Current USERX price = 17.06, Up 4.6% 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.
In the last gold stock SKI Report on 6/21/08, I described how SKI was within a day or two of generating another buy signal and that would happen if prices could stay above the 35-39 index (the intermediate-term index) depicted in Sharefin's free SKI charts as the green line (see http://www.sharelynx.com/chartstemp/SKI-Global-Sentiment.php). But I also wrote that "Such a buy signal wouldn't be forecasting some great rise because it doesn't involve the most powerful index, the master 92-96 index. The probabilities favor that the buy would make a profit (75% probability; not extremely high) but the buy should get sold out within one month and it could happen much faster than that".
On the next trading day, Monday (6/23/08), gold plunged $16 and the gold stocks opened 2.5% lower. A decline of 2.5% was needed to AVOID that index buy signal, but then the gold stocks recovered and the index buy signal was generated for execution at the close of the next trading day. Therefore, SKI officially bought on 6/24/08 at USERX 16.22 as prices declined into the buy signal day.
That week was a very volatile period involving the 6/25/08 Federal Reserve meeting. It was also a most interesting week for the mechanical/mathematical SKI indices. I thought that a reprint of my review of that week would be interesting and informative:
That rise on Friday 6/27/08 caused prices to begin to rise over the 16-20 index's back prices (see the red line in Sharefin's graph). When prices rise over those back prices, it is a SKI short-term overbought sell signal. The next week, the week of 6/30-7/03/08, was another volatile and SKI-interesting experience, so I'm adding to your reading load and reprinting that week's review as well:
So the 16-20 index sell signal marked the short-term high to the day on 7/01/08 and SKI sold. And then last week (7/07-7/11/08) prices declined to sell the 35-39 index on Thursday (7/10/08) before exploding 3-4% higher on this past Friday (7/11/08). SKI is on index sell signals executed on 7/01/08 and 7/11/08 and therefore is skeptical of Friday's surge higher, but is now open again to new and true (not Xxed Out) index buy signals in this choppy gold stock market.
Since I tell you when SKI is wrong and misses gains in the gold stocks, I'm allowed to write that the last 3 weeks were again almost day-to-day SKI perfection, except for this past Friday. I've now bought and sold just 3 times in the first 6 months of 2008, with a market risk/exposure of only 7 weeks and have been at a small loss for a total of 5 trading days (the first 1-2 days after each buy). Those trades in a broad basket of gold stocks have netted a gain of 18% in 2008 (since I only put in 25% of my monies on this last fast trade).
Best wishes, Jeff
P.S. Here's a snippet of a personal section that is slightly related to the financial world and will answer some of your emails regarding my wife's health:
First, my lung-cancer-fighting sister called to ask what to do. She needs money to pay for her skyrocketing medical bills and didn't want a certificate of deposit that comes due on Monday to renew. When she called the bank on Friday, she received a message that the bank had been closed (it went under). It was in my newspaper this morning as being the largest bank failure in a decade (IndyMac Bancorp). I told her that although the Federal Deposit Insurance Corporation (FDIC) only has enough money to pay off perhaps 2% of all insured bank deposits in the U.S., her bank would probably re-open on Monday under the name of a different bank and that all would be OK. She said that she doesn't have the time or energy to deal with this. Second, my trip to Los Angeles for a second opinion regarding my wife's continuing cervical pain yielded a most interesting and simple hypothesis ("simple" is always good!). The neurosurgeon wants to rule out the possibility that the fusion on her neck wasn't perfect and that something is still wrong. For example, bone could have grown in such a way as to impinge on a nerve that couldn't be seen via X-ray or MRI. Lisa had a special type of CAT scan yesterday and we'll find out in a few weeks. She checked this hypothesis on her spinal pain forum and found several other folks who confirmed that that had happened to them and that after a subsequent second surgery, all was well! After all, her pain re-started about 6 weeks after surgery last year and hasn't remitted. She wondered why her orthopedic surgeon hadn't considered this possibility since we keep telling him that something is wrong and he simply repeats that the fusion looks perfect and sends her to the pain doctor. The point is, ALWAYS SEEK A SECOND OPINION BECAUSE EVERYONE CAN GET FIXATED IN THEIR THINKING ONCE THEY GET AN IDEA IN THEIR HEAD. That last sentence pertains to gold and Jeff as well. Try to obtain and read opposite views of the gold market to prevent you from getting wedded/fixated on your own beliefs. Be flexible and view the world in terms of hypothesis-generation (but remember, that statement comes from a scientist [me]).
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.