Hi, We have a website it's in a highly competitive niche (Gambling) We have been targeting two small key phrases, we have been building links for five months, and can easily say, we have much better related links with the correct anchor text, than any of our major competitors. We find ourselves stuck on page two, and fluctuating from 12th - 19th Even though we are continuously building strong backlinks, we see no improvement in ranking. We have been on second page since February, and have gained at least over 100 more strong PR3+ related backlinks since then but yet still no jump to the first page. It makes me think there must be some sort of ageing filter, the site is currently 7 months old.
If your site is constantly updated, it doesn't fall into the "aging filter" you are talking about. Plus, the sites ahead of you are way older. Link building takes a long time. You can get a backlink pointing to your site today, and that might not be discovered by Google few months later. You said it yourself: "highly competitive niche" and "targeting two small key phrases" 7 months is not long and there's no overnight success. Your site is a little baby compared to other gambling sites. Just keep doing what you are doing, and get anchor text backlinks from related sites (gambling).
The age of your links counts as well, how long you've had them. Are you doing linkbuilding from only one method? I find it weird that you've gotten 100 PR3 backlinks - this looks really unnatural. Get links of all sorts and all PRs, even some nofollow links don't hurt either. Social bookmarking, article marketing, squidoo/hubpages, etc... Do it all. In fact spearhead an article marketing campaign, this will give you some immediate results I guarantee it.
It think it is a good sign that you are on second page. just wait some more time and still building good backlinks. And i am Very much agreed with blogaboutnothin.
review your results in August, if there's no movement that you can worry, try to SEO your website in the meantime.
IMO, You just need some time to wait, my site has the same question, just wait to see the result, for if you over optimize your site now, you may lost your position in google!
SEO is a long and tedious process. You need to be very patience. SEO results cannot be achieved over night. As you said that you are in a very competitive niche with competitive keywords, and so, 2nd page is a good start for a 7 month old site.
Make sure your on page Seo is correctly done (Title, Keywords, Meta Description, H1 Headline Text, H2 Headline Text, IMG ALT Attributes and your websites content) if all is well, keep building relevant links. Thanks Brian