Precious metals are in an asset class all their own. They zig when other markets zag. They often rise when other investments -- stocks, bonds and your home -- fall. They can give your portfolio real diversification. Some smart investors argue that you should always hold about 5 percent of your portfolio in precious metals.

But how? These days, when people think of investing in gold, they typically think of buying bullion, often through an exchange-traded fund such as the SPDR Gold Trust (GLD) . And over the past decade, bullion has certainly delivered. It has risen from $270 an ounce to well over $1,600 -- leaving most other investments, and precious-metals mutual funds, in the shade.

But gold bullion is only one option. And it's not always the best one either. At times over the past few years, you could have made more money by investing instead in the stocks of big gold-mining companies, such as Newmont (NEM) and Barrick Gold (ABX), or in the more speculative smaller ones. During the 2008 crash, many of these were being sold for next to nothing.

It turns out, the smart precious-metals pick a year ago was silver. Despite a sell-off this spring, silver is worth double what it was 12 months ago, while gold is up by just 25 percent. And what about platinum, the other white metal? It's beaten gold in five of the past 10 years. Platinum jewelry typically sells for twice what gold jewelry does. The public values it highly. Yet today I can buy platinum as an investment for $1,750 an ounce, less than 10 percent more than the price for an ounce of gold. Is this a bargain?

We really need an all-purpose precious-metals fund with a completely free hand. But the mutual fund industry is of little help. Janet Yang, an analyst at Morningstar, says there are only about two dozen precious-metals funds out there, and they invest all, or nearly all, their money in mining stocks. Few own much bullion, if any.

What are your options? Maybe this is overcomplicating matters, and maybe you should just buy the Gold Trust ETF and forget about it, but I hate to leave value on the table. Dylan Grice, an investment strategist for SG Securities in London, has been bullish on gold for a long time. But when I asked him which he preferred, bullion or the mining stocks, he replied sensibly: "Whichever is cheaper!"

At the moment, that may be the big gold-mining stocks. Every so often, I run some analytical charts to compare different subcategories within precious metals: large mining stocks, small miners, gold, silver and platinum. And right now the big miners look cheapest, in relative terms. (Platinum also looks cheap.)

Some savvy metals investors track the value of the Philadelphia Gold & Silver index, the best-known index of precious-metals mining stocks, in relation to gold bullion. By this measure, the major mining stocks are close to 25-year lows. Fundamental valuations tell a similar story. Newmont is currently trading at 13 times forecast earnings; Barrick, just 10 times. These are fractions of their recent averages -- in 2003 Barrick traded at 70 times forecast earnings. Analysts at Canaccord Genuity reckon the mining stocks, in relative terms, are "nearing an all-time low." Naturally, there are risks. Mining stocks are often more volatile than bullion, especially in a crash. And as Adam Strauss, comanager of the Appleseed mutual fund, puts it, mining stocks also involve "management risk, exploration risk, environment risk and political risk." Rising production costs will shave profits. And political risks -- like the danger that miners will get hit with windfall taxes -- are highest when gold booms.

It's also the case that the long-term relationship between big mining stocks and gold prices is not what it was. Professional investors used to buy shares in the likes of Newmont as a proxy for gold. The shares were liquid and far more tax-efficient for institutions than bullion. But the rise of gold exchange-traded funds has changed all that. It's one reason the big mining stocks have fallen out of fashion in the past decade.

Nonetheless, companies mining gold are going to profit from booming gold prices, one way or another. If you're bullish on gold, it's hard not to like these stocks.

Someone looking to add gold-mining stocks to their portfolio can pick a mutual fund, such as Tocqueville Gold, Fidelity Select Gold Portfolio or Dynamic Gold & Precious Metals. Or they can just pick a low-cost exchange-traded fund, like the Market Vectors Gold Miners (GDX) exchange-traded fund, which invests passively in a basket of mining stocks.

But it makes sense to hold bullion as well. I happen to own SPDR Gold Trust, as well as a little platinum, through the ETFS Physical Platinum Shares (PPLT) exchange-traded fund. I like to keep my bases covered.