Newmont Corp.

Commodities like gold and copper provide a hedge against inflation. But even if inflation stays low, commodity prices are likely to keep rising as rapid economic growth in Asia and South America spurs new construction and car sales. That will help BHP, Newmont and Alcoa. All three are high-quality, well-established resource stocks that have jumped lately. Still, we see only two as buys right now. BHP BILLITON LTD. ADRs $89 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $249.2 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. Regulators in Australia and Canada have recently forced the company to cancel two big deals....

ASA Limited, $33.36, symbol ASA on New York (Shares outstanding: 19.4 million; Market cap: $648.5 million; www.asaltd.com), is a closed-end fund that must keep at least 80% of its assets in shares of companies that mine gold, silver, platinum, diamonds or other precious metals. The company mostly invests in well-established gold stocks with steady cash flows and large reserves. About 85.9% of its assets are in companies with operating mines; exploration and development firms account for 10.4%. ASA’s top holdings are Newcrest Mining, Barrick Gold, Randgold Resources, Compania de Minas Buenaventura, Goldcorp, Agnico Eagle Mines, Impala Platinum Holdings, AngloGold Ashanti, Anglo Platinum and Newmont Mining....

Dynamic Precious Metals Fund is a mutual fund that mainly invests in mining stocks and other resource companies. The $1.05-billion fund focuses on small- to mid-cap stocks. Its MER is 2.75%. The fund holds 95.3% of its portfolio in gold and precious-metals stocks, and 4.5% in metals and minerals stocks. Its top-ten holdings are Osisko Mining, Kinross Gold, Andean Resources, San Gold, Perseus Mining, Allied Nevada Gold, Aurizon Mines, Alamos Gold, Agnico-Eagle Mines and Sabina Gold & Silver. Dynamic Precious Metals Fund holds 72.3% of its portfolio in Canadian stocks, 21.3% in Australia and 6.0% in the U.S....

If you want to buy gold, we recommend staying away from buying gold bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments such as gold bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract. That’s why we recommend that you invest in gold through gold-mining stocks. Unlike bullion, gold-mining stocks at least have the potential to generate income. Newmont Mining, $63.33, symbol NEM on New York (Shares outstanding: 484.7 million; Market cap: $30.7 billion; www.newmont.com), is a relatively conservative choice if you want to buy a gold stock....

Central Fund of Canada, $17.01, symbol CEF.A on Toronto (Shares outstanding: 238.3 million; Market cap: $4.1 billion) is a closed-end mutual fund that holds gold and silver bullion. It now holds 54.3% of its assets in gold bullion, 43.3% in silver bullion and 2.4% in cash. The fund has an MER of 0.38%. The units yield 0.06%. Central Fund trades at a 7.4% premium to the per-unit value of the assets it holds. We advise against buying closed-end funds at a premium, so we don’t recommend buying units of Central Fund. If you want to buy gold or silver, we recommend staying away from buying gold or silver bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments like gold and silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract....

ADOBE SYSTEMS INC., $26.88, Nasdaq symbol ADBE, reported record-high quarterly revenue and stronger-than-expected earnings this week. However, the software maker warned that its earnings in the current quarter will be hurt by slowing sales of its Creative Suite 5 software package to U.S. schools. The weak Japanese economy is also hurting demand for this product. The warning caused the stock to fall 19%. Creative Suite 5, which accounts for about 55% of Adobe’s revenue, is a package of photo-editing and desktop-publishing programs....

BAFFINLAND IRON MINES, $1.03, symbol BIM on Toronto, is the subject of a hostile, $274.3-million takeover offer from Nunavut Iron Ore Acquisition Inc., which is wholly owned by privately held Iron Ore Holdings, LP. Nunavut is offering $0.80 in cash for each share of Baffinland. The company currently owns about 6% of Baffinland. Other shareholders who hold a combined 9.3% stake in Baffinland have also agreed to tender their shares to the offer. Baffinland is now trading at $1.03, or 28.8% above Nunavut’s bid. This indicates that investors expect a much higher bid from Nunavut or another buyer....

Gold and silver continue to rise. Gold is up 30% from a year ago, and is trading at $1,248 U.S. an ounce. Silver is at $19.35 U.S. an ounce, up 38%. Gold and silver could well move higher over the longer term, although they will likely remain volatile. Higher prices would arise from investor fears that low interest rates and governments injecting money into their economies will spur inflation or weaken their currencies. If you want to hold a number of gold or silver stocks, these two exchange-traded funds offer top-quality global miners and low fees....

ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $24.22 (Toronto symbol XGD; buy or sell through brokers) aims to mirror the performance of the S&P/TSX Global Gold Index. This index is made up of gold stocks from Canada and around the world. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.55%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001. The fund’s top-ten holdings are Barrick Gold at 18.6%; Goldcorp., 13.1%; Newmont Mining, 11.9%; AngloGold Ashanti (ADR), 6.2%; Kinross, 4.7%; Eldorado Gold, 4.2%; Agnico-Eagle, 4.2%; Gold Fields (ADR), 4.1%; Randgold Resources (ADR), 3.3%; and Yamana Gold, 3.1%....

Gold now trades at around $1,226.00 U.S. an ounce. That’s up 28.2% from $956 a year ago, but down from its all-time high of $1,261.00 U.S., where it closed on June 28, 2010. Gold’s recent gains have partly resulted from investor fears about the sovereign debts of European countries, especially Greece and Spain. That’s creating uncertainty about the strength of the euro. These fears are prompting more investors to buy gold and gold investments, because they believe investing in gold will provide them with additional security. We think gold could well move higher over the longer term, due to investor concern that low interest rates and large amounts of government stimulus spending will spur inflation. This could prompt even more investors to flock into gold —and drive prices up even higher....