Prices of gold and silver have seen dramatic swings over the past few years, and consequently, shareholders of precious metals miners have been taken on a wild ride. As prices of gold and silver rise and fall, so do the profits -- and by extension, stock prices -- of the industry competitors. That's meant a boom-or-bust investing climate, which may suit some investors not afraid to take aggressive risks in the pursuit of ou-tsized returns.

For more risk-averse investors though, that lack of reliability is probably not a good thing. While it may seem that all miners are highly volatile, there's one industry competitor that is taking meaningful steps to diversify its operations outside mining, and as a result, may represent the best choice for risk-conscious investors.

Not for the faint of heart
Corporate profits within the gold and silver are heavily reliant on underlying prices of the metals in question. For those investors fortunate enough to buy when prices bottom out, this can often be a profitable venture. For example, Silver Wheaton (WPM -2.15%) saw profits soar during the heady days of the precious metals boom in 2011 and 2012, when gold and silver prices skyrocketed. Consider that between 2010 and 2012, Silver Wheaton's revenue and diluted earnings per share nearly doubled.

Unfortunately, when it comes to precious metals prices, volatility is part of the territory. The strengthening U.S. dollar and likelihood of the Federal Reserve tapering off its stimulus programs has shocked the gold and silver markets more recently, and prices are now falling and serving to undercut the underlying profits of producers.

Silver Wheaton saw earnings per share fall 31% through the first nine months of 2013, year over year. This is due almost entirely to the fact that its average realized selling price for silver dropped by 32% in the third quarter.

It's a similar story for gold producer Barrick Gold (GOLD -3.98%), which is also struggling as the price of gold continues to fall. Barrick's adjusted earnings dropped 23% in the first nine months of the year, as compared to the same period one year ago. Like Silver Wheaton, Barrick got hammered by poor pricing. The company's average realized gold price per ounce fell from $1652 to $1453 during the first three quarters, and since operating costs remained relatively unchanged, profits unsurprisingly declined.

A diversified miner to consider
In light of the heightened volatility inherent with the precious metals industry, risk-averse investors may be wise to pick a company with a diversified operational footprint. That's what exists with Freeport-McMoRan Copper & Gold (FCX -1.33%), a company whose future will rely on much more than just metals.

Freeport-McMoRan Copper & Gold has set its sight on significantly breaking away from metals, and has plowed huge sums of money into this effort. In two separate transactions totaling $19 billion, Freeport-McMoRan acquired Plains Exploration and McMoRan Exploration, and the company now believes it has the ability to become a diversified resources powerhouse. Indeed, there's reason to believe this strategy can work in the company's favor.

This may prove to be a wise move, since Freeport can't escape the poor economics of the precious metals markets. The company's earnings per share over the first nine months of the year fell 19%. In a familiar pattern, poor metals pricing was again the culprit.

While traditional mining continues to suffer, global deep-water oil drilling and domestic oil and gas production are both in growth mode. Freeport's two acquisitions provide it considerable deep-water reserves in the Gulf of Mexico, as well as access into several promising shale plays in North America. Furthermore, McMoRan Exploration's portfolio brings in a "large, long-term, and low-cost source of natural gas production" according to management.

In all, Freeport plans to derive a significant percentage of its total business from oil and gas production going forward. To be exact, the company expects a full quarter of its 2014 earnings before interest, taxes, depreciation, and amortization, or EBITDA, to come from its oil and gas segments.

Strategy and shareholder rewards make Freeport-McMoRan the best choice
In addition to Freeport-McMoRan's exciting strategic initiatives, the company is deeply committed to returning cash to shareholders, even in a tough environment for precious metals. Whereas Silver Wheaton recently cut its dividend by 10%, and neither Silver Wheaton nor Barrick Gold yield more than 1.7%, Freeport-McMoRan provides a 3.4% dividend yield. This provides shareholders meaningful downside protection, and makes Freeport-McMoRan the only stock of the three to beat the broader market's 2% dividend yield.

As a result, those investors who don't want the stress presented by extremely volatile mining operations but do want access into precious metals and other natural resources should give clear preference to Freeport McMoRan.