Financial Sense Junior Gold Mining Index Review by Frank Barbera 11/12/2007

General Comments

It was a nutty weak in the financial and commodity markets with really widely skewed results. In the Precious Metals arena, spot Gold picked up 25.20 Dollars per ounce to close at $831.50, up 3.03% for the week while spot Platinum fell by $29.20 to the end the week at $1426.80, down 2.00%. The big gainer and star of the week went to Silver which advanced by 5.55%, a gain of $.81/ounce to close at $15.40, with Silver notching its second best weekly percentage gain of 2007, the best gain being an advance of 7.08% the week ended 9/21/07. At the same time, the US stock market suffered a very painful week with the S&P 500 declining 3.77% amid the ongoing financial –banking crisis which saw major names such as Barclays Bank, Freddie Mac, Fannie Mae, Credit Suisse, and UBS all making fresh plunges to new 52 week lows. In the arena of mining stocks, the cross-currents buffeted the group with the XAU actually ending slightly lower to finish the week at 186.74, down .90 from last weeks close of 187.64. For the HUI, the week also produced a minor loss, with the index ending at 1375.14, down from 1379.75, a loss of 4.16 index points. For the small cap stocks, the results were far more negative with the FSO Junior Mining Index tumbling 14.37 index points on the week to close at 301.01, down 4.55% from the prior weeks close of 315.38. For the FSO Junior Mining Index the 50-day average ended at 290.27 with the 200 day at 293.94.

Financial Sense Junior Gold Index™

Mining Index

Above: the FSO Junior Mining Index backing away from overhead supply in the 325-330 zone.

Financial Sense Junior Gold Index™

Producer Index

Above: FSO Junior Producer Index - held in fairly well in a crazy week.

Among the Sub-Indices, cap-weighting seemed to play an important influence on the index direction as Producers faired well, while Development and Exploration names were mugged. For the FSO Junior Producers, the index slipped only 2.09 index points to finish the week at 306.47, down from last weeks close of 308.56. The 50 day average ended at 290.90 with the 200 day average at 310.00. Elsewhere some real carnage was evident with the Junior Development Index plummeting 46.04 index points, a total of 8.45% to end at 498.61, down from last weeks close of 544.65. Development stocks gave back about 25% of there recent gains ending the week just above the 50 day average at 497.27, with the 200 day average still acting as medium term overhead resistance at 575.96.

Financial Sense Junior Gold Index™

Development Companies

Above: FSO Junior Development Index moving back to partially retrace some of its recent gains.

Financial Sense Junior Gold Index™

Exploration Companies

Above: The FSO Junior Exploration Index - also a week of backsliding.

Finally, Exploration stocks also ended lower, with the FSO Junior Exploration Index finishing at 301.01, down from 315.38, a loss of 14.37 index points or 4.55% on the week, with the more then 2/3’s of the components lower on the week. For the FSO Junior Exploration Index, the 50 day average ended at 208.87 with the longer range 200 day average ending at 191.10. On the positive side, both moving averages continued to move higher on the week. Over the last few years, Junior Mining Stocks have strongly outperformed there large cap brethren, as can be seen in the chart below which rebases the FSO Junior Mining Index to a reading of 58.07, the close seen on 1/9/02 for the XAU.
Over this equivalent period of time, the XAU has advanced from 58.07 to a close this past Friday of 186.74, an impressive gain of 221.57%. Yet, over the same period of time, the FSO Index REBASED has moved from 58.07 to a close this week of 672.55 – for a spectacular gain of 1058.17%.

Financial Sense Junior Gold Index™

Junior Mining Index vs. XAU

Above: Junior Mining Index rebased versus the XAU going back to January 2002.

Financial Sense Junior Gold Index™

Long Term Small Cap

Above: Arithmetic Scale shows the steady long term rising channel which has embodied the small cap sector. The primary trend is still very clearly up.

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.