by Darcy Keith
The Globe and Mail
excerpt from full article:
….Ted Dixon, CEO of INK Research points out that while gold is well off highs near $1,900 (U.S.) an ounce in 2011, the macro backdrop hasn’t radically changed. Central banks are working hard to keep real interest rates in negative territory, and the threat that bond-buying measures will eventually lead to inflation – gold’s best friend –remains intact.
There are no shortages of forecasts calling for gold’s demise, or at least losing some of its lustre. Last week, for instance, Société Générale predicted gold would pull back to below $1,400 (U.S.) an ounce by the end of this year as the U.S. economy improves and the need for quantitative easing is scaled back.
But there are plenty of others that are more optimistic. John Hathaway, manager of the $1.8-billion Tocqueville Gold Fund, who has one of the best long-term track records in the sector, thinks gold could easily vault 25 per cent from current levels to $2,000 an ounce. The recent events in Cyprus have highlighted the continued risks to the global economy arising from the European debt crisis, and gold could continue to benefit from haven flows into hard assets.
While gold stocks have significantly underperformed the bullion market recently for various reasons, including rising production costs, Mr. Dixon thinks miners have a lot of emerging factors working in their favour.
“Such extreme situations usually do not last for long,” notes Mr. Dixon. “With both fundamental and technical conditions supporting recent heavy insider buying, it looks like a significant bottom in precious metals mining shares may be in the process of forming now.”