FSJG Index™ Weekly Review
by Frank Barbera
June 2, 2006

General Comments

The Precious Metals sector was under selling pressure most of the shortened week with Gold losing $10.70 and Silver down $.58. Yet despite the weakness in metals, the senior-end of the mining sector performed reasonably well with the XAU actually posting a small gain of 1.09 index points to finish at 143.63, up from last week's close of 142.54. For the Amex Gold Bugs Index, the week saw an even better gain of 8.47 index points or 2.57%. For the Junior Miners, after a slight bounce the prior week, small cap mining companies also edged slightly higher in the week just past.

Financial Sense Junior Gold Index

At the close on Friday, the Financial Sense Junior Gold Index ended at 255.02, up 3.73 index points or 1.48% from last week's close of 251.29. For the FSJG Index, there is presently medium-term resistance overhead at the 50-day average, which ended Friday at 273.17. At the same time, the index remains above medium-term support at the 200-day moving average, which ended at a reading of 210.09.

Within the realm of the sub-indices, the FS Junior Producer Index ended at 287.48, up 7.8 index points or 2.78% with the index ending below its 50-day average at 295.61 and above the 200-day average at 229.32.

While producer share prices moved nicely higher, both Development and Exploration Stocks struggled to make material progress with the Development Index down 3.69 index points to end at 666.67, down .5% from the prior week's close of  670.36.

For the Exploration Index, prices gained slightly with the index ending Friday at a reading of 120.78, up from 118.65 the prior week. On Friday, the Development Index remained below its 50-day average at 745.15 and above the 200-day average at 592.75. Similarly, Exploration stocks ended below the 50-day average at 131.60 and above the rising 200-day average at 95.20.

Finally, with the Small Cap Mining Indices mostly flat for the week, the Medium Term Summation Index ended at +172.67, up from +136.83 the prior week. After an extensive advance such as the one seen in recent months, a “normal” medium-term correction would see the Summation Index move down to the area near zero and possibly even fully oversold territory near –500. At the present time, with the Summation Index already more than half-way down the range, it appears that the possibility of another important bottom could be looming in the weeks ahead.

For now, the medium-term trend for Small Cap Mining stocks is still down with the short-term trend likely overbought and peaking. It is also likely that a secondary bout of weakness will be seen that acts to “retest” the recent lows on most indices or even generates a series of token lower lows. We will be watching these markets very closely over the next few weeks where things could start to get very interesting, especially if prices drift down just a little bit further. That’s all for now.

*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.