Three Gold Stocks to Buy Now

Take Advantage of the Falling Dollar with Newmont Mining (NEM), Eldorado (EGO) and AngloGold Ashanti (AU)

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Stock	Grade
AU AngloGold Ashanti Ltd. (ADS)
EGO Eldorado Gold Corp.
NEM Newmont Mining Corp.

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May 22, 2009

A year ago, all the talk was about a commodity bubble: Oil was near $150 per barrel, gasoline cost $4 a gallon, copper hit $4 a pound, silver reached $21 an ounce, and corn soared to $6.30 per bushel in the wake of the ethanol craze. Grain prices then soared even higher during the Midwestern floods last June.

Now, in 20-20 hindsight, everybody calls last summer a classic bubble in commodities, but commodity prices weren't rising so sharply in euro terms, or in Swiss francs or Canadian dollars back then.

If you live and invest within a dollar-based economy -- most notably, the United States -- you go about your daily life (and your investing) oblivious to how the rest of the world measures these dollar-based bubbles.

Currency markets, however, aren't like that. They're open 24-hours-a-day and trade $2 trillion daily. The currency markets are stronger than any one central bank or a cabal of minor central banks. The currency markets discipline governments for their profligate policies -- and they do so long before monetary inflation can turn into price inflation. The U.S. dollar is still considered the world's reserve currency, and the dollar still dominates global currency trading, with 88% of all currency trades including the dollar on one side of the trade.

Gold is one example of the negative correlation of commodities to the dollar. What this means is that as the dollar goes down, gold goes up, and vice versa. Gold is an approximate mirror image of the U.S. dollar, although the two dance partners obviously don't mirror each minor move.

Gold Stocks Thrive When the Printing Press Is Running Full Blast

It's no secret what's behind the weak dollar: America has been trying to spend its way out of a serious recession and banking crisis. Printing trillions of new dollars, either as cash or credit, has serious implications for the future of the dollar. This year's budget deficit may top $2 trillion -- about four times larger than any previous deficit.

Currently, 46 cents of every dollar that the federal government spends is borrowed, which makes each dollar worth less in terms of other paper money alternatives, or in terms of a basket of hard commodities.

As a result of record-high spending and rapidly shrinking tax receipts, the 2009 U.S. budget deficit is now up to 13.7% of GDP. Within two years, our cumulative federal debt will reach 100% of the annual GDP. While politicians may talk about defending the dollar, their actions reflect an all-out assault on the dollar. In particular, record-high deficits and profligate money-printing almost guarantee a declining dollar value.

There is a way for investors to protect themselves. Buy gold. I currently rate three major gold producers as buys: Newmont Mining (NEM), Eldorado Gold (EGO) and AngloGold Ashanti (AU). These are three of the largest gold companies in the world.

Newmont has proved and probable reserves of more than 85 million ounces of gold, and the stock has more than doubled since November.

Eldorado is a Canadian-based company with operations in Brazil, China, and Turkey. The stock is a solid buy for investors who prefer stocks under $10 a share.

AngloGold Ashanti is a South African firm that operates 20 mines in 10 countries. The company recently reported earnings of $150 million, which is a huge improvement over the same quarter last year when AngloGold Ashanti lost $17 million.

All three stocks are good buys.

Is this market rally for real? A lot of companies beat earnings expectations last quarter, but many of those gains were due to cost-cutting, not increased revenue. You still have to be selective in choosing stocks that have solid fundamental reasons for growth. Louis Navellier screens his picks against strict momentum growth criteria. Click here to get his new FREE special report, Top 5 Stocks to Own Now!