Despite well documented problems in the industry, gold stocks have never been so cheap, says the Maison Placements Canada President.

The gold mining industry remains in a funk despite gold’s flirtation with last year’s peak of $1,900 an ounce, writes Toronto mining analyst John Ing.

In a new report titled Gold: To Infinity and Beyond, Ing says lower share prices are due to investor disenchantment with huge cost overruns, rising energy prices, acute labour shortages, threats to nationalization and or increased taxes in many so-called safe mining jurisdictions.

“A worrying tend is the political shifts in some mining areas and a pick-up in resource nationalization in Mongolia, Peru, Argentina and Indonesia.’’

However, Ing remains bullish on gold, saying the yellow metal will reach US$3,000 an ounce as currencies continue to be debased by global monetary expansion.

In his report, he takes the view that gold stocks have never been so cheap.

“Our bullish case for gold stocks has been based on the cheap valuation of in-situ reserves,’’ he said.

Predicting that merger and acquisition activity will continue in the sector, Ing recommends low cost intermediate producers and some near development juniors.

Among them are:

“Agnico-Eagle Mines Ltd. (TSX: T.AEM, Stock Forum) (NYSE: AEM, Stock Forum) Agnico has turned the corner, reporting better than expected third quarter earnings of $106 million, recapturing its premium multiple relative to other producers,’’ Ing says. “Agnico operates in low risk jurisdictions, focuses on delivering total shareholder returns (30 years of dividends) and has a growing production and reserve base.’’

“Centerra Gold Inc. (TSX: T.CG, Stock Forum) shares have been beaten up by fears of nationalization, but the company remains aggressive in spending $5 million in exploration around the Kumtor mine site in the Kyrgyz Republic, building on the current eight million ounces reserve base,” Ing writes. “We believe the shares have discounted the problems and the stock is attractive at current levels, particularly with a debt free balance sheet.”

“Eldorado Gold Corp. (TSX: T.ELD, Stock Forum) is an intermediate gold producer with assets in Turkey, Greece and China as well as a small iron ore operation in Brazil,’’ said Ing. “ We continue to recommend purchase.’’

“McEwen Mining Inc. (TSX: T.MUX, Stock Forum) El Gallo silver/gold project in Sinaloa, Mexico will be in producton in the fourth quarter, and with three drills turning, the company is expanding the resource as part of its Phase one program,” Ing writes. Financier Rob McEwen owns 25% of the company, which plans a $60 million rights offering, backstopped by McEwen. While taxation issues have put a cloud over the company’s San Jose mine in Argentina, Ing continues to recommend the shares.

“Detour Gold Corp.’s (TSX: T.DGC, Stock Forum) flagship Detour mine in northeastern Ontario will produce about 100,000 ounces of gold in the first half of the year as it ramps up to commercial production around mid-year and should produce around 650,000 ounces per year for the next 20 years,’’ said Ing. “We continue to recommend the shares here.”

Osisko Mining Corp. (TSX: T.OSK, Stock Forum) “We continue to recommend Osisko because we believe that the flagship Canadian Malartic mine in Abitibi, Que., while experiencing teething problems, is on the way to producing designed output.’’

In the silver space, Ing also says he likes:

Mag Silver Corp. (TSX: T.MAG, Stock Forum), a company focused on district scale projects located within the Mexican Silver Belt.

“Excellon Resources Inc. (TSX: T.EXN, Stock Forum) is now back in production and is close to finding the source of La Platosa [mine in Mexico],” Ing writes. “Both silver players – Mag and Excellon -- have exciting exploration prospects under programs overseen by Dr. Peter Megaw.”