The gold investor has had a bleak run since the precious metal dropped from highs posted in September of 2011. Despite a surge off the lows late last year, the current run may be just about over. A new report from the analysts at J.P. Morgan points out that despite the recent rally, their opinion remains the same: A firmer dollar and rising interest rates could very well cap upside at current levels or lower for the rest of the year.

The J.P. Morgan team has scanned their coverage universe for companies that are undervalued now. Of the three stocks rated Overweight at the firm, they actually raised two from Neutral. The gold stocks J.P. Morgan is recommending investors buy now are AngloGold Ashanti Ltd. (NYSE: AU), Harmony Gold Mining Co. Ltd. (NYSE: HMY) and Randgold Resources Ltd. (NASDAQ: GOLD).

AngloGold Ashanti

This South African gold mining and exploration company also produces silver, uranium oxide and sulphuric acid as by-products, which tend to help the company soften the balance sheet blow of lower gold spot prices. The company has 20 operations, including open-pit and underground mines and surface metallurgical plants in the Americas, South Africa, Continental Africa and Australia. The company has reported proven and probable ore reserves of approximately 67.9 million ounces.

The J.P. Morgan analysts upgraded the stock to Overweight from Neutral, citing the company’s strong asset quality and diversity, which they concede is offset by near-term risks in South Africa and balance sheet concerns. Growing low-cost ounces in Australia and other areas make the company attractive. They also like the cheap valuation when compared to peers.

AngloGold investors are paid a tiny 0.1% dividend. The J.P. Morgan price target for the stock is $18.26. The Thomson/First Call consensus price target is $12. Shares closed down almost 4% Friday at $10.92.

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Harmony Gold Mining

This company is engaged in the exploration and mining of gold in South Africa and Papua New Guinea. The company also explores for silver, copper and molybdenum. It has 10 underground operations located on the Witwatersrand Basin, one open-pit mine exploiting the Kraaipan Greenstone Belt, and various other surface operations in South Africa. The company also owns interests in the Hidden Valley open-pit gold and silver mine and the Wafi-Golpu project, as well as a 100% interest in exploration projects in Papua New Guinea.

Harmony is the smallest South African miner, and the J.P. Morgan analysts cite the Golpu mine as an attractive asset and a mammoth world-class gold and copper mine. With lower debt than its peers, the company is a solid buy for investors.

The J.P. Morgan price target is $3.90, which is posted slightly lower at $3.80. The stock closed on Friday at $2.88 a share.

Randgold Resources

This top mid-cap stock to buy was raised from Neutral to Overweight at J.P. Morgan. The company has recorded solid production from its flagship Loulo-Gounkoto complex in Mali. This increased production has set Randgold Resources up to possibly achieve its guidance for 2015. At the same time, the developing Kibali mine in the Democratic Republic of Congo remains on track to reach its forecast target despite commissioning disruptions. The company has substantial proven and probable reserves totaling 15 million ounces, and it continues to be one of the most highly recommended gold stocks on Wall Street.

Randgold investors are paid a 0.6% dividend. The J.P. Morgan price objective is $103. The consensus target is $90.42. Shares closed trading Friday at $80.64.

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With a huge quantitative easing now underway in Europe, and most of the world slowly devaluing domestic currencies, it is entirely possible that gold becomes the only non-dilutable asset to hedge currency with. While the headwinds for the industry remain strong, keeping 3% to 5% of a portfolio in precious metals still makes very good sense as a hedge.

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