Special SKI Report #283
Marked Top and Next Gold Stock Low?

Jeffrey M. Kern, Ph.D.
Email: jeff@skigoldstocks.com
USERX | historicals
Written Sunday Feb 5, 2023
Published Feb 6, 2023

Current USERX price = 9.91, Down 80 cents (7.5%) since the last report 3 weeks ago.

Introduction (repeated from prior Reports):

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.

New Material

The last SKI Report, written on 1/15/23, warned that at least a short-term top for the gold stocks had occurred on 1/13/23 because the infrequent, but highly accurate 660-664 index had just executed a sell signal at USERX 10.71. One can only deal with probabilities. Since this index buys on declines to mark “probable” lows and sells on rises to mark “probable” tops, the probability was that 1/13/23 marked a high. Jeff concluded that “A rise through this sell signal would be quite immediately bullish. But the typical behavior is a decline back below the prices from almost 2.75 years ago to generate the next 663 index BUY signal.”

The immediate USERX decline on Tuesday (1/17/23; 1/16/23 was a holiday), completed a typically bearish 1 day Down and 2 days Up run pattern. That fit well with the 663 index’s 1/13/23 sell signal. The Tuesday (1/17/23) drop to USERX 10.28 came close to generating the expected 663 index’s BUY signal (on a decline), but wasn’t quite large enough of a price decline. As of 1/17/23, USERX’s prices from 660-664 trading days earlier were 10.31, 10.50, 10.89, 10.55, and 10.14. And historically (since 1974), it would have been too soon for the market to generate a 663 index buy signal just 2 trading days after it sold. As always, the best measurement/prediction is based upon the interaction of Price AND Time. Almost all analysts understandably focus just upon Price, but markets and human nature are also affected by Time.

Anyway, the gold stocks then rebounded into 1/28/23 at USERX 10.67. The 1/29/23 declined completed ANOTHER generally bearish 1 Down and 2 Up run pattern at a lower high. Plus, one should monitor the Australian gold stock index (XGD.ax) that made a bearish “key reversal down” on 1/25/23 via a spike up to a new multi-month high and then strongly declined to close below the prior day’s low.

USERX then declined back to 10.28, but that still was not down enough to generate the typical 663 index buy signal. As reported in the SKI Report 3 weeks, that index’s back prices were DECLINING. I can’t report all of the numerous details in these public updates, but those back prices were declining to the 6/12/2020 bull market corrective low at USERX 9.99. Hence the buy signal needed a decline to below 9.99. As of LAST weekend, Price X Time was about to expire during this past week (i.e., IF a decline was going to occur, the gold stocks “needed” to decline by the end of the week OR another rising phase should begin without a 663 index buy signal).

And so, the decline occurred, marked by gold’s typically bearish “key reversal down” on Thursday (2/02/23). USERX has declined to below 9.99. The 663 index’s mathematical buy signal is about to generate along with a decline to a 16-20 index buy signal. The 16-20 index also is a contrarian index that buys on declines as USERX declines to below the prices from a 16-20 trading days ago. Since the gold stocks usually decline into such buy signals, some additional early-week decline is typical.

The approaching index signals are likely to be quite important. I’m reminded of 2020 when the even rarer contrarian 884 index executed its sell signal on 2/24/2020 that marked an exact high. The risk markets then crashed THROUGH a quick subsequent 884 index buy signal for the “great COVID plunge” into multiple index signals a month later to mark the low and then the start of a bull market. This time, a decline through the approaching buy signals could again mean that the gold stocks (and various markets) are in danger. That has NOT yet occurred and the USERX decline has persisted long enough (3+ weeks) for an approaching low into 2 index buy signals. Furthermore, the 663 index’s back prices are now RISING towards the August 2020 high over several months. That means that the 663 index won’t generate a new sell signal unless the gold stocks rise to/above that 2020 high, as per the prior SKI Report’s boldfaced: “If the gold stocks do decline to a 663 index buy, the ensuing rise can therefore be quite extended and powerful”. But a decline through the buy signal is quite dangerous. So, it’s a rather “do-or-die” Price X Time set-up that is almost here…   

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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.

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email: jeff@skigoldstocks.com

Jeffrey M. Kern,Ph.D., is an academic psychologist with a specialty in the measurement and prediction of human behavior. The communications provided are for informational purposes only and are not intended to be investment advice or recommendations for specific investment decisions. Dr. Kern is not a registered investment advisor, but is registered as a commodity trading advisor (CTA). The information provided is considered accurate, but cannot be guaranteed. Investments/trading in narrow market segments or gold futures is for individuals willing to accept a higher level of risk for the opportunity of greater returns. Past performance is no guarantee of future performance. His website is www.skigoldstocks.com.

Communications should be sent to: jeff@skigoldstocks.com.

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