Financial Sense Junior Gold Mining Index Review by Frank Barbera 11/19/2007

General Comments

After moving up 11 of the last 12 weeks, the inevitable correction unfolded in the Gold market, with precious metals and mining stocks correcting prior gains during the week just past. For Gold, the carnage for the week yielded a decline of $45.20/oz, or 5.43% with spot gold falling from $831.50 to a close on Friday of $786.30. For Gold, the $45 dollar decline represented about a 25% retracement of the prior advance from $652.10 in mid August at the low, to the recent closing high of $833.40. Silver also fell sharply, giving back $.97/oz, a decline of 6.29% to end the week at $14.45, down from $15.40/oz. On the strong side, was spot Platinum, which bucked the downtrend and managed to end the week with a gain of $21/oz to finish at $1447, up from $1426.

Not surprisingly, mining stocks were crushed on the week, with the XAU getting bashed for a loss of 7.52%, or 14.06 index points with the index ending at 172.68, down from 186.74. Given that the index had previously advanced by a stunning 54.92% in the preceding 12 weeks, the loss was actually modest given the prior frame of reference in which the correction totaled a very standard 20%. Of course, these ARE GOLD STOCKS we are talking about, the proverbial kings of high beta, so numbers like 55% up and 14% down are simply the norm. For its account, the HUI or Amex Gold Bugs Index faired no better with the HUI surrendering 6.77% to end at 411.70, down from 441.60.

However, despite all the downside volatility there was a potential bright spot tucked away in the dark corners of the basement. The Junior Golds declined, but in general, decline far less then would have been expected under the circumstances. At the close on Friday, the FSO Junior Mining Index ended lower by 9.82 index points, or just 3.26% --- less then half the percentage decline seen in the XAU and HUI. This may also not have come as a total shock as investors following the sector are undoubtedly aware that Juniors were lagging Seniors over the balance of the last 12 weeks. Yet, it may still be the first sign of a new trend of out-performance which would be a logical expectations with metal prices settling in to new altitudes in the high $700’s – low $800’s for Gold and the $14 to $15 dollar range for Silver. For the week, the FSO Junior Mining Index fell from 306.47 last Friday to end this week at a value of 294.03.

Financial Sense Junior Gold Index™

Mining Index

Above: the FSO Junior Mining

Financial Sense Junior Gold Index™

Producer Index

Above: FSO Junior Producer Index

Financial Sense Junior Gold Index™

Development Companies

Above: FSO Junior Development Index

Financial Sense Junior Gold Index™

Exploration Companies

Above: The FSO Junior Exploration Index

Among the FSO Sub-Indices, the Junior Producers fell 12.44 index points or 4.05% to end the week at 294.03, down from 306.47. The 50 day average ended at 294.40, with the 200 day average ending at 309.17. Among the Development Stocks, the index ended at 470.01, down 28.60 from last weeks close of 498.61, a loss of 5.73% with the 50 day average at 500.16 and the 200 day average at 571.27. Last week, we inadvertently missed the Exploration Index numbers, with the correct ending value for the last three weeks, as follows: 11/16/07 214.64, 11/09/07 218.35, and 11/2/07 228.57. As can be seen from the data, this week, exploration stocks fell just 3.71 index points, a loss of only 1.69%, with the index still holding above the rising 50 day moving average at 212.93, and the 200 day moving average at 192.53.

Financial Sense Junior Gold Index™

Junior Mining Index vs. XAU

Above: The Relative Strength Ratio of the FSO Junior Mining Index to the XAU

Importantly, as can be seen in the chart above, the relative strength ratio of Juniors to Seniors turned UP this week off of what could be an important double bottom low. Obviously, only time will tell, but with the R/S Ratio near the long term 200 day lower band, this is a zone where an important relative strength shift could develop within the mining sector.

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.