(MONEY Magazine) – Advisers often urge people to put 5% to 10% of their portfolios into gold or gold-mining stocks as a hedge against inflation. While this is sound advice, in the short run gold and mining shares are notoriously volatile. In 1987 gold rose 24%, coming close to $500 an ounce in early December; since then, gold has fallen back to $450. Mining shares have bounced around even more. Since Jan. 1, 1987, mining stocks first doubled, then dropped 40%; they subsequently rose 30% and then fell 20% again. The shares are now so low that Pru-Bache analyst Nicolas Toufexis believes that some of them are attractive buys for growth investors willing to hold them for two years or more. He recommends four large U.S. mining companies based on a measure of value that he calls payback period. Toufexis divides the - total market value of a company's shares by its cash flow -- earnings plus noncash accounting items such as depreciation. Payback period gauges how long it would take a company's cash profits to pay for its stock. The most attractive mines, he says, are those that are shortening their payback periods by developing new reserves and cutting costs. The companies Toufexis likes are expanding reserves in the Nevada gold fields and also own properties elsewhere in the U.S., Canada and Australia. The four are Battle Mountain Gold (NYSE, $16), Echo Bay Mines (American Stock Exchange, $19), Freeport McMoran Gold (NYSE, $12) and Newmont Gold (NYSE, $34). Newmont Mining, which owns 90% of Newmont Gold, fended off a takeover attempt in 1987 from T. Boone Pickens, whose chief target was its mammoth gold reserves, which may run as high as 20 million ounces.