Current USERX price = 14.18 Down another 7% 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 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 8/04/07 was entitled "True SKI Bull in 2 Days?". Note that the title had a question mark at the end of it and included just three highlighted sentences that captured the entire point of that public prediction piece (so as to allow folks who are short on time to capture the essence of the prediction). Those highlighted sentences were:
At that time, I truly did not know whether the gold stock bull market buy signal would be generated or whether the market would avoid generating the signal and crash. Hence, SKI was in cash (and that word, "cash", was also highlighted).
The point of this new article is to document for you, once again, that prediction is possible, that the crash of 2 weeks ago did not "come out of the blue," and that the SKI indices, for some inexplicable reason, are sensitive to a penny and a day. The gold stocks came within one day and a few pennies (based upon the prices of the oldest gold mutual fund, USERX) of generating the true buy signal, but on the very day that they failed (by RISING in price, but not enough), they generated a second sell signal for a bearish double sell pattern. The day after that second sell signal executed, the market went into crash mode.
As my preceding 321gold Special Reports have described, all of the great gold stock bull market phases of the past 33 years have been marked by a 92-96 index buy signal. The 92-96 index compares today's price to prices from 96, 95, 94, 93, and 92 trading days earlier. An index signal is generated when the current price rises above or falls below those back prices for several days. Although you will probably be appropriately skeptical that what I am going to describe herein is ever possible, and I too am often still amazed (even after 22 years of calculating the indices on a daily basis), the calculation of the index is via a simple formula that has been publicly available and therefore, is verifiable. I am NOT making this up!
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. Basically, prices must fall to generate a 92-96 index sell signal that marks the LOW and then prices immediately rise enough to generate the true buy signal and the bull market period begins (ala the bull period beginning on 8/09/05 for SKI).
When I wrote that Special Report on 8/04/05 the 92-96 index was within one day of generating its sell signal (the first step in setting up the bull market). On Monday, 8/06/07, USERX fell enough (as expected) to fall below all of the 5 back prices and did generate the signal (which is a change in the sign of the final index score). Signals are then executed the next day, thereby always providing one day of advance notice. On Tuesday, 8/07/07, the gold stocks fell slightly into what should have the exact low IF a bull market was about to begin. And the next day, Wednesday, 8/08/07, the gold stocks instantly soared (as they were supposed to) rising above all 5 of the index back prices. It was quite exciting as the bull market signal was ALMOST generated. Here's a little table of that price movement, the 92-96 index back prices, and 92-96 index itself:
When the sign of the final index score changes, a signal is generated. If prices had stayed up for two more trading days, the index would have generated the bull market. But the next day, Thursday, 8/09/07, prices once again fell below all of the back prices. Meanwhile, the second major index, the 35-39 index, was moving towards its sell signal. And yet a strong rise on Friday 8/10/07 would have generated that 92-96 index buy signal and avoided the 35-39 index sell signal. The rise was not enough (although in the morning the rise WAS strong enough to then failed to hold), the 92-96 index buy signal was avoided, and the 35-39 index generated its sell signal to be executed on 8/13/07. Any SKIers who had failed to heed my prior warnings to be in cash were supposed to sell on 8/13/07. And then the crash.
Interestingly, those crash days brought the gold stocks down to a long-term index, the 218-222 index. That index generated its signal that often marks a low. Hence the prediction that prices would rise this past week. USERX is back up to 14.18! Another 218-222 index signal was then generated this past Thursday and executed on Friday (8/24/07).
Some of my subscribers felt that I "gave away" too much in that last Special Report, while some readers of 321gold emailed me to say that it was a travesty that I had made them believe that a great SKI bull was about to begin. [Barb's Note: And I didn't help... for a while the line item on the 321gold home page had a flipping exclamation mark, instead of a question mark]. I did not intend to mislead anyone nor did I intend to "give too much away". That last article provided the correct information, in my view, but non-subscribers had no way to know that the bull market signal had not been generated. I believe that the SKI indices are once again indicating that a large move is about to begin. It should be evident within the next 1-7 trading days, but as usual, I am not allowed to say the direction or the day.
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. But when other analysts write that no one could have seen X coming, I disagree. There never is 100% certainty with any prediction system, but at times I profess that the index certainty approaches 99% (such as the true short to intermediate-term buy signal generated on 6/26/07 and executed on 6/27/07), and I am writing to subscribers that Jeff is going 100% long with leverage. In three weeks, when I write again, it should already have been more than evident what the direction of this next move has been.
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.
Be safe, best wishes,