Financial Sense Junior Gold Mining Index Review by Frank Barbera 06/09/2008

General Comments

A key reversal down day on Thursday, followed by a wide range bar down day on Friday for the US Dollar sent the Dollar Index tumbling from a peak of 73.37 on Thursday’s high to a reading of 72.38 at Friday’s close, with the Swiss Franc and Euro leading the advance. For precious metals, weak economic data including surging unemployment was bullish grist for the mill, helping the metals complex end the week on a strong note and reversing some of the prior weeks losses. For Gold, the week produced a gain of $15.45 to end at $901.35, up 1.74% from last weeks close of $885.90, and reversing about 40% of the prior weeks $38.30 decline. For Platinum, prices surged by $67 dollars per ounce on the week for a gain of 3.34%, with prices closing at $2070.00, up from $2003.00 the prior week. During the prior week, Platinum declined by 7.26% or $157 dollars per ounce, so this week’s recovery rally retraced 42.6% of the prior weeks down move. Silver also gained ground during the week just past, advancing from a close of $16.84 last Friday to a close of $17.48 this Friday and ending with a gain of $.64/zo or 3.80%. For Silver, this weeks gain retraced 48.85% of last weeks 7% decline.

With the Dollar very weak and precious metals very strong, it was no surprise to see mining stocks in recovery mode. For the XAU Gold Stock Index, the week generated a gain of 2.26 index points or 1.24%, with the index ending at 183.70, up from 181.44. For the XAU, strong gains on Thursday and Friday erased earlier pronounced intra-week losses, with the XAU gaining 5.26% from the Thursday low of 174.52, to the Friday close of 183.70, an advance of 9.18 index points in just two days. Other mining stock barometers also finished with gains, with the GDX ETF advancing by 1.45% on the week, with the HUI Amex Gold Bugs Index advancing by 2.31%. For the Small Cap Miners, which usually lag the action in the large caps by a day or two, the turn in large cap stocks provided only a modest boost to the weekly result. In the case of the FSO Junior Mining Index, the index managed to finish the week with a gain, ending higher by 1.41 index points at a close of 235.41, up .6% from last weeks close of 234.00. For the FSO Junior Mining Index, the 50 day average ended at 234.16, with the 200 day average ending at 267.71.

Financial Sense Junior Gold Index™

Mining Index

Above: FSO Junior Mining Index 40 Stocks ending above the 50 day average but still below the 200 day moving average (shown above).

Financial Sense Junior Gold Index™

Producer Index

Above: long term view, FSO Junior Producer Index

For the Junior producers, the week brought a better response with the index gaining 5.94 index points or 2.21% to finish at 273.87, up from 267.93. For the Junior Producers, the 50 day average ended at 256.93, with the 200 day average ending at 276.94. Development and Exploration stocks were largely flat on the week, with the FSO D&E Index ending down .75 at 224.85, lower from last weeks finish at 225.61. For the D&E Index, the 50 day average ended at 227.05, with the 200 day line at 259.43.

Financial Sense Junior Gold Index™

Development & Exploration Index (D&E)

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

Financial Sense Junior Gold Index™

Junior Exploration Index

Above: FSO Junior Development Index

Development stocks ended lower with the FSO Development stage index at 478.98, ending down 6.76 index points from last weeks close of 485.75, a loss of 1.39%. The 50 day average ended at 467.90 with the 200 day average ending at 486.15. Finally, exploration stage stocks ended slightly higher, with the FSO Exploration Index finishing at 140.16, up 1.26 index points from last weeks close of 138.90 with the 50 day average at 146.77, and the 200 day average at 183.86.

Financial Sense Junior Gold Index™

Junior Development Index

Above: long term view: FSO Junior Development Index

Financial Sense Junior Gold Index™

Junior Exploration Index

Above: long range view of FSO Junior Exploration Index

Financial Sense Junior Gold Index™

The D&E Index vs. Gold

Above: the FSO Junior Mining Index versus the XAU Index, relative strength ratio.

Overall, small cap mining stocks remain ultra-depressed with the relative strength ratio of small cap to large cap stocks still residing near a four year low.

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.