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 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.
It's Mother's Day in the United
States. Mothers are the most important people in the world. But
they need new shoes too. So, turning to money and gold, it's
the rather miserable one-year anniversary of the major high in
the precious metals' market from 5/11/06. In the last
Update for 321gold (see http://www.321gold.com/editorials/kern/kern042207.html),
I reprinted the Special Update sent to subscribers that declared
the end of the SKI bull market at that time due to the rare "death
run" and 321gold has been kind enough (and honest enough!)
to continue to allow me to post rather bearish articles for the
past year (other gold websites ban me because SKI does change
from bull to bear and vice versa). The very special and rare
"death run" completed at USERX (the gold mutual fund)
15.54 in May 2006. As of Friday (5/11/07), USERX closed at 15.57.
Although many small gold stocks have exceeded the levels of 5/11/06,
the broad complex has been UNCHANGED. The best position has been
cash, unless you are an excellent stock picker (I am not an excellent
stock picker; I am a market timer). I haven't gotten many new
subscribers based upon my bearish position, but it's not MY position;
MY view is based upon the 33-year history of run patterns and
index signals. AND THE SKI INDICES ARE NOW, AGAIN, AT A MOST
CRITICAL JUNCTURE. I try to avoid hyperbole, but the precious
metals' market has truly reached another critical point.
The special set-up requires that prices rise over the prices from 96, 95, 94, 93, and 92 trading days earlier (to generate a 92-96 index buy signal), then prices fall below the prices from 92-96 days earlier, and then rises back above the 92-96 back prices. This past week, prices barely rose over those back prices to generate the 92-96 index buy signal (NOT a time to buy; just the first part of the "set-up"). On 5/11/07, prices needed to rise to USERX 15.58 to avoid falling back below those back prices. USERX closed at 15.57 on 5/11/07! You probably don't believe this, but the indices are accurate to the penny. The 92-96 index generated a sell signal on 5/11/07. Therefore, we have the first two parts of the set-up for a true SKI bull market.
The final and most important part of the set-up now requires that prices quickly generate a new 92-96 index buy signal. That has NOT happened yet. But it could happen within 1-7 trading days. Jeff (that's me, the keeper of the SKI indices) believes that it won't happen because the 2006 "death run" has not been negated. Prices should move down in a dramatic manner over the coming several months and provide a "life run" plunge that allows me to buy (and leverage) within one day of the multi-year low. But if a new 92-96 index buy signal occurs here, SKI will give its next great bull market buy signal, Jeff will buy, and those death run concerns will have to be written off as "This time it is different". I don't believe that the true bull market signal will occur or that "This time will be different" from the last 33 years, but the set-up is here and now.
The "death run" from one year ago predicted a major decline in the precious metals. But the SKI indices are now set-up for the next bull. I am not trying to confuse you, nor am I trying to hedge the prediction. The prediction, that has always been correct in the multi-year sense, is that a major decline still awaits. But the SKI indices are now open to the next great bull market rise. The next 1-2 weeks WILL show the answer. Cash and/or short positions are still recommended as of the close of Monday (5/14/07). The next buy should yield at least a yearly triple (300% gain) in USERX without leverage. That will happen, but only once SKI goes into "buy mode".
No one should believe the above,
rather definitive statements, without having followed them for
many bull and bear market cycles. I've posted SKI reports for
years and I've cross-validated the indices for 22 years. Frankly,
they've always been correct in a multi-year time frame (my short-term
predictions are often incorrect, but the long-term index and
run pattern calls have always been correct). The true bull is
not expected here but can occur within 1-7 trading days. PLEASE
BE SAFE UNTIL THE BULL RETURNS.
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.
Jeff (Yes, I am STILL trying to maintain patience and discipline after one long year from the highs)