Smelling Gold In Vengold

Despite inflation fears, gold stocks have failed to glitter. They have, in fact, been sorry losers all year. No matter, says Douglas Kass, research director at J.W. Charles Securities in Boca Raton, Fla. Bearish on stocks all year, Kass isn't necessarily a gold bug, but he's putting money on Vengold, a Canadian company with big stakes in mining properties in Venezuela and on Papua New Guinea's remote Lihir Island. The company has yet to post revenues. And its stock has been battered, collapsing from 12 in February to 3.

So why is Kass crazy for Vengold? He's convinced there is gold in its Oro Uno concession in Venezuela, mainly because the site abuts Placer Dome's Las Cristinas property, where more than 7 million ounces of gold were discovered last year.

Vengold's initial findings there proved disappointing. But, says Kass, Vengold has since discovered "significant mineralizations at Oro Uno--a potential kilometer of gold." Vengold's other prospect, Lihir Island, "boasts one of the world's largest gold deposits," says Kass. He expects Vengold CEO Ian Telfer to sign a pact soon with the Papua government for a license to explore on Lihir.

Vengold's stock is truly undervalued, says Kass, trading at a 60% discount to the company's asset value.

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