Don’t throw away your pick and shovel just yet. The gold boom is not about to turn into a gold bust.

That’s what I hear from several gold enthusiasts (not gold bugs) following Tuesday’s slide, when the precious metal plunged more than $20 an ounce, or 3.4%, its biggest one-day decline in dollar terms in nearly 13 years.

The metal later recouped a good chunk of its loss, which was largely attributed to a stiff dose of profit-taking following gold’s 18% jump in 2005 and a further 2006 rise to a recent 25-year high of $574.60. Gold, which closed last year at $517, is currently around $554.

“After its big run, I think we saw a not unexpected and temporary gold correction,” money manager Tom Postin of Los Angeles-based P&W Partners says. “With what’s going on in the Mideast, the sell off was a buying opportunity.”

For some thoughts on what’s ahead for gold, I called the folks at U.S. Global Investors, a San Antonio, Tex.-based family of mutual funds with $3 billion of assets under management. Included are two that invest in gold – U.S. World Precious Metals Fund (assets: $328 million) and U.S. Gold Shares ($90 million).

I last caught up with this firm in early December. At that point, with gold at a 23-year peak of $503, U.S. Global made a super call by predicting a bigger gain, while insisting that “we’re in the beginning of a bull market in gold and it’s still the place to be.”

Even though the metal is substantially higher than its 2004 close of $438.45, the firm still believes the latest gold rush may have a lot more mileage before it runs its course. Its reasoning: Many of the ingredients that led to the latest gold boom are intact.

“I believe we’ll see $600 an ounce before the end of March and $650 before year end,” says Ralph Aldis, an analyst at U.S. Global who tracks precious metals for the firm.

Laying out his scenario for a higher gold price, Mr. Aldis kicked off with his expectation of renewed economic weakness, partly spurred by weakening home prices. That, in turn, as he sees it, will weaken the dollar, which is usually a major incentive for buying gold. (His economic weakness theory, it should be noted, runs counter to the prevailing view that 2006 will produce a reasonably peppy economy, with GDP pegged to grow about 3.4%-3.5% in the first half and about 3% in the second half.)

The dollar rose 12% last year and gold still managed to post an advance, indicating, of course, that other catalysts were at work.

Here’s a rundown of some other reasons that lead Mr. Aldis to believe the current gold rush is far from over.

* Gold reserves of central banks are at 50-year lows, indicating slowing sales from this source. Likewise, some countries, such as Russia, are targeting increases in their reserves.

* Annual gold demand (about 300,000 metric tons) is outstripping new mine supply (about 250,000 metric tons). Usually, the difference is made up by central bank selling, but this trend has slowed to a crawl.

* Rising demand from India, a huge consumer of the precious metal. Also, India has amended its investment rules to permit its mutual fund industry to launch an exchange-traded gold fund. A similar type of American fund, Street Track Gold Shares, which started in America just 14 months ago, has already amassed assets of $6.2 billion.

* In China, another hefty gold buyer, one sizable bank initiated a gold passbook account, allowing individuals from the world’s fastest growing economy to buy gold with their deposits.

Mr. Aldis’s favorite gold stock plays, most of which are Canadian based companies, are Goldcorp, Rangold Resources, and Northern Orion Resources. He also favors a silver company, Silver Wheaton, which is 65% owned by Goldcorp. Some silver pluses: On occasion, it has outperformed gold in historic advances; likewise, silver stockpiles are diminishing, and there are a lot fewer pure silver companies.

Mr. Aldis’s boss, Frank Holmes, U.S. Global’s chief investment officer, is even more bullish than Mr. Aldis. He thinks gold could reach $1,000 an ounce by 2007. Before then, though, he believes gold could easily pop to $800 if there’s a spike in inflation or if interest rates peak and fall, which would mean a negative rate of return on cash after inflation and taxes. In any event, he views gold, based on supply-demand factors, still undervalued at current levels.

Sounds good if you own gold or a gold stock, but a word of caution. Market Vane’s latest survey of investment advisers – the findings habitually are a super contrary indicator – show a hefty 91% of them are bullish.