Current USERX price = 12.99, Down 15 cents (1.1%) 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 10/21/12, described how bull market corrections from the 9/21/12 high go down to the 16-20 index buy signal and often continue down to the 35-39 index. At the time of that last SKI Report, the gold stocks had already declined to the 16-20 index on 10/15/12 at USERX 13.11. That could have been the corrective low OR the correction would continue down to the 35-39 index, but the last SKI Report concluded that prices should be higher by the time that this next SKI Report was published. That expectation was based upon the fact that during all prior bull markets, corrections down to a 16-20 index buy signal have yielded a rise into a 16-20 index sell signal at around 20 trading days from the buy signal at around break-even or a profit. Also, the initial correction in a bull market has typically gone down to or below the initial bull market breakout level (where the bull market 92-96 index buy signal occurred), but I didn’t include that historical information in that Report. The 92-96 index had bought on 9/06/12 at USERX 12.18 and HUI 470.39.
Since that last Report, weather conditions caused the markets to be closed for 2 trading days. If the market is closed, the day does not count for the SKI indices. Therefore, the period of 20 trading days since the last 16-20 index buy signal has not yet been completed. Let’s see if the gold stocks conform to all of their prior bull markets and rise up this coming week into a 16-20 index sell signal at over USERX 13.11.
The gold stocks have been in a continuing slightly downward channel since the 9/21/12 high (as everyone can see) and hit/touched the 35-39 index this past week, as is common. Such index signals mark low areas during bull market corrections. But the “safer” entry is if/when the next up-trend gets going via a new 35-39 index buy signal (as USERX rises back over its prices from 35-39 trading days earlier).
The most interesting development since the last SKI Report was a new 221 index long-term buy signal. A 221 index buy signal is required for a bull market. This index had previously sold on 9/14/11 at USERX 18.21. That bearish index signal had suggested that it would be a “long time” until the next bullish phase, typically taking a year or more until the next buy signal. The new 221 index buy signal executed on 11/02/12 as gold was plunging $40 and can come within a day of marking a low. The index’s back prices are now in the USERX 12.23-12.70 area and the gold stocks held up over that area last week despite a meaningful decline in the general stock market. That index’s back prices are about to rise and the immediate bullish case would look for the gold stocks to remain on a 221 index buy signal (remaining over the prices from 218-222 trading days ago).
The gold stocks have continued to go sideways/down to the most common target for a bull market correction, the 35-39 index. That index was hit/touched this past Monday (11/05/12) and that has been the closing low (to date) for the gold stocks. The bears would need a large decline to go through this index and down 20% to the 92-96 index in order to negate the potential true bull market in the gold stocks. And since the long-term 221 index bought on 11/02/12, Jeff bought more gold bullion that day at around $1677 and had also bought at the time of the prior SKI Report at $1717 (my highest purchase price ever). The bears would need an imminent decline to sell the 221 index. SKI and Jeff are in the rather common bullish camp that views the decline since 9/21/12 as a correction, with higher prices to come. Therefore, the expectation continues to be that prices will be higher by the next SKI Report in 3 weeks. A new 35-39 index buy signal should/will mark a safe entry point for the next leg higher. That buy signal would have to occur at a higher price than now, changing (but declining) each day with the prices from 35-39 trading days earlier.
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.