Financial Sense Junior Gold Mining Index Review by Frank Barbera 05/12/2008

General Comments

Well it was quite a week for the Precious Metals Complex as all three precious metals moved higher with Spot Platinum experiencing its biggest weekly percentage gain of the year, and one of its biggest percentage gains ever seen. For the week, nearby spot Platinum surged $188.00 per ounce or 9.92% to close at $2083.00, up from $1895 the prior week. That gain of nearly 10%, bested huge weekly gains seen the weeks ended January 30th, February 13th, February 2st and March 28th. The advance, which saw Platinum prices moving higher five days in a row, -- the entire week, left spot Platinum only $79 per ounce or 3.65% below its all time weekly high close of $2162 seen the week ended February 21st. Following the dramatic advance in Platinum, Gold prices surged $29.15 per ounce or 3.40% to close at $884.15, up from $855.80 the prior week with the weekly Gold chart sporting a bullish piercing candle at weeks end. For Gold, the text book A-B-C correction of the last 7 weeks now appears to be complete with prices now well poised to move rapidly back up toward the $950 range and possibly higher. Silver, the king of high volatility, did not awaken fully in the week just past and yawned its way higher by $.44 per ounce for a gain of just 2.69% to end at a reading of $16.79, up from $16.35. For Silver any upside follow thru could easily see prices assault the $18.50 to $19.00 levels once again with white metal still up a cool 13.59% YTD thru this weeks close.

With the strong advance in Precious Metals, it was no surprised that the Precious Metals mining stocks rampaged their way higher, ending a string of three soft weeks with a series of bullish closes. For the XAU, the week produced a gain of 7.74% to end at 182.16, up 13.10 index points from last weeks close of 169.06. Elsewhere, the Amex HUI Index gained 6.00% to close at 423.05, while the Gold Miners Index GDX ETF closed at $45.96, up 6.43%. Among the big three majors, Goldcorp gained 9.97%, Barrick gained 4.87% and Newmont gained 2.74%. Not surprisingly, the badly beaten small cap sector snapped-back right along with the large caps this past week, in the process ending a five week losing streak. For the FSO Junior Mining Index, the week produced a gain of 5.94% with the index ending at 227.31, up from 214.56. On Friday, the FSO Index ended below the 50 day average at 250.54, and below the 200 day average at 273.35.

Financial Sense Junior Gold Index™

Mining Index

Above: the FSO Junior Mining Index (40 stocks)

Financial Sense Junior Gold Index™

Producer Index

Above: FSO Junior Producer Index

For the Junior Producers, the week produced a gain of 6.52%, with the index closing at 247.01, up from 231.88 with the 50 day average ending at 268.02, and the 200 day average ending at 278.45. In the arena of non-Producing companies, we find the FSO D&E Index gained a healthy 5.68% to end at 222.12, up from 210.17, with the 50 day average at 243.93, and the 200 day average at 265.55.

Financial Sense Junior Gold Index™

Development & Exploration Index (D&E)

Above: FSO Junior Development & Exploration Index (D&E)

Financial Sense Junior Gold Index™

Junior Development Index

Above: The FSO Junior Development Index

Among the remaining sub-indices, the FSO Junior Development stocks ended at 465.28, up 24.48 index points from the prior weeks close of 440.80, a gain of 5.55%. For the Development Index, the 50 day average ended at 481.33, with the 200 day average at 490.87. Exploration Stocks also ended nicely higher with the FSO Exploration Index ending at 141.07, up 7.78 index points from 133.29 the prior week. On Friday the 50 day average ended at 163.47, with the 200 day average ending at 190.44.

Financial Sense Junior Gold Index™

Junior Exploration Index

Above: the FSO Junior Exploration Index

Financial Sense Junior Gold Index™

The D&E Index vs. The XAU

Above: the D&A Index vs. the XAU

Financial Sense Junior Gold Index™

The D&E Index vs. Gold

Above: the D&E Index versus Gold

As can be seen in the preceding two charts, the D&E Index has been hitting four year lows when compared to the XAU and physical Gold, quite the anomaly with this weeks action hitting a plateau versus the XAU and showing a nice gain versus Gold. Could the bottom finally be at hand for the Junior Resource sector? As always, only time will tell.

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.