FSJG Index™ Review
by Frank Barbera
May 21, 2007

General Comments

It was a second, very negative week for the Gold market as nearby Gold tumbled an additional $10.50/oz last week or 1.56% adding to the prior weeks losses where it fell by $18.10/oz, or 2.61%. Of small consolation was the fact the week ended on a more encouraging note, with Gold prices stabilizing above $650.00. Yet, the damage to the yellow put mining stocks under pressure with the XAU falling 2.14% on the week to end at 136.76, down 3.00 from the prior weeks close of 139.76. For the XAU, the period between the May 7^th high close of 143.14, to Thursday’s low, was the index down 5 out of 8 sessions with almost no period of any significant bounce in between. The ugliness in the mining sector was not contained to the high caps, and spilled into the small stock universe with the FSO Junior Mining Index losing 8.04 index points to end last week at 299.95, down from 307.99, a loss of 2.614%. On Friday, the FSO Index ended below the 50 day average at 313.35, but above the 200 day average at 274.64. The index closed at a reading of 318.84 on May 4^th so has now lost 18.89 index points or 5.9% over the last two weeks. 

Financial Sense Junior Gold Mining Index Comments

Turning to the action in the Smaller Cap Sub-Indices, the Junior Producer Index ended the week at 320.36, down from 326.79 on Friday, May 11^th and down even further from the close of 340.53, on Friday, May 4^th. On the week, the Junior Producer Index fell by 6.43 index points, or 1.96% and ended below the 50 day average at 337.80, while remaining above the 200 day average at 302.11. Development Stage companies also had a rough week, ending down a hefty 25.94 index points or 3.95%, to close the week at 631.02, down from 656.96. The 50 day average ended at 696.61, with the 200 day average at 664.88, so the Development Stage stocks are now below both medium and long term moving averages…. Not Good!

Finally, the Exploration Index gets the Gold Star Award for sector champ, ending the week at 184.69, down just 3.87 index points from 188.56, the prior week. Over the last two weeks, the Exploration Index has been barely knicked down just 2.78% from its Friday, May 4^th close of 189.98. On Friday, this index ended ABOVE the 50 day average (just barely) at 184.14, and well above the 200 day average at 148.08. 

On the positive side, the FSO Junior Mining Index did end last week deeply oversold with the Medium Term A/D Ratio reaching a reading below .85 (the lower oversold benchmark) on Thursday of last week. That implies that depressed stock prices should see a recovery over the next few weeks.

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.