Financial Sense Junior Gold Mining Index Review by Frank Barbera 07/28/2008

General Comments

Led lower by a steep 8.60% decline in Crude Oil, commodities of all stripes tumbled in the week just past. For the Precious metals, the decline in Oil pressured both Gold and Silver sharply lower with Gold falling 2.65% and Silver falling 4.03%. Platinum feel even more steeply for the second week in a row, with spot Platinum down a striking 5.35% to the lowest levels seen since late January. For spot Gold, the week produced a loss of 25.35 dollars per ounce or 2.65% with prices falling from $954.05 to a close of $928.70. For Silver, prices fell $.73 from $18.10 to a close of $17.3. With precious metals under assault, mining stocks continued their two week decline with the XAU Index falling 14.40 index points or 7.66% declining from a close of 187.92 the prior week to a close of 173.52 on Friday. Other mining indices like the Amex Gold Bugs Index fell in sympathy, with the HUI falling from 437.15 to a close of 409.01 for a loss of 6.43%, with the GDX Gold Miners Index falling 6.30%.

While Junior Miners actually ended the week with slightly smaller percentage declines, there were no cheers in any quarter as a wide range of Junior Indices tumbled to multi-month and in some cases, multi-year lows. At the close on Friday, the FSO Junior Mining Index ended at 204.98, down 7.70 index points or 3.62% from the prior weeks close of 212.68. With this weeks close, the FSO Index ended at a 2 year low, now seen since June 2006, with a close of 194.48 representing a panic low recorded way back on June 13th, 2006. Any move below those lows, would place the FSO Index at a three year low rather rapidly. For the FSO Index, the 50 day average ended at 224.81, with the 200 day average at 258.84. Among Junior Producers, the index fell 7.86 index points or 3.11% to close at 244.83, down from 252.69. The 50 day average ended at 264.52, with the 200 day average at 275.11.

Development and Exploration stocks tumbled to the lowest levels since November 2005, a nearly three year low, with the index ending at 193.73, down 8.08 index points or 4.00% from the prior week close of 201.81. On a year to date basis, the D&E Index is now down 19.40% with the index down 42.45% from the major high seen last February 26th at a close of 463.98. For the D&E Index, the 50 day average ended last week at 213.70, with the 200 day average ending at 249.78.

Within the D&E Index, Development stage companies plunged to the lowest levels since June 2005, a fresh three year low with the Development Index ending at 413.51, down from 433.62. For the week, Development stage companies ended down 20.11 index points for a loss of 4.63% with the 50 day average ending at 455.13, and the 200 day average ending at 479.67. While the two moving averages came very close to crossing one another in late April, that cross over never took place. As a result, going back to the original cross over to the downside in June 2007 at 553.40, the index has lost an additional 25.31% since the moving average sell signal. From its high of 798.74 on May 9th 2006, the index is now down 44.33% in just over 2 years. Finally, Junior Exploration stocks were also down on the week, with the Junior Exploration names ending down 3.28%, with a close of 120.47, down from 124.53. For the Junior Exploration Index, the 50 day moving average ended at 133.23, with the 200 day moving average ending at 173.45.