Bear markets do interesting things, one of which is to overreact severely on a few stocks. For example, there is a gold mining company that I have followed for a while by the name of New Gold Inc (NGD). Like every other gold stock out there, NGD has been shellacked to very low prices.

Interestingly, if we look at New Gold’s financials, the stock is currently trading with a market cap of $170m (at yesterday’s closing price of $0.80/share). The company currently has $250m in cash, and minimal amounts of debt. NGD is trading at a solid 30% discount to the cash on their balance sheet… so buy buying the shares at $0.80 you get $1.17 in cash, and they throw in several high quality, currently in production gold mines.

Of course, it’s not as clear cut as the previous sentence may make it sound… Rumors have it that New Gold is having some sort of issue with their new big mine, and thus they are not risk free. They’re also spending that cash to continue operations, as companies normally do, so the amount of cash on their balance sheet is not a constant, fixed amount.

Despite the caveats, this is a great bargain for a gold stock right now. And this certainly isn’t the only stock trading at a discount to cash…