How to Buy Gold Mining Stocks

Graf: NovaGold, I have followed that name for a long time. I think it has value. I give the name full credit for all of its assets regardless of the fact that I don't see how a company of the market cap of NovaGold ... can raise the $2 billion, more or less, it would need to either develop Galore Creek or Donlin Creek at 50% interest. ... It's not a favorite name of mine, just because I don't see how they can raise the capital to develop any of the projects that give them value, and I don't see how the pieces of the projects that they own would be interesting to anyone else with the possible exception of the Chinese. And we've seen in the past how strong NovaGold feels about being bought out. It fought tooth and nail to prevent getting taken over by Barrick.

But value wise you still like it?

Value wise it doesn't look bad and actually gives you decent leverage. ... but there are two other names that I think are more interesting and trade cheaper than NovaGold and to a large extent provide the same or superior leverage to NovaGold. On the gold side, Seabridge Gold(SA) ... actually provides more leverage than NovaGold does, also provides more leverage on copper side than NovaGold does. And they have been very forthright that they are not interested in developing their projects. They're taking their projects to pre-visibility and have the full intention of selling them to a major for shares. So that is a very different, radically different, path than NovaGold.

Another name that also comes to mind is Northern Dynasty(NAK) ... Anglo American is earning in 50% of their project and they have a monstrous copper and molybdenum project in Alaska called Pebble. ... In my mind, they offer superior copper leverage vs. NovaGold and actually have a huge gold resource.

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-- Written by Alix Steel in New York.

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