buy the metal. Contracts are rolled over before expiration, and another contract is purchased in its place. Rolling over contracts generates trading fees. Futures contracts are taxed at a lower maximum rate of 23%.

  • PowerShares DB Precious Metals Fund ETF (NYSEArca: DBP)
  • PowerShares DB Base Metals Fund ETF (NYSEArca: DBB)
  • PowerShares DB Gold Fund ETF (NYSEArca: DGL)
  • PowerShares DB Silver Fund ETF (NYSEArca: DBS)
  • Ultra Gold ETF (NYSEArca: UGL)
  • ProShares UltraShort Gold (NYSEArca: GLL)
  • ProShares Ultra Silver (NYSEArca: AGQ)
  • ProShares UltraShort Silver (NYSEArca: ZSL)

Many metals ETFs give investors exposure to the companies that mine and produce the metals. While such funds don’t give you access to spot prices, they have their own advantages. One big one is that mining companies can continue to do well if a commodity’s price steps back, but remains far above the cost of production. Such funds also lack the big day-to-day swings that have a tendency to vex futures- and physically-backed metals ETFs.

  • SPDR S&P Metals & Mining (NYSEArca: XME)
  • Market Vectors Gold Miners (NYSEArca: GDX)
  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ)
  • EGS DJ Emerging Markets Metals & Mining Titans (NYSEArca: EMT)

Lastly, funds may offer exposure through notes or exchange traded notes (ETNs). ETNs are taxed by the long-term equity rate of 15%. ETNs are unsecured debt backed by the full faith and credit of the issuer. They have no tracking error. [ETNs: Everything You Want to Know.]

  • ELEMENTS Rogers International Commodity Metal ETN (NYSEArca: RJZ)
  • E-TRACS UBS Bloomberg CMCI Industrial Metals ETN (NYSEArca: UBM)
  • iPath DJ AIG Industrial Metals ETN (NYSEArca: JJM)
  • PowerShares DB Base Metals Long ETN (NYSEArca: BDG)
  • iPath AIG Copper (NYSEArca: JJC)
  • iPath DJ AIG Lead (NYSEArca: LD)
  • iPath DJ-AIG Aluminum (NYSEArca: JJU)
  • iPath DJ AIG Nickel (NYSEArca: JJN)
  • E-TRACS UBS Platinum (NYSEArca: PTM)
  • iPath DJ AIG Platinum (NYSEArca: PGM)
  • PowerShares DB Gold Short ETN (NYSEArca: DGZ)
  • E-TRACS UBS Short Platinum ETN (NYSEArca: PTD)
  • PowerShares DB Base Metals Double Long ETN (NYSEArca: BDD)
  • PowerShares DB Base Metals Double Short ETN (NYSEArca: BOM)
  • PowerShares DB Base Metals Short ETN (NYSEArca: BOS)
  • PowerShares DB Gold Double Long ETN (NYSEArca: DGP)
  • PowerShares DB Gold Double Short ETN (NYSEArca: DZZ)

For more information on metals, visit our precious metals category or base metals category.

For full disclosure, Tom Lydon’s clients own shares of XME.

Max Chen contributed to this article.