Ron Paul is a lot like licorice; not everyone likes him, but the ones who do really like him.#-ad_banner-#

The former Texas congressman built his reputation and loyal following by taking strong positions on a number of controversial issues.

The first is his desire to audit and eliminate the Federal Reserve. Paul is a free-market capitalist and doesn’t believe a centrally controlled, non-elected entity should have the ability to dictate interest rates and change the trajectory of the economy.

Paul has also expressed deep concerns about the U.S. dollar, which is not backed by any physical asset, and has been steadily devaluing against other currencies since 2001 under growing domestic trade deficits.

Finally, Paul is also worried about the possibility of massive inflation. Although the U.S. Bureau of Labor statistics’ Consumer Price Index has yet to show any serious signals of inflation, with central banks around the world fully committed to monetary stimulation, the devaluation of fiat currency is a very real consideration for many investors.

But unlike many politicians simply tickling populist fancy, after taking a look at Paul’s portfolio, it’s obvious the man puts his money where his mouth is.

The typical congressional portfolio might have 10% in cash, 10% in bonds, 20% in real estate and 60% in stocks or stock funds, according to The Wall Street Journal.

But Paul has taken a radically different approach.

His 21% allocation to real estate looks pretty normal. So does his 14% allocation in cash. But where he parts ways with his congressional brethren is the remaining 64% of his portfolio, which is invested in gold- and silver-mining stocks. Adding to his contrarian style, his 1% allocation to stocks funds are invested in “short” funds, a bet against future stock gains.

Here is a list of 15 gold- and silver-mining stocks that Paul owns in descending order from largest to smallest market cap. 

From the group, I have chosen to highlight Barrick Gold Corp. (NYSE: ABX) because of its historically low valuation and Silver Wheaton (NYSE: SLW) because of its low valuation and unique business model.

Barrick Gold Corp. (NYSE: ABX)
Barrick Gold is the largest gold miner in the world, with a market cap of $19.5 billion and owning four of the world’s 10 largest gold mines. Much like other gold and mining stocks, Barrick has been under pressure during the past year, with shares down 47%. 

But in the meantime, Barrick’s earnings have held strong, with analysts looking for earnings of $3.89 a share in 2012 and $4.90 a share in 2013, a bullish 26% growth projection. The downtrend in the face of strong earnings has pushed Barrick deep into value territory. The stock is trading at just eight times forward earnings, a sharp discount to its 10-year average of 19 and its peer average of 19. 

Silver Wheaton (NYSE: SLW)
Silver Wheaton has a different business model from other miners in that it is technically a “silver streaming” company. This means Silver Wheaton purchases the by-product silver production of a mine that it does not own or operate, allowing the owner/operator of the mine to receive an upfront payment and focus on its target metal (usually gold). This creates a mutually-beneficial relationship between the companies involved, because it gives Silver Wheaton the option to purchase silver at predetermined prices, while the owner/operator of the mines are able to monetize the value of its future, non-core silver production. This unique business model has lifted Silver Wheaton to a rare gain against its peers, with shares up roughly 15% in the past few months. 

But in spite of these gains, shares till look undervalued, trading at 22 times forward earnings, a discount to the 10-year average of 25 and its peer group average of 44.

Risks to Consider: Most gold-mining stocks have sharply underperformed gold prices in the past two years, driving big losses for investors choosing to invest in gold miners as opposed to bullion or spot prices through exchange-traded funds like SPDR Gold Shares (NYSE: GLD) and PowerShares DB Gold Double Long (NYSE: DGP).

Action to Take –> If you are concerned the Fed‘s recent actions, weakness in the dollar and inflation, then it’s time to take a page from Ron Paul’s portfolio and consider gold and silver miners. And while I wouldn’t recommend the same allocation as Paul has, I do like Barrick and Silver Wheaton for most portfolios.

The former Texas congressman is considered a political renegade, fueling what some analysts call the craziest portfolio they have ever seen.

P.S. — There’s a hidden stock market where ex-presidents and former politicians make millions. Bill Clinton made $15.4 million from it. George H.W. Bush… Jeb Bush… Rudy Giuliani and Al Gore all made small fortunes too. Discover that backdoor into this private investment arena that yields up to 17% by clicking here.