Investing in gold stocks can be a wild ride. The supply and demand for the underlying metal is often difficult to understand and, consequently, share prices can be volatile. If you're looking for exposure to the group, Rio Tinto (NYSE:RTP) may be a way to invest in the sector but be insulated from potentially violent swings in the price of gold.

In addition to gold, Rio Tinto also mines aluminum, copper, diamonds, coal, iron ore, and half a dozen other industrial minerals. The benefit here is that earnings can grow even if gold does not go to $450 or $500. But even though only about 20% of Rio Tinto's earnings comes from gold, the stock has a very high correlation to the Philadelphia Gold and Silver Index.

The fundamental picture for Rio Tinto is very solid. Earnings are expected to be $6.45 per share and increase 25% for 2005 to $8.09, with revenues expected to jump 13% over the same period. With a forward price-to-earnings (P/E) ratio of 12, shares are much cheaper than many of the other gold stocks. Lastly, Rio Tinto sports a 2.9% dividend yield, which compares favorably to rival companies.

Last year was a great year for shares of Rio Tinto, as they jumped 40%. This was thanks to a worldwide economic recovery, new demand coming from China, and a bull market in the entire commodity complex. In reviewing the 2003 annual report, it's clear the company is well-positioned to take advantage of China's immense need for industrial metals.

Some investors hold gold stocks for an inflation hedge. Unfortunately, as inflation has seemingly begun to pick up in the last few months, gold stocks have dropped 10% to 15% on average.

Other investors may be interested in one other type of insurance that Rio Tinto and gold stocks offer. In the days after the Sept. 11 tragedy, the gold sector had a small rally while the broader market dropped 20%. This is clearly an unpleasant topic, but if we truly are in a war on terror and if we are to believe what the government tells us about possible future attacks in the U.S., gold stocks are likely to react the same way if there is another attack.

If we are lucky enough to never be attacked again, Rio Tinto still gives you an almost 3% dividend yield, and big benefits from China.

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Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time, neither he nor his clients owned any of the stocks mentioned.