Current USERX price = 11.80, Up 36 cents (3.1%) 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 12/21/21 described how the gold stocks had declined to below the regular SKI indices (the 16-20, 35-39, and 92-96 indices). It concluded that “The multiple index signals during the past 1.5 weeks absolutely can mark a low here for a multi-week rise back to the 16-20 and 92-96 indices. But such a rise would “just” trigger renewed index resistance signals in a few weeks. And since the gold stocks are below all of the primary SKI indices, there isn’t an objective sell-stop and Jeff canNOT hold long positions”. A multi-week rise would once again hit multiple index resistances despite the longer-term “expectation” of another large rise (bull market) for gold and the gold stocks.
The gold stocks then declined for 3 more days into the 12/15/21 U.S. Federal Reserve meeting. GDX went all the way down to test its 2021 low. The HUI and USERX held a few percent above that yearly low.
USERX formed a 2 Up and 6 Down run pattern into 12/15/21. Such runs down usually end at 5-6 consecutive daily declines. This is a special run pattern that can mark major lows IF the run down is “strong” (i.e., the run down averages 2+% daily declines; meaning 12+% over 6 trading days). This run down was rather “weak” because it only averaged 1.1% daily declines.
The 2 Up and WEAK 6 Down run pattern has occurred only 14 times in the past 45 years. The weakness of the decline prevented Jeff from buying because 10 of the prior 14 occurrences have only yielded “weak rises”. They have never yielded major intermediate-term or long-term lows. (Of-course “never before” does not guarantee “never ever”). The 4 “good rises” have yielded 10-15% gains over several weeks or even 1-2 months. And even the “weak” rises have lasted for more than just a few days. Therefore, the historical run pattern probabilities favored a rise from 12/16/21 during this seasonally bullish period into January (or even February) 2022.
True bull markets need higher lows AND higher highs. Gold bottomed in March 2021 but has only made lower highs since then. Physical Gold purchases were encouraged at that time and the public reports at that time were bullish for the gold stocks into the mid-May high (some measures did not top until early June 2021). By the way, Jeff maintains a multi-decade long position in physical gold (10% of my net worth). The gold stocks DID finally form a higher low on 12/15/21. USERX would need to rise above 13.13 to make a higher high.
USERX has now risen to the 16-20 and 92-96 indices on the SKI chart. The USERX black dots are about to rise above the 16-20 index’s blue line. The USERX price is also hitting/touching the green line 92-96 index. The gold stocks usually RISE into those index signals. The 16-20 index’s 1st resistance sell signal WILL execute next week (into the New Year). The 92-96 index’s 2nd resistance signal would generate next week on a further rise.
The signals represent resistances but also “activate Mechanical SKI” for potential buy signals with objective sell-stops. This coming week’s behavior is quite SKI-important. This coming Monday’s (1/03/22) USERX movement will be reduced due to the closure of the Australian and Canadian markets. If/When the gold stocks continue this 2-week up-trend, will next week’s rise be powerful? Subscribers receive daily and/or Saturday weekend emails (that’s my “advertising” statement; smile). All daily and weekly SKI Updates (for several decades) are available/archived to subscribers. Right now, the 2+ week uptrend is intact heading into Price X Time resistance.
Best Wishes for a happy New Year!, 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.