"In the 2000s, as we’ve alternated between deflationary and inflationary worries, gold has been the only major investment to rise every year," says Stephen Leeb.

In his The Complete Investor, he explains, "We think that many miners are exceptional bets today. And among our favorite gold investments is one that we hold in our small cap value model portfolio: NovaGold Resources (ASE: NG)."

"The case for mining stocks is that the price of gold rises faster than miners’ costs, allowing margins to increase.

"That’s not to deny the risks, such as possible shortfalls in production, sudden price increases, environmental costs, and so on. Still a miner that can increase production and maintain or boost margins will outperform the metal over time.

"NovaGold -- and its relationship with Barrick (NYSE: ABX) -- illustrates particularly well the potential a superior miner can have even when gold prices are flat. 

"Barrick, now Nova’s partner in developing one of the world’s largest gold deposits, proves that miners can rise independently of a bull market in gold. Between the mid-1980s and early 1990s, Barrick climbed more than fifty-fold on extraordinary increases in gold production. 

"Production of gold, copper, and silver from Nova’s major properties, Donlin Creek and Golore, may come close. The Donlin discovery, one of the largest ever in North America, is estimated to contain at least 54 million ounces of gold.

"How much gold is this? In 2006 with gold trading below $700, Barrick offered to buy Nova for the equivalent of $16 a share. Then as now Barrick had a 50% interest in Donlin. 

"Today, in the midst of a credit crunch, Nova has been beaten down to where it trades at some 80% below Barrick’s 2006 bid. Barrick still has a 50% interest in Donlin, whose potential reserves are considerably higher than in 2006. 

"Moreover, the other significant holding of Nova is Galore, which represents one of the largest undeveloped copper deposits in the world. 

"What are the risks? The only meaningful one is that the company does not get the financing to develop the properties. But that’s extremely unlikely given Barrick’s 50% interest in a deposit that would more than double its North American gold resources. 

"Clearly any company that has no production and is dependent on others for its continued existence has to be rated as highly speculative. That said, from a risk/reward perspective you won’t find a better play than NovaGold."