But the guys who are looking forward are seeing that that production base is going to dwindle, said Smith. Smith said that because of the poor performance of gold in the past six years, little exploration has been done and that means the supply of gold will soon be hard pressed to match demand. That means the price of gold should not trip itself up as it edges higher. Technical analyst Roman Franko of Dundee Securities has been looking at the technical data and also confirms that the price of gold should head higher, but for different reasons. Franko said that he has been looking at charts going back to 1979.
Gold really looks quite positive here on the long-term charts and the medium charts.
What s interesting is that gold bullion is trying to push through its 40-month moving average, the first time since February of 2000, Frank said. You ll recall those couple of spikes that we had in late 99, they really weren t sustainable because there wasn t really sufficient base-building. But at this point, bullion has built a better base and the current move is much more likely to be sustainable, he said. Franko said that this price move is just the beginning of a longer-term positive more for gold. The senior gold mining producers are likely to be the beneficiaries of technical moves and again, Franko sees evidence in the price moves of the companies.