Financial Sense Junior Gold Mining Index Review by Frank Barbera 08/05/2008

General Comments

It was another bruising week for Precious Metals investors as the US Dollar Index rallied against foreign currencies hitting a six-week high at the end of August. For spot Gold, the dollar strength depressed the yellow metal by a measure of $19.15/ounce, with gold losing 2.06% for the week. At the same time, Platinum ended lower by $100/ounce ending at $1651.00 per ounce down from $1751 the prior week. From its all time high at $2226 on March 3rd 2008, spot Platinum is now down almost 26%. Silver was the only shining star in the precious metals camp, where the week actually produced a small gain, with spot Silver adding $.06 to finish at $17.43. Nevertheless, with weakness in the underlying metals, mining shares experienced another week of heavy carnage with the XAU falling 10.98 index points or a hefty 6.32%, led lower by weakness in Freeport McMoran (FCX) which was down by 5.42%. Elsewhere, Barrick Gold feel 7.49% and Goldcorp feel by 9.32%. Other Gold indices finished lower, with the GDX Gold Miners ETF ending down 4.2%, and the Amex Gold Bugs Index ending down 4.61%.

In a kind of perverse twist of fate, Junior Mining indices actually gained ground on the week, however, most of the gains came from acquisitions, with Kinross Gold making an offer to acquire Aurelian Resources with Aurelian shares shooting higher by 41%. Beyond this strength, the rest of the Junior mining sector turned in what was essentially another forgettable week. At the Friday close, the FSO Junior Mining Index ended with a gain of 4.52 index points to close at 209.50, up from the prior weeks close of 204.98. With a 2.20% gain on the week, the FSO Index nevertheless remained below the 50 day average at 222.10, and the 200 day average at 256.15. Within the FSO Index, Junior Producers sold off, losing 5.17 index points to close at 250.00, down from 244.83 the prior week for a loss of 2.11%. For the Junior Producers, the 50-day average ended at 262.84, with the 200 day average ending at 273.71.

Development stage stocks were the big pocket of strength with Aurelian Resources leading the advance. On the week, the FSO Junior Development Index ended at 424.98, up 11.47 index points or 2.77% versus the prior week close of 413.51. For the Development Index, the 50-day average ended at 449.40, with the 200 day average at 476.95. Junior Exploration stocks also gained slightly, with the FSO Junior Exploration Index ending at 122.72, up 2.25 index points or 1.86% from the prior week close of 120.47. The 50-day average ended at 131.14, with the 200 day average at 170.36. The composite of both Development and Exploration stage companies, the D&E Index, ended at 198.29, up 4.56 index or 2.35% versus the prior week close of 193.73. The 50-day average ended at 210.70, with the 200 day average at 247.01.