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Agnico Eagle's Pinos Altos Mine in Mexico.Agnico-Eagle Mines

The dean of Canada's gold mining analysts, John Ing at Maison Placements, continues to pound the table for stocks in the sector, saying they're "a terrific buy" at current depressed levels.

Mr. Ing's latest missive to clients says the catalyst on the upside for producers will be the low value the market is assigning to reserves of gold in the ground.

By his calculation, investors are valuing reserves at the rock bottom price of only $400 an ounce on average, about a quarter of the market price. Something's got to give, and he figures it will be a move up in price for the stocks.

"We continue to believe that gold stocks are not only a terrific buy at current levels but their reserves in the ground will be the reason for their phoenix-like rise," he says.

Like all gold bugs, Mr. Ing cites the usual suspects for gold to rally further: fear of fiat currencies, financial instability, government deficits, and so forth.

In the sector, he figures the junior exploration plays will be laggards because the bear market for gold stocks has made it difficult for these outfits to get financing. The exploration stocks will rally, but won't do so until the more senior and mid-tier producers have started to move upward.

A number of companies show promise and can be bought, he contends.

Agnico-Eagle Mines
 The miner has been hammered after a $2-billion write-down earlier this year at its shuttered Goldex mine. The shares have traditionally traded at a premium and now trade at a discount. "We do not expect this discount to last as Agnico regains market credibility," he says.

Eldorado
The company gets the nod because of its growing production and reserve profile. The company also links its dividend to the price of gold.

McEwen Mining
The company is developing its El Gallo deposit in Mexico and should begin production in the third quarter. The shares have been hurt by Argentina's more nationalistic stance on resources, where it has interests. "Nonetheless, we believe the pullback provides an excellent purchase opportunity and McEwen Mining shares are cheap here."

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