Instructions
Walk to a work bench in your home. If you do not have one, craft one with 10 pieces of wood, obtained by chopping down trees.
Press the "Esc" key on your keyboard. When standing next to a work bench, a list of items you can craft, provided you have the ingredients, appear on-screen.
Scroll through the list until you see a picture of an anvil. This will only appear if you have five iron bars in your inventory. If you do not have iron bars, you can craft them at a work bench. Each iron bar requires three pieces of iron ore.
Click the anvil icon. This completes the crafting process. Click an available square in the top row of your inventory, which are also your equipment slots. Press "Esc" again to close your inventory.
Scroll through your inventory until you are holding the anvil. Right-click anywhere in your home to place it on the ground. This lets you forge metallic items, such as copper greaves, iron shortswords and a silver chandelier.