SKI Gold Stock Prediction

presented by Jeffrey Kern, Ph.D.

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April 12th, 2004

Archived SKI Alert
More About This Trade

I am writing to you because you have expressed an interest in my indices. I do not wish to cause you distress in any manner and am simply providing you with information in which you have expressed an interest. If you use me as a contrary indicator, that is fine.

Since you are kind enough to read my Updates, I feel the moral imperative to alert you to the fact that my 92-96 index, has generated a sell signal for tomorrow. Tomorrow WILL be marked. Although many major gold stocks and indices (e.g., the XAU) closed slightly higher today, my measure, USERX (the gold mutual fund), closed meaningfully lower, dropping below 8.50 and 8.44, to 8.36, generating my 92-96 index sell signal. I sold today (at exactly break-even for me), although my colleague remains long (as is his style). The higher close in spot gold was very disturbing.

A drop of about 4% tomorrow (USERX below 8.07) will generate a triple sell pattern. Today’s action suggests that tomorrow may yield a large decline across the gold stocks. This was the critical time period and the gold stocks did the unexpected and ominous fall today. A triple sell, if we get that tomorrow, does not mean that there will be an instantaneous continuing decline, but I don’t want to risk my money. It would, however, negate the triple buy from 12/02 in an unexpectedly short time frame (15 months) and an eventual further and major decline would be strongly indicated.

The 92-96 sell signal will open the path to the next signal. If my index is marking a bottom tomorrow, as some analysts predict, USERX prices should hold above 8.07 and set up a true bull market for the near future (time unspecified, within two months?). But if the triple sell pattern occurs, all I can say is that the prior three triple historical sells have yielded 60-90% declines in USERX over several years corresponding to disinflation or deflation. I find that hard to believe, but it has not happened yet (pending tomorrow). If the triple sell does not happen tomorrow, it looks like any further decline will generate a “mere” double sell that portends months of decline (USERX=5.00), before the great bull (due to the triple buy), begins. As you may know, I haven’t had a “true bull” since 1993, so some have understandably ridiculed my indices during the last three years (but I never lose faith because I’ve lived through them for 20 years).

In any case, tomorrow, or latest Wednesday, will tell the tale and I can’t recommend this risk. I’ve been pointing to last week and this week for a long time now. That was correct, this is IT, and the scenario IS playing out.

I get all kinds of emails calling me “pathetic” when I’m out of the market and it is rising, and vice versa. I also get emails that call tops and bottoms incredibly beautifully. Please don’t email me unless you believe that you have an indicator or analyst making a prediction for tomorrow or Wednesday. I’ll send out excel programs within the next 2-3 days.

When I re-read my Update from yesterday, I can note the “bravado”. Be wary when I am confident. Today, I am not confident and am very concerned. I didn’t sleep much last night and arose at 5 A.M. to see gold up (and fading) with the primary USERX gold stocks falling as the markets opened (big nausea time). Friday and today also marked an historic time because U.S. Global Investors stopped providing their 3-times per day trend on their gold mutual funds, after 30 years! I can tell you that when this happens, it marks a major historical point. They may not like me for telling you this, but on 11/4/1985 I called to initiate a major buy signal at the exact historic low of 29.60 (split adjusted). That EXACT day, on the EXACT low, the government closed them down due to fraud (managers receiving kickbacks from small gold companies for buying those stocks) that caused a change in management to the current honest owners (Frank Holmes). It then rose to 43.60, rising FIFTEEN consecutive days into SKI tied 16-20 sell and 35-39 buy signals. The government reopened the fund to investment on that exact day, marking a top. I am telling you that the current change in providing a trend ( a change that few would notice) marks an historic occasion, but as usual, I cannot be sure whether it marks the start of the great decline (triple sell about to occur), or the great bull about to commence. All we ask for is peace and monetary stability, but the indices say “No way”. Be extraordinarily vigilant here. As always, best wishes.

How Did This Trade Work Out?

March '04 to April '04

SKI BUY SIGNAL SKI SELL SIGNAL Jeff Sold SKI Gain/Loss Jeff's Gain/Loss
Buy Signal

Mar 10 04


Apr 13 04

Apr 12 04
$-0.23 $0.21

On April 12th, 2004 Jeff issued an alert to sell as a very rare TRIPLE SELL SIGNAL was about to execute. Readers were able to exit befor price plunged. The system was late here, and shows the value of Jeff's email alert system for SKI traders!

  » Alert: Jeff Sells
     Apr 12 04

  » The Sell Signal
     Apr 13 04

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