WINDERMERE, Fla. ( Stockpickr) -- While many market-leading stocks -- look at ( PCLN), ( BIDU), Wynn Resorts ( WYNN) and Apple ( AAPL) -- are off to great starts in 2011, one leading sector hasn't been so lucky: gold.

So far in 2011, gold has dropped from over $1,420 an ounce to around current prices near $1,375. Many market pundits are saying that this drop will mark the end of the run for gold, but I think that call is premature. Take a look at gold's chart for the past three months. The shiny yellow metal has basically been in a trading range from $1,430 on the upside to around $1,315 on the downside.

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There are various reasons for gold's poor start in 2011, including continued strength in the dollar, an overcrowded retail trade, better-than-expected economic data that has pushed market players out off commodities -- and some good old-fashioned profit-taking.

From a technical standpoint, gold has started to trade below its 50-day moving average of $1,380.25 and its 20-day moving average of $1,389.53. This can often be a warning sign for the future price of any trading vehicle. But gold also has some solid support zones at around $1,360 and even down to $1,330 and the 200-day moving average at $1,265 an ounce.

As long as those support zones aren't breached, then I think market players should consider buying gold on this dip instead of shorting or selling.

If you're really worried about where gold is going to go in 2011, you might find some comfort in the fact that Goldman Sachs recently raised its price target on gold to $1,690. Goldman thinks gold will hit this target by the end of 2011 due to a low-interest-rate environment in the U.S. The firm also believes that gold could peak at $1,750 an ounce by 2012 as the U.S. moves into full economic recovery mode and interest rates possibly start to go up.

Market players need to understand that when commodities pull back, the selloffs are often vicious and can last for longer than many might expect. But if you believe that the longer-term story in gold is still intact, as I do, then you have to use these selloffs to accumulate positions on the cheap. As long as we continue to have a Federal Reserve that is determined to print currency in order to get us out of this economic mess, then gold won't stay down for long.

My favorite way to play gold right now is with gold mining stocks. Many of the miners have removed their hedges because they think gold still has plenty of room left on the upside. I would suggest that traders look to buy the most heavily shorted miners or the miners that have been clear market leaders during this beautiful gold bull market. I would also recommend that investors look for the gold miners that are showing the most relative strength even as gold has dropped.

With all this in mind, here's a look at some gold mining stocks that you might want to start buying on the dips .

One gold mining stock that has been a market leader and could be a great buy now is Agnico-Eagle Mines ( AEM), a gold producer with mining operations in northwestern Quebec, northern Mexico, northern Finland and Nunavut and exploration activities in Canada, Europe, Latin America and the U.S. Shares of Agnico-Eagle, which are currently fetching around $71.66 a share, are down more than 18 points off of its 52-week high of $88.20 a share. That's a healthy decline for a stock that traded as low as $55 in 2010.

One of the reasons I really like Agnico-Eagle right now is that despite the stock's deep selloff, the shares haven't broken below the key support level of the 200-day moving average at $66.50 a share. As long as the stock can stay above that area, then I think you can start to sniff around Agnico-Eagle for a big buying opportunity.

Agnico-Eagle currently has a 5.3% short interest, which isn't huge, but it's enough to give the stock some juice if buyers start to step back into the name. Also, Agnico-Eagle does pay a dividend of around 64 cents a share, for a yield of almost 0.9%. In fact, Agnico-Eagle was one of several stocks that increased their dividends recently, boosting its shareholder payout by 255.6%.

Another gold miner that I think could be setting up for a buying opportunity is Barrick Gold ( ABX), which is engaged in the production and sale of gold and related activities, such as exploration and mine development. Barrick also produces copper and holds interests in oil and gas properties located in Canada. Shares of Barrick are currently changing hands at around $49 a share, about 6 points off its 52-week high of $55.72. Shares of Barrick traded as low as $33 a share in 2010, so you can see that this stock was a decent performer and a market leader in the space last year.

Shares of Barrick have recently broken below the stock's 50-day moving average of $51.17 on heavy volume, but now the stock is starting to find some support off a previous support zone at around $48 a share. Keep in mind that shares of Barrick also have some solid support down around the 200-day moving average of $45.45. As long as the stock doesn't breach the 200-day moving average, I think you can start to take a hard look at buying this stock.

Major holders of Barrick include NWQ Investment Management; as of the most recent reporting period, the stock made up 3.8% of the total portfolio. Jonas Elmerraji highlighted the stock recently in an article on three investments that could rally in 2011.

Let's dig in to a few names with heavy short interest. I love to buy stocks that are heavily shorted in an oversold sector because the bears often press their bets when they see a decline go their way -- and that can lead to explosive short-squeeze rallies once the bulls step back in to accumulate shares.

One gold miner that is heavily shorted is Hecla Mining ( HL), which is engaged in discovering, acquiring, developing, producing and marketing silver, gold, lead and zinc. This stock had a huge 2010, with shares moving from a low of $4.27 to a high of around $11.50. Make no mistake about it: A lot of that move was fueled by shorts forced to cover some of their positions as the stock continued to trend up and up. Hecla's rise earned it a spot on the 10 Best-Performing Mining Stocks in 2010 list.

The current short interest as a percentage of the float for Hecla stands at around 17%. I would also like to point out that Hecla has a strong balance sheet, with around $216 million in cash and only $5.9 million in long-term debt. Short this stock at your own risk, because I think once the bulls come back to this name, it is going to go much higher and easily take out its old 52-week high.

Two more heavily shorted gold miners are Seabridge Gold ( SA) and NovaGold Resources ( NG). The last time Seabridge Gold saw a big short-squeeze rally back in March of 2010, the stock ran from around $21 a share to over $37 in just two months. This demonstrates how powerful a short-squeeze rally can be for a gold miner once the bulls decide to come back into the stock and buy.

The current short interest as a percentage of the float for Seabridge is a rather large 13.1%. What will make any short squeeze in Seabridge even more powerful is the company's very low trading float of only 28 million shares. A low-float stock with a high short interest can run further and faster because of the supply imbalance of shares created in a short squeeze.

Seabridge is currently trading around 12 points off of its 52-week high of $37.95. If you see a rebound start for the gold miners, then look to jump into this name because I think it would be likely to see another large short squeeze.

The short interest as a percentage of the float for NovaGold is also rather large, at around 8.2%. The stock has some strong support at around $13 a share, which has held up so far off of the NovaGold's slide from $16.90 to its recent low of $12.80. It's possible that NovaGold could slide all the way down toward its 200-day moving average of $9.20, but I think market players should start to look for a possible rebound sooner rather than later.

NovaGold has attracted the attention of some major investors, including John Paulson at Paulson & Co. -- the stock makes up about 0.8% of his total portfolio as of the most recent reporting period -- and George Soros, at 1.7% of his total portfolio. According to Shanthi Bharatwaj, NovaGold was one of the top 10 commodity stocks of 2010.

To be clear: I like to buy heavily shorted stocks that are trending in the right direction. It makes no sense to make a case for heavily shorted stocks that have no history of actually squeezing the shorts. I am a trend trader, and I want the names that are putting it to the bears and working for the bulls. This is chess, not checkers, so give yourself the chance to buy the heavily shorted stocks that have a higher probability of squeezing the shorts. Simply put, that's why I want the strongest names, not the weaker ones that could well be shorted for good reason.

To see more gold stocks that could be due for a rebound, such as Coeur d'Alene Mines ( CDE), Allied Nevada Gold ( ANV) and Gold Fields ( GFI), check out the Top Gold Stocks to Buy on Pullbacks portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to and maintains the website, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.