Current USERX price = 17.82, Up 4% 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 the most informative gold site, 321gold, since its inception approximately six years ago. 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 32 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 at http://www.skigoldstocks.com/about.php. 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.
In the last gold stock SKI Report on 1/05/08, I described how the gold stocks had risen off of a touch of the master 92-96 index due to a strange dividend and that prices were exploding higher. The week after that Update witnessed yet another explosion of 10% over 5 trading days into a new century high of USERX 18.73 on 1/14/08. That rise was accompanied by SKI index sell signals and an historically bearish 2 Down and 5 Up run pattern. The market came within hours of generating a buy signal that I would have had to buy (a new 35-39 index buy signal), but then reversed and declined strongly on 1/15/08. That has been the high to-date.
The fundamentals appear to be extremely bullish for gold bullion. As I write this, gold is up another $6. The U.S. government is dropping dollars into the mail via tax refunds that will double the stated Federal budget deficit, the Federal Reserve is slashing interest rates without any apparent concern that the U.S. Dollar will lose value (understated), and as of Friday (1/25/08) the output of gold mines is likely to be reduced by South Africa's power problems (causing the SA gold mining shares to plunge and gold bullion to rise to new all-time nominal highs). My experience is that the fundamentals rule the long-term (multiple years) and the psychologicals/terchnicals (SKI) rule the short to intermediate-term prices of the precious metals stocks.
The articles on public websites, are, to some extent, well-intended advertising articles. Few writers note that and few websites (outside of 321gold) allow anyone to state so. But that is the case. I am just Jeff, who wrote freely for years, obtained a large readership due to honesty, accuracy, and no cost. I then went to the paid website thingie, in large part to make my life easier by having technicians handle the emails hassles, via a relatively small annual cost to readers. Jeff (that's me) and the SKI system are far from perfect. My goal is to minimize risk and to capitalize on several opportunities each year to make 20+% each year and to also make the 80-100% gains in a year when the gold stocks are in a true bull market. I only made 11% in 2007 and could have made about 100% if I had been able to capture the rise off of the August 2007 low, sold at the November high, and then bought back on that low on 12/20/07. I did NOTHING, except get a true buy signal at the end of June 2007, made my 10% over a few weeks, and then waited.
I am still waiting. I am still skeptical. I am at least short-term bearish.
The small and mid-sized gold miners are at very low prices and have not participated in the gold bullion's rise over the past six months. They are either a great long-term buy right here, or something is wrong. USERX has risen over the past five months, but has performed rather poorly relative to the underlying metal. Historically, such underperformance by the gold stocks has not been good for the bulls.
The last update reported that the critical time would occur in 18 trading days and we ARE at that time period. SKI continues to be on a master 92-96 index buy signal from 9/12/07 at USERX 16.15 that is not supposed to be a true bull market (defined as a rise that lasts more than a year amidst prices that at least double). The gold stocks are supposed to sell off again and sell that 92-96 index over the next 1-2 weeks. IF THAT HAPPENS OVER THE NEXT 1-2 WEEKS, SKI WILL BE PREPARED FOR THE BIG BUY SIGNAL, but until that happens OR this market simply rises a few percent over current levels to the "buy stop", I still cannot be a great bull. Logically, based upon the fundamental factors listed above, it doesn't make sense. Rather obviously, the gold stocks are being restrained by the malaise in the general U.S. stock market. I continue to maintain that the gold stocks do not surge higher while the general stock market experiences strong declines. Analysts have made the reasonable call that last Tuesday-Wednesday (1/22-1/23/08) was the panic low in the general stock market, but that is doubtful in light of my SKI indicators.
This Special Update probably isn't definitive or clear. I wish that it could be so. SKI has been frustrating for the past 5 months and I have not been willing to assume risk. That will change, it always changes, but for right now, I am short-term bearish and await a true buy signal in the precious metals stocks. I hope that helps a little. This coming week is very important and a decline tomorrow (Monday; 1/28/08) is short-term bearish.
Best wishes, Jeff
P.S. It truly appears that the Federal Reserve and our elected government officials continue to act in a manner that is not positive for our long-term economic health, that does not reward savers and hard-workers, and that does not bode well for my children. I've been "obsessed" with the gold stocks since the early 1980s because they were the vehicle that would protect my family. I still believe that they will, but they haven't done so recently and SKI keeps saying to be wary. That may change over the next couple of weeks, but prices are supposed to decline as of the day that I write this Special Report. The very fact that you take the time to read this is an honor. Thanks. I 'm doing the best that I can to survive this financial mayhem.
If you are interested in following and learning more about the SKI indices, I'll write another Report for 321gold 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 $25 (for a one month subscription) or more ($200 for an annual subscription). I also provide more frequent intra-week messages/alerts at a slightly higher price along with access to our informative Forum. The precious metals are in a very long-term (decade+) up-trend but are the most precarious, volatile, and psychologically difficult market in the world (in my opinion). That's the way it's always been.