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 (
http://finance.yahoo.com/q?s=abx) (NYSE: ABX (
http://finance.yahoo.com/q?s=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...