What's this to Virginia? Well, when it sold the mine, it kept a royalty on future production.  The net smelter royalty has two variables: the gold price and the mine's aggregate production. Suffice it to say, with gold anywhere above $1,200 an ounce, the royalty will soon be paying Virginia 3.5% off the top, or over $36 million a year.

The net present value of the royalty, based on future cash flow at today's gold price (around $1,640), exceeds the total market cap of the company (currently $265 million).  Net out Virginia's cash of $45 million, and the stock becomes a bargain based on this one asset.

All the rest of the company comes free: the gold resources, the zinc deposit, the multiple joint ventures, and the company's own exploration projects around its Eleonore discovery. 

Why so cheap? Well, the market -- and especially the gold market -- likes instant gratification, and Eleonore doesn't start production until late 2014. But as we approach production, we can expect the stock to move up to a more realistic valuation. Virginia also trades on the Toronto Stock Exchange under the symbol VGQ.TO.

We note that the long-term fundamentals for gold remain bullish. All the reasons why people have been buying gold over the past couple of years remain firmly intact. Monetary policy in the U.S. and Europe remains easy. Emerging market inflation continues to pick up, particularly in China and India, the two largest gold markets.

Central banks continue to buy after the third quarter, which saw net purchases double from the previous quarter. Emerging countries, with the highest reserves but the lowest percentage of gold holdings, want to diversify out of the dollar.

See all 50+ picks in our Top Picks Report 2012.

Steven Halpern's TheStockAdvisors.com​​​​ offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.