Gold stocks are trying to break though a layer of resistance at the top of the range between late April and early June. Volume patterns suggest they will succeed, possibly as early as next week. Last week was a consolidation week, hopefully next week will be the start of another leg up.

During the last 6 weeks, gold stocks have outperformed the metal, during the last 3 weeks, small caps have outperformed the big caps. This is further evidence that the move in PMs is for real - at least until the period of seasonal strength ends in late September. It also has prompted me to move down the food chain. I've been taking profits in the larger stocks and buying the smaller ones. The smaller stocks dropped more during the year and have more room to bounce before hitting resistance.

I'm still sticking with liquid names – I don't want to repeat the mistake I made with the Venture stocks – they were very difficult to sell when they started to break down. That said, some liquidity does appear to be returning to the Venture. Last week was the best volume for an up week since January, but it is not yet enough to jump in whole hog.

Bottom line – PMs looking good for a continuation of the seasonal run, probably until late September. After that, we'll see...