FSJG Index™ Weekly Review
by Frank Barbera
November 18, 2005

General Comments

It was an excellent week for the Precious Metals complex with Gold gaining $16.10 to $486.00 for a gain of 3.42% in what was the yellow metal's strongest showing since the week ended March 19, 2004. With Gold advancing to new multi-year highs last seen in early 1988, it was no big surprise to see the major gold stock indices also moving to new high territory.

For the week, the widely followed Philadelphia Gold and Silver Mining Index, or XAU, gained 3.90 to close at 115.11 for a gain of 3.50% on the week. For the XAU, this week’s strong showing built upon last weeks gains, which saw the XAU tack on 5.39 index points or 4.84%. For the Amex Gold Bugs Index (HUI), the last 5 days saw the index move up by 10.75 index points or 4.58% and that gain came on the heels of a 10.46 index point gain (or 4.67%) the previous week. With a close of 244.98, the HUI is now within 3.22 index points of its former high seen on September 29, 2005 at 248.20, which reflects a significant impact from heavyweight component Newmont Mining (NEM), which finished the week at $46.33, just below its September 29^th high of $48.03. In the case of both ABX and NEM, the take-over deal involving Placer Dome had unduly depressed prices for several weeks as ABX was the acquiring company with the market also impacting NEM on questionable speculation that a counter-bid could be forthcoming.

Financial Sense Junior Gold Index

The strong rally in Gold did an excellent job triggering a broad based rally in mining shares, which boosted the FS Junior Gold Index by 6.18 index points or 3.97% to a close of 168.45, up from last week's close of 162.27. At week's end, the FS Junior Gold Index finished above both its 50-day average at 161.96 and its 200-day average at 155.39.

Within the various sub-sectors, the Junior Producers Index vaulted a sharp 6.03% on the week to close at 188.39, up from 177.66 the prior week. At week's end, the Junior Producers Index ended above the 200-day average at 168.87.

Financial Sense Junior Gold Index™
Producer Companies

A respectable gain was also seen in the Junior Development Index, which tacked on 2.86% to close at 497.54, up from 483.69 the prior week for a gain of 13.85 index points. The Junior Development Index finished above the 200-day average at 455.65. 

Finally, Exploration stocks lagged this week as is not uncommon at important turning points. The Exploration Index finished at 67.84 up from 67.22 last week, amounting to a gain of just .009% or .62 index points. Ideally, as physical gold moves higher and attracts more investment interest, more money will enter the gold stock market and begin seeking out speculative investments in lower-priced stocks. For this reason, Exploration Stocks, which possess the highest levels of risk, tend to be “late movers” in most gold cycles. A normal pattern to watch for would be to see a meaningful pick up in the Exploration Index and Development Index in the weeks directly ahead.

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.