By Sean Brodrick, Money and Markets
Last update: 12:01 a.m. EST Feb. 4, 2008
JUPITER, Fla. (MarketWatch) ? Gold has enjoyed a great run over the past few years, but it hasn’t been a straight path.
There have been enough dips and outright plunges to make gold traders feel like they’re riding the devil’s own roller coaster. But one strategy has worked time and time again: Buy the dips.
It takes courage to buy when everyone else is selling. But if you do your research, you can act with confidence that even if gold dips lower than you’re buying it, the upside potential is huge.
My preliminary price objective for gold is $1,065 per ounce, and it could go a lot higher than that. Let’s look at some forces driving precious metals higher.
Global gold production fell to a 10-year low of 2,444 metric tonnes in 2007, according to Gold Fields Mineral Service. This year, production will likely drop again. While China is producing more gold ? up 12% ? South Africa’s output is falling off a cliff, down 8.1%.
Gold miners are exploring frantically, but the mother lodes are getting harder to find. This should drive consolidation in the industry going forward as the big companies gobble up the smaller fish to replace their reserves.
See the full article here.
