Current USERX price = 5.95, Down 86 cents (12.6%) since the last report 4 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 gold stock SKI Report, written on Sunday 9/14/14, concluded that: (1) The long-term cycles/indices were in control, (2) The 221 long-term index had sold and the long-term 92-96 index was within 2 trading days of generating its sell signal, and (3) Either the long-term indices had to get on buy signals OR the gold stocks would decline to new multi-year lows (period; there could not be any hedging from that statement).
After that SKI Report, the gold stocks rose a little for 2 trading days and then declined after the U.S. Federal Reserve announcement on 9/17/14. That decline was sufficient to sell the 92-96 index. Therefore, both of the long-term indices were on sell signals and that was it. Jeff had been in cash but then also sold/hedged all of his long-term holdings.
The gold stocks (USERX) have simply continued to decline in lockstep with the long-term indices. It was and still is those long-term index back prices that dictated the all-or-none non-hedged statement in the last SKI Report that either the long-term indices would bullishly re-buy or the gold stocks HAD TO decline to new multi-year lows. For example, the 221 index’s back prices were declining to USERX 6.24 on this past Friday (10/03/14). With USERX closing at 6.19 on this past Thursday (10/02/14), the gold stocks still could not get above the 221 index’s long-term back prices.
The gold stocks are now solidly below the 92-96 index’s back prices. That index’s back prices will bottom at the June 2014 low soon and then will begin to rise. Therefore, the 92-96 index is UNlikely to generate a buy signal. Furthermore, the 221 index’s back prices are still declining to the December 2013 low (at USERX 5.70). For example, that index’s back prices will decline to USERX 5.95 on this coming Thursday (10/09/14). USERX closed at 5.95 on this past Friday (10/03/14). Therefore, the prediction has to be that USERX will be below 5.95 during this coming week and that the gold stocks and gold are heading to new multi-year lows (below USERX 5.70). Therefore, this is a rather short and simple SKI Report.
I do not believe that anyone can accurately predict, well ahead of time, the final low’s date or price. I certainly do not attempt such predictions. I do know that the next rise will likely be stopped as USERX rises over the prices from 16-20 AND 35-39 trading days earlier. Therefore, SKI is bearish and is set up to call the next high as opposed to an upcoming low.
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 $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 and a managed gold futures program. 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.