With so much spin these days, it’s important to pay closer attention to what people do rather than what they say. Case in point: George Soros’ recent behavior regarding gold. A couple of weeks back, the hedge fund manager made headlines by suggesting gold was in a bubble—implying that investors should lighten up on their gold holdings. Naturally, that brought gold prices down a bit. [Monday] morning, however, we read that Soros has decided to buy $75 million worth of shares in NovaGold Resources (NG, AMEX). NovaGold, you will recall, is one of our favorite junior gold development picks. It’s not in production yet, but it owns some very large gold and copper deposits in North America. If we’re right about the direction of gold and commodity prices, this stock could deliver some very big returns over the next few years. … We doubt Soros would be loading up on junior gold shares if he really believed gold prices were headed lower. Besides, Soros is not the only savvy investor who has shown an interest in Nova Gold. John Paulson, for instance, recently acquired a $100 million stake in Nova. Paulson has been arguably the most successful hedge fund operator over the past 10 years. … In a world filled with risk, gold remains an outstanding investment. While large mining companies like Goldcorp (GG) and Barrick Gold (ABX), or closed-end fund ASA should be anchors in any gold portfolio, you could see multiple baggers from a compelling junior such as Nova Gold.
Stephen Leeb, The Complete Investor