Special SKI Report #256
Gold Stock Update: Unique Recent Behavior

Jeffrey M. Kern, Ph.D.
Email: jeff@skigoldstocks.com
USERX | historicals
Written Sunday Jul 11, 2021
Published Jul 12, 2021

Current USERX price = 13.28, Up just 10 cents (0.8%) since the last report 3 weeks ago.

Introduction (repeated from prior Reports):

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.

New Material

The last SKI Report, described how the decline in gold and the gold stocks had finally occurred. The May public report had stated that there has ALWAYS been an eventual decline to a 16-20 index buy signal. History had repeated for the hundredth+ time since 1974 and USERX had done the quick plunge into a supportive 16-20 index buy that executed on 6/18/21 at 13.18.

Jeff had not reported (in deference to paying subscribers) that an Intra-Week Buy Update had been sent on Thursday 6/17/21 because the buy signal had generated. All index signals then execute the next trading day, providing a 1-day advance notice of buying (or selling). Hence, Jeff had bought a partial (beginning) 40% long position on 6/18/21. Note that I personally rather “conservative” and focus on “SKI + personal discipline”. Yes, SKI has provided an average annual gain of about 18-20% since 1974, but such gains are HIGHLY variable. Jeff didn’t make much of anything for several years into January 2015 and then the bull market buy signal generated for a 100% gain over just 6 months. It’s not “easy” to maintain discipline and then execute (including multiple, usually quick, losses).

During ongoing bull markets, the corrective declines can go down to a 16-20 index buy signal. That can mark an exact corrective low (e.g., 6/12/2020; smile) OR the 35-39 index can also sell. The 6/20/21 Report described how the 35-39 index had been hit/touched towards its sell and Jeff had no way of knowing if it would sell to mark THE low or the beginning of “a bottoming area”. Either way, the 16-20 index’s buy signal was a high-probability oversold indicator.

It turned out that the 6/18/21 16-20 index’s buy signal looked like it had marked an exact low BUT the 35-39 index then still sold a few days later at a higher price (USERX 13.38). That was historically “strange” because such sell signals occur on rather exact declines. The details may bore non-SKIers, but the 35-39 index then executed a “strange” new buy signal the next day. Such buy signals are historically supposed to occur AFTER significant rises, buying at a high price that still yields major rises, Therefore, it was too strange to buy. The gold stocks then declined the next day (6/28/21), generated a very quick second 35-39 index sell signal, and conservative Jeff sold for a prototypical small loss (because prices almost always decline into the execution of that sell signal the next day). Sure enough, gold and the gold stocks gapped lower on 6/29/21, but then rebounded from an opening low for potential bullishness. Nonetheless, they closed lower into the index’s signal at USERX 12.98. When prices rose the next day, the conclusion was that the second 35-39 index sell signal had just marked the exact low at 12.98. Jeff re-bought that next day for a “whipsaw”.

That 6/29/21 35-39 index sell signal HAS continued to mark the exact low for gold, but the gold stocks have continued to act “strangely”, in a manner that’s never been seen since 1974. USERX rose for a few days. When the metals complex gapped higher last Tuesday (7/06/21), the 35-39 index was set-up to generate a very bullish buy signal if USERX rose to above 13.75. But that opening rise yielded a bearish reversal into a down close to avoid the buy signal. On Wednesday (7/07/21), gold rose for a 5th consecutive day (as the 6/29/21 35-39 index sell signal continued to market the exact low) and settled just above the round number $1800. That is distinctly short-term BEARISH behavior. Runs higher usually end at 5-6 days Up, and rises in Cash Gold that settle just above round numbers are highly likely to short-term decline back below the round number (and vice versa!; don’t get faked out; it’s not a perfect indicator, but it’s a high historical probability). “Magically”, gold then declined last Thursday (7/08/21) to settle at $1799.90 (!) just below the round number and down a meaningless $1.90. That also ended the run higher at 5. But the gold stocks were relatively weak/bearish. USERX dropped to a new multi-month low of 12.96, largely due to a strong decline in the commodity currencies. Focus on the Australian and Canadian Dollars rather than the U.S. Dollar index that is over-weighted to the Euro. USERX does that for you/me!

As always, I understand that you want a clear conclusion/prediction. I could provide the bearishness in May. I could not provide a clear prediction in June, but had partially bought the plunge. The current potential bull market bottoming process is UNIQUE since 1974. Jeff dislikes “uniqueness”, BUT I do know the following SKI PriceXTime:

It HAS been 14 trading days since the decent 16-20 index buy signal at USERX 13.18. “Normal” would yield some rise this week into a 16-20 index first resistance sell signal at about 20 trading days from that 6/18/21 buy (its profit). The major sell-stop is just too low. The 35-39 index buy signal and a new 221 index buy signal are just too high. Historically, it can take up to 35-39 trading days to complete a bull market bottoming process.

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.

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email: jeff@skigoldstocks.com

Jeffrey M. Kern,Ph.D., is an academic psychologist with a specialty in the measurement and prediction of human behavior. The communications provided are for informational purposes only and are not intended to be investment advice or recommendations for specific investment decisions. Dr. Kern is not a registered investment advisor, but is registered as a commodity trading advisor (CTA). The information provided is considered accurate, but cannot be guaranteed. Investments/trading in narrow market segments or gold futures is for individuals willing to accept a higher level of risk for the opportunity of greater returns. Past performance is no guarantee of future performance. His website is www.skigoldstocks.com.

Communications should be sent to: jeff@skigoldstocks.com.

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