Current USERX price = 15.21 Down 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 the most informative gold site, 321gold, since its inception 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 7/15/07 reported that SKI had generated its first true buy of 2007 on 6/26/07, that the buy signal was a short to intermediate-term index buy, that prices had rocketed higher, and that Jeff had sold his excess gold stock holdings. The boldfaced (highlighted/emphasized) sentence in that report was this was "NOT, as yet, true bull market". To reiterate, a true bull market 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. Historically, the bull market periods for the precious metals stocks were in 1978 - 1980, 1982 - 1983, 1993 - 1995, December 2001 - May 2002, and the recent May 2005 - May 2006 explosion. What did all of those periods have in common? They all included a true SKI bull market index signal. SKI bull markets are marked by a 92-96 index buy signal that occurs in a specific manner so that it is "On the system Path". A detailed description of this pattern is included in the article "About SKI". A true bull requires much more than prices simply moving over a certain price level. That is the critical feature. We've been waiting for a year for the next true bull market and that true SKI buy signal on 6/27/07 may have marked the end of a one-year corrective period, but it did NOY say "Bull Market". We are now within 2 trading days of generating a true SKI bull market in the precious metals' complex.
As with any prediction system, the system is far from perfect (otherwise I'd own the world). All true bull market periods have ALWAYS been marked by a true SKI index bull market buy signal (I used the term "always" and that IS accurate over the past 33 years, but the required caveat is that nothing can ever be guaranteed), but about half of the true SKI bull market signals have been WRONG. When the signal is false, the index sells quickly (in a few days to a couple of weeks) at a small loss. When the signal is right, it makes 50-300% over a year or so. If we get the next signal in a few days (probably 2 trading days), this signal pattern has always yielded a price rise and a profit, but the index pattern indicates that it might only produce a 3-week explosion OR it could be a one-year plus true bull market.
The gold stocks have fallen to their support level. We know that because the last six trading days have been marked by four SKI index signals obtained between Friday 7/27/07 (as a run of six consecutive down days was completed) and yesterday, 8/03/07. I am also warning you that if we don't get the SKI bull signal here, the gold stocks are in CRASH mode. Remember, the "death run" pattern from May 2006's high projected a major decline lasting approximately two years. We've gone through 14.5 months of false breakouts and sideways action, but the death run still predicts further major price declines . I keep that in my awareness, but I just follow the index signals. If we get the true bull buy signal in two days, Jeff will execute a maximum buy. I put everything that I own (outside of my home and my retirement funds) into the market (long or short) when SKI generates a very high probability index signal. The Wall Street mantra "Just Diversify and Hold" are foreign to me. They are based upon the false belief that "No one can time the market". I do strongly advocate diversifying within the precious metals' sector, but the only thing that I can predict are the precious metals, so I dare not put my money at risk in any other sector or broad market. It's either U.S. government money market funds or gold stocks for me since 1985. The results? Using only long positions, SKI has averaged about 21% profits a year since 1974 and also since 1985 when I actually developed and began using the system. That doesn't include interest gains. Another mantra is "During bull markets the risk is being in cash". Once again, that belief is based upon the idea that no one can time the markets. I believe in being in cash as much as possible because the risk is much lower than being long or short a market. So this calendar year, I've been long the gold stocks for a total of only about 3 weeks, I've made 10% and accumulated about 2.5% interest. I am okay with 12% per year, happy with 21% per year, and most grateful when I make more than 50% a year (as per 2006). High years are usually followed by low years, but subscribers usually pour in during high-gain years when prices have already risen. Please don't do that! People poured into the website during April and May 2006. What was I supposed to tell them? I made the mistake of writing that SKI was bullish (that was accurate), but the buy signals had occurred at much lower prices, so SKI was safe, but those people lost money when I could only call the top five trading days after the actual May 11, 2006 major high. I've vowed never to do that again. In the future, when people subscribe after a buy signal, I will tell them to wait until the next one. And it can be a loonngg wait. Subscribe during price declines and wait!
If I am writing of a great bull OR a great crash in two trading days, what's the current recommendation? CASH. Money management and risk management dictate that when there is uncertainty AND a major buy signal awaits a small price rise, it's wise to avoid losses but be ready to buy. I AM DROOLING OVER THIS POSSIBLE BUY SIGNAL, but I am waiting to pounce. As I wrote in the last Special Report, the true buy signal on 6/27/07 may have marked the end of the corrective period from May 2006, but the rise that followed may yet be labeled as the "B" wave rise and the "C" wave crash has now begun. I should find out this week.
Gold bullion has performed well in the last week while the gold stocks have gone sideways. Gold had fallen to fill its open gap at $669 (basis December) into Friday 7/27/07. Last weekend I wrote to subscribers that this might be the rare time that gold bullion and the gold stocks diverge (gold up and gold stocks down), BUT THAT DIVERGENCE HAS NEVER REALLY LASTED MORE THAN A FEW WEEKS. If the stock market crashes and the gold stocks decline while gold rises, BEWARE. Gold has always ended up following the gold stock downtrend. I know that may sound like heresy to gold followers, but that is historically accurate.
I write these Special Reports in part as a "come-on" to attract new readers. But I truly write with honesty and sincerity, trying to provide as much information as possible while maintaining deference to paid subscribers. That's why I've happily continued to do this on a "timed basis" (as opposed to on an "as needed basis"), every three weeks, and am thankful to 321gold for their excellent website. In three weeks, when I write again, if the gold stocks have exploded higher, I'll probably write that SKI generated the second true buy signal of 2007. Or I'll write how the great decline started 2.5 weeks earlier. My website is supposed to generate some profits, but the website is not supposed to be "expensive".
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.
Be careful here, but seize the opportunity if it arises.