MONTREAL (Reuters) - In years past, silk shirts, high-grade rock samples and even a gun or two have flashed at the prospectors and developers convention in Toronto, but junior gold companies are likely to spark the most interest at this year's shindig.

Gold heading toward $1,000 a ounce and widely expected to move a fair bit higher may have something to do with their popularity at the Prospectors and Developers Association of Canada convention, which runs from yesterday to Wednesday.

Held every year since 1932 in early March - because that is when grizzled prospectors shuffled in from thawing exploration grounds - the gathering will feature no less than five separate forums on the outlook for gold resources in Australia, Africa, Eurasia, Latin America and the Americas.

Speakers at other sessions will also address the burning question of where gold is headed and what that means for the global mining industry.

It will be the junior and mid-tier companies' chance to attract attention from the 18,000 registrants as big, deep-pocketed producers seek ways to boost their reserves.

Gold prices rose about 31 percent last year, but gold stocks dropped five percent.

They have rebounded this year, but analysts figure there is still plenty of catching up to do.

"I think 2008 will be the year where gold stocks will at long last catch fire," said John Ing, president of Maison Placements Canada.

"Main Street has not figured out yet that while the price of bullion has gone up, there is not much coming in terms of supply," he added.

Ing sees gold going to $1,200 an ounce this year and peaking at $2,500 in the cycle, whenever that ends.

Aside from concerns about the global supply of gold in the face of healthy demand, the metal also serves as a hedge for anxious investors against a falling US dollar.

He expects industry consolidation, already seen over the past year among the big caps, shifting toward the mid-tier and junior sectors.

Ing sees Agnico-Eagle Mines Ltd, Kinross Gold Corp , both unhedged producers with top-notch deposits, as possible takeover targets.

The same may apply for juniors such as High River Gold Mines Ltd, Etruscan Resources Inc and Aurizon Mines Ltd .

In its 108-page research compendium on junior miners put out for the prospectors and developers convention, Haywood Securities sees inflation pressures and the central banks' boosting of gold reserves as factors buoying prices for the metal.

Canadian juniors looking for a piece of the action have been going farther afield to find high-yield deposits in low-cost countries.

Two of Haywood's picks are Banro Corp and Moto Goldmines Ltd, which the securities firm figures could together produce 1.4 million ounces of gold a year by 2015 in the Democratic Republic of the Congo (DRC).

Analysts Eric Zaunscherb and Andrew Kaip think both speculative plays are trading at significant discounts to their enterprise value per ounce when compared with other explorers.

Much of that reflects the "country risk" attached to the juniors being able to move ahead with mining development, but their deposits are located in world class mining camps in the DRC, the analysts wrote.

Back in Canada, the juniors showing their wares at the prospectors and developers convention face a number of challenges that offset rising gold prices. Mining costs are rising almost as rapidly as prices, and financing remains surprisingly tight for many of the players.

Maison Placements' Ing expects the next round of mergers and acquisitions to feature the smaller players, whether or not there is a discovery big enough to spark a staking rush.

"This industry has been starved for capital for 20 years. Mining deposits have been mined out, and there are fewer players because of the consolidation game," he said. "Anyone left standing is a potential target."