Current USERX price = 13.14, Down 35 cents (3%) 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 gold stock SKI Report, written on Sunday 9/30/12, was long-term bullish, but was hesitant regarding short-term predictions. USERX had risen for an extreme 9 consecutive days into 9/21/12 to hit 663 index resistance, but the rarity of that run pattern and the fact that the 663 index’s resistance prices were rising, made it difficult to make a short-term prediction. I DID state, “My wave count suggests that 9/21/12 was a high and that 9-day run higher into 663 index resistance on 9/21/12 may have been a high”. I received a lot of emails that criticized the last 321gold SKI Report because it wasn’t offering a clear prediction, but folks, I’d already “apologized” in that Report and the markets always are somewhat uncertain.
Since that last Report, the gold stocks’ decline has confirmed that 9/21/12 WAS “a high”. That’s important for folks who are charting wave patterns. It WAS the high of a third wave from the May 2012 low: The rise from 5/16/12 to 6/06/12 (or 6/19/12) was a Wave 1 top, the decline to 7/23/12 was a Wave 2 low, and the rise to 9/21/12 was a Wave 3 high. Therefore, if this is all bullish, another rise has to be expected (a Wave 5 rise to an important high). And it IS supposed to be bullish because the HUI went onto a true bull market 92-96 index buy signal on 9/05/12 (projecting a 100%-500% rise over the next year) and the more important USERX 92-96 index “almost” went onto a true bull market as I tried to describe in the last Report.
Corrections during bullish phases go down to a 16-20 index buy signal (the index buys on declines and sells on rises) and often continues lower to the 35-39 index. The current decline from the 9/21/12 high DID yield a 16-20 index buy signal that executed this past Monday (10/15/12) at USERX 13.11. The gold stocks declined into the buy signal, as should happen, and Jeff said “Buy”. Prices rose for the two days after last Monday’s buy signal and then dropped again into this past Friday (10/19/12). The decline during the last 2 days was rather “weird”, no? GDX/HUI plunged 3% last Thursday (10/18/12) although gold and the general stock market only dropped .5% on that day, but USERX kept the 16-20 index buy signal intact as it only declined 1.3% and held above the 9/26/12 low and the 16-20 index buy-in price of 13.11. As I wrote last time, pay attention to USERX. Then, on Friday, gold dropped another $20.50 and the general stock market “plunged” 2%, but the gold stocks held their 9/26/12 and 10/15/12 lows!
Gold is dropping again as I write this Report on Sunday afternoon, but the decline from the 9/21/12 high in the gold stocks either: (1) Ended via the 16-20 index buy signal on 10/15/12, or (2) Will continue this coming week into the 35-39 index at about 5-8% lower. The market rarely offers 99% certainty, but 10/15/12 was marked as a possible USERX low at 13.11. If USERX breaks that low, the likelihood is for a decline to the 35-39 index this coming week. The current prediction is for a rise to new 2012 highs over the next 1-2 months into an intermediate-term (rather important) high. Additional details are provided to subscribers and it’s difficult to summarize them in this type of Report because they involve the long-term SKI indices, but Jeff’s bullish from here into the next Report in three weeks.
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.