Gold's Next Wave

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"For now, the best time to add shares will be sometime in the next few weeks."

Over the past two months, gold prices have settled into the $910 to $950 range as investment demand for the precious metal continues to balloon. Gold stocks, on the other hand, remain in the doldrums.

The gold stock market is now dependent on a new breakout for precious metals prices. And in order for precious metal stocks to disconnect from the global financial turmoil, gold and silver prices will need to make some pretty big moves.

I believe gold would need to move over $1,100 an ounce to force this disconnect from general market activity. I am looking for a silver breakout in excess of $23 an ounce.

So, the question is: when will this next wave hit?

Gold was up this week, but I don't see the big breakout occurring until sometime in the fall. I expect to see a sideways trading pattern for the next six weeks or so before things start heating up again.

With all that is happening in the United States and worldwide, higher gold and silver prices are going to rule the day. Stay on course with gold stocks and don't fret too much about what happens over the summer.

On the other hand, it's always important to pay attention to any short-term profit situations and cash up some on any opportunity to do so. If you find yourself with a position that has doubled from where you bought it, you should take 50% off the table and let the rest run to see what can happen. In this market, look for any short-term profit situations and pay yourself back whenever you can.

For the balance of the summer, I am personally looking for gold companies with the aggressive drill programs to come up with the results we need for higher share prices. Until we get breakout gold prices, the best we can hope for is a set of stellar drill results.

When the breakout does occur, the gold stock market could really take off. For now, the best time to add shares will be sometime in the next few weeks.

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