Current USERX price = 14.00, Up another $1.78 cents (14.6%) since the last report 3 weeks ago.
Introduction (repeated from prior Reports):
I have been using my unique SKI indices to predict price changes in the precious metals' market for more than two decades. And my indices continue to mark the critical points. I have initiated a subscription website since 1/13/06 (yes, Friday the 13th) after having posted free updates for years at www.321gold.com. SKI is a timing service; although almost everyone seems to believe that market timing is impossible, that IS what the SKI indices have done for 36 years.
The SKI indices contain short-term (16-20 trading days), intermediate-term (35-39 trading days), and long-term (92-96 trading days) indices. A more comprehensive description of these mathematical indices and their history is found here. Basically, the indices compare today's price to prices from a specified prior time period. The name of the index specifies the time period (e.g., 92-96 index = compare today's price to prices from 96, 95, 94, 93, and 92 trading days earlier). Although I use the oldest gold mutual fund, USERX, for analyses, the predictions are applicable to the broad precious metals' market. I do not recommend or analyze specific stocks, but my subscribers from around the world regularly discuss individual issues on our Forum. In addition to the truly unique SKI indices, I also use "run patterns" to guesstimate turning points in the precious metals' market. A "run" refers to a pattern of daily up and down market closing prices. If the market has 3 consecutive days of higher closing prices, the run is "3 up". If prices then decline for 2 consecutive days, the run becomes "3 up and 2 down". If prices then close higher the next day, the run changes to "2 down and 1 up". Some people have referred to run patterns as "worms". A run pattern is only completed after the direction of closing prices has changed. I have compiled a listing of every run pattern that has ever occurred and generated probabilities that the end of the run marks a high or a low, moderated by the indices themselves.
The last SKI Report, written on 7/12/20, concluded and bold-faced/emphasized that “unless USERX now UNexpectedly plunges about 13+% in the next few days, any potential SKI-bearish scenarios will have SKI-virus (sarcasm) “died’”. Furthermore, “Mechanical SKI and Jeff’s bullish intermediate-term and longer-term perspective does NOT require a continuing rise during the coming week” and boldfaced that “The next SKI-disciplined buy-point will occur on an eventual decline back down to the 16-20 and 35-39 indices”.
What happened? Simple again. The gold stocks declined for a day and then kept rising. It’s been a SKI bull market since the master long-term 221 index bought for Long-Term Mechanical SKI at USERX 7.08 on 3/27/20 (as USERX rose back over the prices from 218-222 trading days earlier), the Regular Mechanical SKI master 92-96 index bought at USERX 9.65 on 4/27/20 (as USERX rose above the prices from 92-96 trading days earlier; but this requires a specific index pattern, not just rising above the index), and then as the contrarian short-term 16-20 index bought the corrective low on 6/12/20-6/15/20 (as USERX declined to BELOW the price as from 16-20 trading days earlier). Such bull markets have only occurred every 5-7 years since 1974, so one hopes to make large amounts during such bull markets or SKI typically gets stopped out on a brief decline and loss.
Last Monday’s (7/27/20) huge gap higher in GDX-HUI, coupled with a stretched 7-day consecutive rise in GLD and COMEX Cash Gold into media-hyped new All-Time gold highs, did yield the first bearish USERX run pattern since the 5/20/20 multiple-week top provided an 80% historical probability bearish run pattern. However, the run pattern rise into 7/27/20 is not as high-probability as that 5/20/20 run pattern based upon the history of such runs during bull markets since 1974. GLD and Gold proceeded to hyper-extend that run higher to 9 consecutive trading into last Wednesday (7/29/20) even as USERX declined a little for 2 trading days. That WAS fear-provoking for Jeff and I temporarily suspended buying yet more on down days. I’m personally maximum long + an extra 4.5%, and am up to 34.25% long my net worth. I don’t count my 10% net worth long gold position because I use that as my long-term “insurance”.
Had USERX kept declining and plunged, a rare “Death Run” top pattern would have occurred. Such Death Run patterns have historically marked multi-year major tops. But thankfully, last Thursday’s decline stopped the Gold/GLD run higher (and GDX/HUI filled last Monday’s 7/27/20 open up-gap) and this past Friday’s USERX rise prevented/killed the possible Death Run top (smile).
The next multi-week issue is whether last Monday (7/27/20) marked a high at USERX 14.12 to be followed by the several-week (3-4 week) decline into the next “SKI-disciplined” 16-20 index supportive buy signal. Since the SKI indices are simple math (addition/subtraction and multiplication; the simple formula never changes and is the same for every index), that include “velocity” (the rate of price change), and “acceleration” (the rate of velocity change; as per basic physics), we “know” with 100% certainty that such a decline will eventually occur. Jeff only uses the words “will” and “know” when it is mathematically certain. What we do not “know” is WHEN such a decline will occur and that is obviously what matters most over the short-term to intermediate-term. It’s all stretched/overbought, and there’s last Monday’s bearish run pattern, but the primary recommendation continues to be to “ride the bull” and buy yet more when (not “if”) the next corrective decline occurs into a second 16-20 index buy signal. A rise to above XXXX would likely signal that this wonderful second intermediate-term rise (from the March 2020 low) has not yet completed. Yes, my “XXXX” is my need to save that and more for SKIers…
Best Wishes, Jeff
If you are interested in following and learning more about the SKI indices, I'll write another Report in three weeks or you can shell out the big bucks for a SKI subscription. Weekly Updates are available by subscribing for a month (or longer if you're wise and cheap enough to want to save money) at my website www.skigoldstocks.com for the princely sum of $30 (for a one month subscription) or more ($240 for an annual subscription). I also provide more frequent intra-week daily messages/alerts at a slightly higher price along with access to our informative Forum.