FSJG Index™ Weekly Review
by Frank Barbera
July 8, 2006

General Comments

It was a strange week in the financial markets as geopolitical tensions surrounding North Korea and Iran boosted Gold prices, but failed to help mining stocks. With Gold up nearly $15.90 on the week to a close of $633, the leading Gold Indices barely managed any gain with the XAU finishing almost precisely unchanged at 143.57, while the HUI managed a small gain to close at 339.57.

In no small part, it appears that mining stocks have been closely tied into the fortunes of the broad equity market indices over the balance of the last two to three months as both the broad equity market and the mining sector are pinning their hopes going forward on an end to Fed tightening. No doubt about it, we appear to be at that point in the cycle where additional Fed tightening would be bearish for both the stock market and the mining sector as the risk of kick-starting an economic recession would be very high.

To that end, this week’s news, while not taken well by the financial markets, nevertheless had more than a few potential silver linings for investors. Friday’s payroll data put forth by the Labor Department reinforced the message seen earlier in the week by the ISM Employment report, which declined for the fifth month in a row and ended at the lowest levels seen since late 2003. Combined, the two reports show a fairly uniform trend of decelerating growth – at this point, a slow down – which should be enough to give the Fed pause. If this idea seeps into the market psyche in the days ahead, there is a good chance that markets could continue their recent revival on renewed hopes for the end of the Fed rate hiking cycle.

At any rate, with the S&P 500 and DJIA both lower on the week, the action in the Gold Stocks was restrained and this also kept the Small Cap mining companies in check.

Financial Sense Junior Gold Index

For the week, the Financial Sense Junior Gold Index (FSJG) ended at 247.02, up only .79 from last week's close of 246.23. On Friday, the FSJG Index ended below resistance at the 50-day average at 252.94, but remained above long-term support at the 200-day average which closed at 220.49.

Turning to the sub-indices, the Junior Producer Index ended at 280.53, up from 279.81 last week with the 50-day average at 280.00 and the 200-day average at 240.75.

For the Development stocks, we saw a negative week with the index closing at 640.28, down from 645.53 last week with the Development Index below the 50-day average at 671.45, but still above the 200-day average at 614.38.

Finally, the Exploration Index ended at 116.69, up slightly from 114.52 for a gain of 2.17 index points or 1.89%. The best showing of the week, the Exploration Index ended below the 50-day average at 121.30 and above the 200-day average at 101.60.

Due to circumstances beyond our control, data for June 23^rd close was not reported and saw the FSJG Index close at 242.03, the Junior Producer Index close at 268.98, the Development Index at 632.69, and the Exploration Index close at 117.54. 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.