Gold's Next Wave

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.

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

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

Gold was up pretty big this week. But I don't see the big breakout occurring until sometime in the fall when a confluence of factors appears. In the meantime, I expect to see a sideways trading pattern for the next six weeks or so before things start to heat up again.

I continue to believe with all that is happening in the United States and worldwide, higher gold and silver prices are going to rule the day. This would dictate for us to stay on course with gold stocks and not fret too much about what happens over the summer.