Jeffrey M. Kern, Ph.D.
SKI Special Report #8
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.
Although I use 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.
It's been exactly a year since I wrote on 321gold and elsewhere that a true gold bull market (as defined by the SKI indices' master 92-96 index buy signal) was beginning on August 9th, 2005. I've reprinted the major portions of the Update that I wrote at that time. I hope that you'll enjoy reading it as much as I have, particularly in reading all the predictions and directions that came true but that I (and probably you too) didn't adhere to!
SKI Bull Market Update 08/05/05
Please remember that SKI signals mark critical points. And they do it beautifully. I must write that it IS still possible that last Wednesday's spike into the 92-96 index at 8.29 could have marked a massive high. That run pattern of 3 Down and 5 Up marks the high at 8.29. BUT THAT RUN PATTERN HIGH CAN BE OFFSET BY AN ENSUING 4 OR MORE DAYS DOWN. Please go your nearest gold sanctuary and pray for 2 more days down of any size. Two more days down into the buy signal will arrest my fears that I will be buying near a major high. If we get 2 more down days and the buy signal: BUY with as much certainly as I can have.
Assuming that the signal is generated, what does that mean for other financial assets? A year ago I vehemently wrote to sell real estate and everything on the triple sell signal. I did. I am worried that this 92-96 index buy signal will auger for a continuing rise in real estate and that I have sold everything except for my home. But I've also learned that inter-market relationships are temporary and unpredictable. Interest rates used to rise with rising gold stock prices, but that relationship has fallen apart this decade. The dollar has risen for months but the gold stocks have also risen. I recommend that you don't use this gold stock buy signal to project other markets. I am still expecting rising interest rates and a falling real estate market. I'm also guessing that the stock market won't fall apart while the gold stocks are rising, but that the stock market also won't be exploding upwards with the gold stocks.
I'd love to be able to buy and then go into a stupor for several months, only to be awakened by a 92-96 sell signal. I'd want to avoid watching the markets. Adopt a buying strategy that fits your personality and that you can adhere to based upon what you know of your own emotions. Do not buy more than you can afford: Do not allow yourself to sell on a decline that doesn't generate a 92-96 index sell signal.
I have been waiting for this
signal for 20 years. Such signals always occur, we just don't
know how long we have to wait. And I promise (100%) that if this
signal occurs and the rise ensues, that the market will decline
into a sell signal in the future and that the gold stocks will
go through a terrible decline. Just not for the next many months.
I've been writing these Updates
for 5 years now. This is the signal that I've been waiting for.
Thousands of people are on the email list and even more are readers.
Please put me in suspended animation after I buy so that I don't
have to endure the pain/euphoria of watching. Just another day
or two to wait. SKI's going to be a gigantic but anxious bull?
I can't believe it, but that's the way it is.
Postscript Birthday/Anniversary Fun: The gold stocks declined that Monday and Tuesday in August 2005 to complete 4 straight days down directly into the great buy signal and then the SKI bull commenced! As of this anniversary/birthday, prices have now risen slightly more than 100% in the past year, as measured by the gold mutual fund, USERX. The index bought at USERX 8.07 and still has not sold, with yesterday's closing price at 16.42 for a gain of 103%. Declines of 10% or more into index signals have marked every bottom in the last year. Interest rates have risen, real estate has softened, and the stock market hasn't crashed.
I was supposed to go into suspended animation and sell only if there was a 92-96 index sell signal or at a 100%+ profit. We reached the 100% profit mark on April 19th, 2006 and I did sell all of my leverage, but I've bought and sold so many times that I have NOT equaled the mechanical SKI indices' 103% long-term capital gain! And USERX has been the number one performing precious metals' index/ mutual fund in the past year. If the bull market continues, USERX should continue to outperform other indices; but when the bull dies, USERX will fall faster than anything else.
Unlike the XAU and the HUI indices, USERX has recently moved above its July 2006 high. As long as the master 92-96 index remains on its buy signal, the bull lives according to SKI. Prices touched that index on the day of the low on June 13th 2006 but did not sell the index. IN SEVERAL WEEKS THE 92-96 INDEX BACK PRICES WILL RISE TO USERX 16.36 (current price = 16.42). Although the gold stocks have been volatile for months, I'm now wondering whether USERX will now remain flat for weeks and then fall a little to touch the 92-96 index. In my view, that will mark the critical moment to the day for the next year: the 92-96 index will either sell or the market will explode upwards. If the 92-96 index remains on its buy signal, I'll have to write that we should go into suspended animation for another year and expect another 100%+ rise. And then I can write another happy birthday/anniversary report on August 9th, 2007!
I'll write another Report for 321gold in a few weeks (hopefully after the 92-96 index touch and the rise) 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. And if you remember, I don't want a subscription cost to deter "the small investor" or "the person with special circumstances" from subscribing/profiting. Seriously, if the above applies, write to me at firstname.lastname@example.org.
Best wishes, Jeff