Current USERX price = 16.22, UP 10+% since the Buy.
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.
The last SKI Report on 6/24/07 recounted the difficult nature of the gold stocks over the past year, but that a true SKI buy signal MIGHT occur during the next week. I purposefully bold-faced the key statement in that report stating that "A short to intermediate-term SKI index may generate a true buy signal before the end of this coming week (by 6/29/07)" (and yes, I see that I mistyped the "6" into a "5" and even Barb at 321 gold didn't catch the typo!; smile; I hope that you could tell it was a typo as 5/29/07 had passed a month before!). [Barb's comment: Hope Bob reads that, Jeff, maybe I'll be fired/retired, yippeeeee]
Prices declined strongly in the two days after that Report and the buy signal was generated on Tuesday 6/26/07 for execution the following day. That was basically the first true SKI buy signal in a year, so I sent a special Intra-Week Update to subscribers that afternoon to buy the next day. That Update is reprinted below. Jeff went 150% long using leverage (PMPIX and gold futures) on 6/27/07 for the first time in a year as USERX (the oldest gold mutual fund) dropped to a new low for the year. SKI is supposed to time the market and buy the low to within a day; that is the history and my expectation. SKI did buy the low, but it wasn't the lowest price in the past year, it was the low that MAY have marked the end of the 1-year corrective period.
The gold stocks (USERX) rose for 8 consecutive days off of that buy signal and did generate the next buy signal, an intermediate-term buy, as expected. That last Special Update generated just one new subscriber, demonstrating that almost no one was interested in the precious metals despite my writing that a new buy signal was imminent. Now that the gold stocks have surged 10-12% higher in the 2+ weeks since the buy, the gold articles appear to all be bullish. The traditional technical indicators are short-term overbought, but the weekly and monthly indicators, as well as the ratio between the gold stocks and gold bullion, have all generated major buy signals.
Using a timing service like SKI requires discipline. We wait and wait and wait and fear that we are going to miss the great rise. But the SKI indices keep saying that there isn't going to be a great rise (even as prices rise 10% and then decline), so one stays in cash or short. Then the day comes, after a year, and SKI generates its buy and one is supposed to act. Jeff tried to get everyone to buy via discipline and Jeff went 150% long. I am conservative and folks at www.Kitco.com labeled me as "chickenski" years ago when I was posting for free. I retain that term, but then I try to morph into "lionski" when the buy signal finally comes and I do my rare leveraging/margining/gold futures. Now that most writers are bullish or turning that way, Jeff has sold his excess leverage, taken the 10%+ profit over two weeks, and maintains a conservative intermediate-term long position. And while everyone seems to focus on the bullish general stock market, the gold stocks just produced an 10+% gain in two weeks that exceeds the Dow's rise for this entire year!
You're reading this because you want to know the future. I am constrained in reporting such predictions in deference to my subscribers. However, I am telling you that this is NOT (as yet) a true SKI bull market. People have varying definitions of a bull market, and yes, in a few years from now the gold stocks should be higher than now, but the current bullish phase is "only" an intermediate-term rise. A true bull (according to SKI) is where prices go higher and higher and establish a new and much higher trading range as per the true SKI bull that started in August 2005 (for SKI) and ended in May 2006 and early September 2006 whereby SKI sold long-term at an 84% profit in USERX in a year. Now we have had the short and intermediate-term buy signals and prices should rise over the coming weeks and several months, but it is not a SKI true bull market. It may morph into a true SKI bull via a decline in 6 weeks from now, but the "death run" from May 2006 keeps Jeff skeptical that it will happen. After this intermediate-term rise culminates, we will either get the true bull or we'll get a massive sell pattern that will yield a 30+% decline into a life run final low in 2008. The death run of May 2006 predicted a decline of at least 2 years duration. Elliot Wavers may yet label the SKI buy of 6/27/07 as the end of Wave A down from May 2006, the current rise may end up being Wave B up, and there is still the powerful Wave C down ahead of us. SKI doesn't care; SKI is based upon mathematical indices that bought on 6/27/07 and will generate a powerful sell in several months IF that great final decline is to occur. Otherwise, the next decline should yield a true SKI bull market (again) and confirmation that the largest rise, Wave 3 of 3, has commenced!
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. 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.