We are in the middle of a five-year bull market in gold and gold stocks, but that doesn’t mean they will go straight up. With the exception of a spike to an intermediate Elliott Wave 3 top of $1,424 in the past seven weeks, the metal has been consolidating.

It’s typical to see Fibonacci periods of time as part of consolidations whether it be an individual stock or a precious metal in this case. Gold was overbought at the $1,425 pivot highs a few weeks ago, and that terminated what I label a “wave 3 pattern.” This led us into a fourth wave corrective pattern, which we remain in now. My worst-case pivot low is expected at $1,321, and so far we have seen $1,331 an ounce, and then an ensuing bounce to the $1,370 range.

In the intermediate term, I’m looking for further consolidation, likely for another week or so, followed by a breakout over $1,425, leading to my objectives of $1,480-$1,525 to complete the entire rally from the $1,040 lows in February of this year.

Many are starting to get bearish on gold and silver here, and to me that is bullish and indicative of fourth wave mentality. In a fourth wave, there is growing bearish sentiment, but not so much as to topple the bull structure.

We are in a super bull market for gold stocks as I outlined in August of 2009, and we have another four years left to go. I’m seeing a lot of amazing chart patterns in the junior miners, which are in a relentless climb. Owning the explorers that are finding the gold is how best to take advantage of the remaining four years. Make sure you own hard assets and precious metals resources one way or another.

Below is my updated gold forecast using a weekly chart:

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