Financial Sense Junior Gold Mining Index Review by Frank Barbera 04/07/2008

General Comments

Metals priced ended lower for the second time in three weeks but managed to close well off the worst levels of the week, suggesting potential for an improving short term trend. On the week, spot Gold ended lower by 17.10/oz, or 1.83% to finish at $912.90, down from last weeks close of $930.00. In the case of spot Silver, the week produced a loss of .14 cents per ounce, or .07%, with Silver ending at $17.74 the ounce, down from $17.88. Spot Platinum ended almost unchanged, recovering more then $100 off the low of the week to finish at $2012.00, down $7.00 per ounce from the prior weeks close of $2,019. On the week, the US Dollar Index ended higher by .36 to finish at 71.97, with a slightly stronger Dollar at least partially to blame for the weakness in metals prices. Nevertheless, by weeks end, a consistent recovery in share prices left a number of large cap miners in the green for the week, with the XAU moving ahead by 2.44%, for a gain of 4.40 index points, the XAU closing at 184.68, up from the prior weeks close of 180.28. For the HUI, Amex Gold Bugs Index, the gains were less impressive with the index up 1.40 index points to finish at 450.56, up from 449.16 the prior week. For the widely watched GDX ETF, the price actually lost a slight amount of ground for the week, with the GDX ending at 48.91, down from 49.08. In light of the overall mixed performance by the large cap miners, it was not too surprising to see small cap miners end the week on the downside, with the FSO Junior Mining Index ending at 253.93, down 3.56 index points or 1.38% from the prior weeks close of 257.49. For the FSO Junior Gold Index, the week’s close of 253.93 left the index below the 50 day average at 265.29 and well below the 200 day average at 280.13.

Financial Sense Junior Gold Index™

Mining Index

Above: the FSO Junior Mining Index with 50 and 200 day moving averages.

Financial Sense Junior Gold Index™

Producer Index

Above: FSO Junior Producer Index

Elsewhere on the week, the Junior Producer Index ended with a loss of 6.21 index points or 2.24% to close at 270.90, down from 277.11. The Junior Producer Index ended below the 50 day average at 277.34, and below the 200 day average at 285.22. Over the last few months, the index has traded in a wide range between overhead resistance near 315 and medium term support at 250.00. While a series of broken declining tops line attests to a pattern of diminishing selling pressure unfolding over time, to date, the index has not yet been able to overcome the latest declining trend line connecting the major high of mid-April 2007 with the recent lower high seen the week of March 13th.

Financial Sense Junior Gold Index™

Development Companies

Above: FSO Junior Development Index

Turning to Junior Development stocks, the FSO Index for Development stage companies ended at 474.23, down 5.94 index points or 1.23%, down from last weeks close of 480.17. For the index, there is strong overhead resistance at the November 2007 highs and the late February highs all clustered at the 560 level, with rising trendline support connecting the Dec, January and April lows coming in at the 455 to 460 level. For the week, the Development Index ended below the 50 day average at 498.25, and below the 200 day average at 504.60. Finally, Exploration stage stocks ended slightly lower at 168.74, down from 170.39, with the FSO Index ending below the 50 day average at 177.78, and below the 200 day average at 194.89. As can be seen in the chart below, the index is still attempting to hold very important price support at the prior lows in the 165 zone, and appears to be building a complex base.

Financial Sense Junior Gold Index™

Exploration Companies

Above: The FSO Junior Exploration Index

Financial Sense Junior Gold Index™

Exploration Companies

Above: the FSO Junior Gold Index relative strength ratio versus Seniors…

Finally, we end this update with a glimpse at the relative strength ratio of Juniors versus Seniors which remains near the lows for the recent multi-month decline and near the lows of the past 2 years. We continue to watch this ratio closely for any hints that a change in trend is at hand, as that could be a very important signal of a change in the mining stock investment climate.

That’s all for now,
Frank

*Please note that the individual companies in this index are proprietary and will not be disclosed due to compliance and regulatory issues resulting from the relationship of FinancialSense.com, Puplava Financial Services, Inc., Registered Investment Advisor and Puplava Securities, Inc. Member Firm FINRA/SIPC.