Gold Stocks Could Be A Value Investment At These Levels

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BOULDER, CO / ACCESSWIRE / September 3, 2015 / Depending on what radio station
you tune into or cable channel you watch, the stock markets either overpriced
or fairly valued. In general terms both of those statements can always be true
depending on which sector of the markets your referring to. Commodity markets
such as corn, copper and gold have bounced off their lows recently while oil
appears to be bouncing around the $40 support level. Gold on the other hand,
hasn’t really gone anywhere the past few months, although most of the price
action has been to the downside.

With stocks mired in their long
awaited correction, some serious value investment opportunities are taking
shape, especially in commodity based stocks. It was inevitable. The market had
nowhere to go but down as everyone waited for the much anticipated federal
reserve interest rate hike. And the most broadly announced and confusing
interest rate move of the last decade may finally come in the next few weeks
around the next Fed meeting later this month. But by the time that decisions
been made, the fireworks and fallout might already be over.

Virtually every major central
bank in the world has been actively involved in historic monetary stimulus
programs during the past few years, so investors would have thought that an
investment in gold or gold stocks would have been a “no-brainer.” No
such luck. Had you bet on gold going higher you would have missed the entire
rally in stocks, the past few years, as you painfully watched the precious
metal trade sideways to down in a tight trading range.

The predominate players in the
gold market have all seen significant deterioration in the price of their
shares during the past six months. Gold, Inc. (NGD), Barrick Gold Corporation
(ABX), Gold Fields Ltd. (GFI) and AngloGold Ashanti Ltd. (AU) and almost all of
the gold stocks, for that matter, are now trading near or slightly above their
fifty two week lows. This is one sector of the market that just hasn’t seen any
meaningful upside in quite some time. So is it time to take small positions in
a few of these names?

Ironically, while U.S. stocks
were in a free fall, gold stocks should have been a good investment but many of
these companies are not in a good fundamental position to attract meaningful
investment . So while domestic equities get pushed lower, short term, most
analyst who follow the metal, don’t really see gold trading much higher in the
near future and fundamental factors also don’t seem to be favoring a meaningful
upside move n the precious metal.

With all that pessimism,
contrarian investors might think this is a good time to take a position in some
of these badly depressed gold stocks. And they may be right. Even though gold
broke down to a new two month lows recently, many mining stock did have green
trades last week, bucking the downward trend in the metal. Primero Mining Corp.
(PPP), Sandstorm Gold Ltd. (SAND), Kinross Gold Corporation (KGC) and Eldorado
Gold Corporation (EGO) all ended the week on an uptick.

Shares of most gold mining
companies are selling at steep discounts to their historical multiples even
though many of them can still be profitable with gold prices at these levels.
So the slightest hint of stabilization in the metal could bring investors back
to these stocks in a big way.

Dynacor
Gold Mines Inc. (DNGDF – $1.07) is an interesting microcap gold play that
deserves a closer look by value investors who want to have a position in a
microcap company operating in this sector of the market. Dynacor has gold and
silver ore processing operations and exploration projects in Peru. The Company
recently announced earnings for the quarter ending June 30, 2015.

Despite weakening market
conditions Dynacor registered net income of US$ 0.8 Million (US$ 0.02 EPS) and
EBITDA of US $2.0 Million during the June 2015 quarter. Cash on hand of $13.3 M
at June 30, 2015 compared to $14.0 M at December 31, 2014. Gold and silver
sales were $20.2 M (cumulative six-months $39.0 M).

DNGDF has set its 2015 production
guidance in the range of 64,000 to 68,000 ounces of gold which is down slightly
from last year. Lower gold prices have had a negative impact on the
Corporation’s second quarter gold processing operations. But overall, DNGDF is
looking to increase its ore processing inventory by the end of Q4-2015.

Support appears to be developing
around the $1.00 to $1.10 level which is just slightly below the fifty day
moving average at $1.25. For more information on Dynacor Gold Mines Inc. visit http://www.dynacorgold.com.

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