Current USERX price = 13.99, Up 34 cents (2.5%) 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.
The last SKI Report, written on 8/23/20, concluded that “the next SKI-disciplined buy-point would be on the next decline into a USERX 16-20 index buy signal.
That index signal is VERY close to generating. A rise that continues to avoid the buy signal should yield an outrageous “super-bull”, but that would be extraordinary. Otherwise, a high-probability buying opportunity is very close”.
The buy signal then generated the following day as the gold stocks declined. As always, the execution of the buy signal occurs 1 trading day after generation in order to provide a 1-day advance notice. Prices usually decline into the buy signal (since it is supposed to mark a low). Therefore, the next SKI-disciplined buy executed on 8/25/20 at USERX 13.45.
SKI-Bingo, for the uncounted (too numerous to track) number of times since 1974. But, of-course, it’s never correct 100% of the time.
Jeff refrained from describing the expected “contracting triangle” chart pattern that was expected based upon the index signals and bearish run patterns. The first touch of the supportive 16-20 index marked an A-Wave low on 8/11/20 at USERX 13.04, the B-Wave high occurred on the “Buffett-news” brief rally into 8/17/20 at USERX 14.29, the C-Wave low occurred on cue via the 16-20 index’s buy signal, and then the gold stocks rose into triangles’ typical “fake break-out” on 8/31/20 at USERX 14.35. The subsequent decline did the typical intra-day “fake-downs” to form the E-Wave low of the triangle.
From the perfect 16-20 index buy signal (the same historical index signal as the perfect buy on 6/15/20 to mark a low), the gold stocks SKI “HAD TO” rise enough to generate a first resistance 16-20 index sell signal (i.e., the index is contrarian, buying on declines and selling on rises). You likely don’t know or don’t care about the simple mathematical formula for generating signals that is always provided and NEVER changes. But USERX needed to close over 14.05 on 9/03/20. It did so by the common (because the math is often exact) and proverbial “SKI-penny” at 14.06. And to prevent a very bearish instant index signal, USERX needed to remain above 13.62 on the next trading day (9/04/20; right into the technically important 3-day holiday weekend). So the gold stocks plunged during the morning of 9/04/20 to just below USERX 13.62 and then strongly recovered to close at 13.96.
The continuous intra-day declines to below the chart’s “contracting triangle” have kept being the typical expected “fake-outs to the downside” that occur near the end of a contracting triangle: Such intra-day declines have continued to yield rebounds (smile) back to above the technically-marked index levels.
SKI applies only to the gold stocks. Therefore, Jeff rarely provides comments on the general stock market. On 8/31/20, Jeff noted the absurd spike higher in the high-flying NASDAQ stocks (ala Tesla and Apple). Their ensuing 20+% 1-week plunge has held the gold stocks back. The gold stocks have shown a continuing positive correlation to those tech-stocks. Therefore, Jeff IS “worried” that a continuing plunge in those stocks portends another crash in the gold stocks, but that’s not what SKI indicates for the gold stocks.
Jeff is aware of multiple respected analysts’ conclusions that a major gold stock (and gold) top occurred on 8/05/20 at USERX 14.76. I agreed that a correction was coming and it has occurred. Those analysts’ bearish conclusions (even bragging that they were stopped out on the subsequent 4-day decline into the triangle’s low) were/are historically correct but do NOT take into account the true bull market SKI behavior that was not present at prior similar historical tops. The SKI-definition of a bull market requires (always; period) a 92-96 index buy signal that is ON the SKI Path of Trades (read SKI to understand what that Path is and how important it is).
In conclusion, the bull remains intact and is still “SKI-Textbook” perfect, often to the day. The history since 1974 is perfectly (100%) bullish here but there are no “guarantees”: “Never say Never”. The “nice” development is that a true sell-stop could occur during the next 1+ week (exact Time X Price point reserved for SKIers) via a failure to stay above the USERX prices from 35-39 trading days ago BEFORE the decline goes below the 16-20 index’s prices from 16-20 trading days earlier. That would replicate the index’s switch to bearishness that occurred shortly after the 2/24/2020 top and yielded a 25+% quick plunge into the index-marked 3/13/20 major low. But Jeff is nearly 40% long my NET WORTH in gold stocks and 10% net worth long in long-term physical “insurance” gold after adding a significant “extra” on the index-marked exact low on 8/25/20 and a little more recently…. Yes, basic subscribers get a lot more information each weekend (or day-to-day information for Premium subscribers). I hate to sound like an “advertiser”.
Best Wishes, Jeff
If you are interested in following and learning more about the SKI indices, I'll write another Report 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 $30 (for a one month subscription) or more ($240 for an annual subscription). I also provide more frequent intra-week daily messages/alerts at a slightly higher price along with access to our informative Forum.