Do not assume that the XAU or HUI/GOLD ratio has to go any lower. I would expect that gold and silver should fall as much or more than the gold stocks into the great bottom. Don’t get bullish too early when you see the stocks holding up relatively well as compared to the metals. USERX “just” needs to fall 2.5% per day and needs to continue to do so, even if gold falls 3% a day.

Last weekend, I wrote that the fundamental scenario was “depressionary” and that the gold stocks declined at the start of the last depression. That was and is correct. But now I can see how a life run low that should lead to a gold explosion, suggests a depression that is accompanied by terrible financial conditions and an inflation. An Elliott Wave alternation from the 1930s great depression? That’s simply the worst possible scenario, where economies slow, people are out of work, and the governments print fiat money that simultaneously destroys people’s savings. IF we obtain the life run, it appears to me that my long-term expectation of needing SKI to survive will actually occur; a statement that I have never, ever, made. The banks will still go under. The many solicitations for money that I now receive from Las Vegas investors so that they can buy real estate “on the cheap” (as Las Vegas now suddenly leads the nation in home BUYING activity as well as foreclosures) will end with devastation as home prices begin the next plunge over the next several years.

These are extreme predictions that are only made IF the life run plunge occurs. It sounds like craziness. Such predictions are irrelevant. All that matters is that the gold stocks rise off of the life run low.

There is no objective stop loss after a life run low. That should be quite scary and it is to me. It’s what makes “buying the falling knife” so difficult. Although I will not get stopped out by one or two days of sitting at a loss, I will have to use TIME and judgment to limit the loss. If you can’t stand that problem, you are allowed to wait until there is a 35-39 index buy or a 92-96 index buy on the Path at much higher prices. You’ll simply miss the first wave up.

Let’s see if the life run actually occurs. Until the fifth day down, all of the above is simply preparatory conjecture. The 663 index appears to be marking the absolute allowable low in this century’s bull market. Simply unbelievable, but Jeff believes! My next upside long-term target/guess, based upon a great life run low (based upon historical precedent) is (drum roll): USERX 90-100. And that’s at the next death run top before another life run low and a final multi-year rise.

You have my permission to send this craziness to a few relatives or friends. They shouldn’t believe it anyway. My sister has been waiting for years. I told her, but her lung cancer treatment is draining all of her savings and her energies, so she cannot be interested. But please, no mass or public postings until a few weeks after we are done buying, IF IF IF it happens next week.

Best wishes, Jeff

P.S. I started writing this Update on Thursday (8/14/08) so as to get this Update to you a day early. It’s a lot of reading. I did not want to wait until the actual day of the life run confirmation (the fifth day down). I did that in May 2006. Go to the Archives section and read the extremely bullish 5/13/06 Update that included, in bold-faced print, that a continued decline of 3 more days would trigger the disastrous death run pattern. Then read the 5/17/06 Intra-Week Death Run Update. I wrote how you didn’t need to sell at that moment. And you did not need to sell immediately because you could have waited until the 92-96 index would sell. That index sold in early September 2006. I am trying to give you a little more of a heads up this time, but this time, it’s the possible buy. And you don't HAVE to buy until the next 92-96 index buy signal that is on the Path. That is months away at higher prices.

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