Financial Sense Junior Gold Mining Index Review by Frank Barbera 04/28/2008

General Comments

Last week was a punishing week for precious metals as the price of Gold fell four days out of five, on the week losing $30.85/oz to finish at $885.15, down 3.36% from the prior weeks close of $916.00. With Gold prices under pressure from a microscopic rally in the US Dollar, other metals also lost ground with spot Silver declining by $1.02 per ounce to finish at $16.82, down from $17.84, for a loss of 5.71%. Platinum prices were also lower, with spot platinum losing $94.00 to close at $1951, down 4.59% from the prior weeks close of $2045. With the precious metals falling sharply, it was no surprise to see large cap miners getting hit, with the XAU falling 12.46 index points or 6.61%, while the HUI fell by 45.11 index points or 9.89%. For the HUI, the index is now down 20.21% or 104.10 index points from its high of 514.89 seen on March 14th.

With downside pressures weighting heavily on large caps, Junior miners were also lower, as some negative changes to mining law in Ecuador brought about crash like behavior for exploration and development miner in Ecuador. With the FSO 40, names like Aurelian Resources (ARU-TSE) and Dynasty Metals and Mining (DMM-TSE) were hit hard, falling nearly 50%. For the week, the FSO Junior Mining Index tumbled 19.10 index points or 7.96% to close at 220.75, down from 239.85 the prior week. On Friday, the FSO Junior Index closed near a fresh 52 week New Low and remains well below the 50 day average at 259.56, and the 200 day average at 276.27, with the bear market in Junior Mines still intact. Since reaching a record peak ay 329.30 last February 26th, the week of the start of the sub-prime crisis in the US, Junior Golds have fallen 32.90% or 108.55 index points over a period of 14 months. Many small cap junior mines are highly dependent on financing for mine development, and while few companies have shown any problems in actually being able to raise funding, the sector has suffered as global credit conditions have declined.

Financial Sense Junior Gold Index™

Mining Index

Above: the FSO Junior Mining Index

Financial Sense Junior Gold Index™

Producer Index

Above: FSO Junior Producer Index

Among the FSO Sub-Indices, the Junior Producers fell 8.31% last week to close at 237.31, down from 258.82 the prior week. For the FSO Junior Producers, the 24.93 index point decline left the index below the 50 day average at 275.31, and the 200 day average at 281.78. It also resides below a steeply declining tops line which would now require the index to move back above the 250 mark in order to regain former support.

Financial Sense Junior Gold Index™

Development Companies

Above: FSO Junior Development Index

Elsewhere, the FSO Junior Development stocks were also lower, edging down by 5.21% to close at 453.27, down from 478.20 the prior week. For the Development Index prices remained below the 50 day average at 493.71, and below the 200 day average at 497.38.

Financial Sense Junior Gold Index™

Exploration Companies

Above: The FSO Junior Exploration Index

Feeling the sting of Ecuadorian Nationalism, fears most likely over blown in the grand scheme of things, the FSO Junior Exploration Index ended at 137.64, down 14.48 index points or 9.51% from the prior weeks close of 152.12. We say that the fears on Ecuador may be over blown, as without the Canadian mining industry Ecuador will be SOL on its mining industry, with resulting government cash flows moving right down the drain along with Ecuadorian share prices. Better bet: the government will recant some of what sound like draconian policies and allow production to move ahead after extorting some extra money for itself. For many miners in Ecuador, even with higher government extortion rates, profitability should still be well within reach with the countries huge mineral wealth offsetting some of the potential downside to mining law changes. On the week, the Exploration Index ended below the 50 day average at 137.64 and the 200 day average at 192.08. The table below recaps the price history for the last few weeks.

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.