Financial Sense Junior Gold Mining Index Review by Frank Barbera 03/31/2008

General Comments

After falling $92.32 dollars per ounce, or 9.23% the prior week, Gold prices stabilized and began a recovery posting a modest gain for the last week of March. On the week, spot gold closed higher by $19.82 or 2.17% to close at a reading of $930.00, up from $910.18. Other metal prices also posted gains with Platinum gaining $171oz or 9.25% to close back above $2000, with a reading of $2,019, while spot Silver gained $1.11 or 6.61% to close at $17.88, up from $16.77. The recovery in metals prices helped large cap mining stocks as well, with the Philly Gold and Silver Index, the XAU ending at 180.27, up 8.26 index points or 4.80% gaining off last weeks close at 172.01. For the HUI, the index gained a more modest 2.30%, to finish at a reading of 449.16, up from 439.05. In the prior week, the XAU lost 16.50%, while the HUI tumbled 14.76%, so this weeks recovery gains were healthy, but nevertheless modest.

Not surprisingly, the bounce in metals and large cap mining stocks helped the Juniors Miners move higher, with the FSO Junior Mining Index closing at 257.49, up 8.72 index points or 3.50% from last weeks close of 248.77. This recovery gain for the FSO represented about a 1/3 retracement of the prior weeks decline which totaled 28.28 index points, or 11.36%. As can be seen in the chart below, for the last 12 months, Junior Gold Stocks have been trapped in a wide trading range between 325 to 330 on the high end and 250 on the low end. At this week’s close, the FSO Junior Mining Index ended below the 50 day average and below the 200 day average, with the 50 day at 266.11, and the 200 day at 280.89.

Financial Sense Junior Gold Index™

Mining Index

Above: the FSO Junior Mining Index - 40 stocks

Turning to the FSO Sub-Indices, we find that Junior Producer mining companies, gained 3.62 index points or 1.32% for the week, partially recovering from last weeks shellacking in which the index lost 25.76 index points or 8.60%. At the close, the FSO Junior Producer Index ended at 277.11, up from 273.49 with the 50 day average at 277.07 and the 200 day moving average at 286.07. Among the Development Stocks, the index gained back 18.29 index points or 3.95% after losing 49.58 index points or 9.69% the prior week. For the FSO Development Index, the week ended with a reading of 480.17, up from 461.90 with the 50 day average at 498.26, and the 200 day average at 506.89.

Financial Sense Junior Gold Index™

Producer Index

Above: FSO Junior Producer Index

Financial Sense Junior Gold Index™

Development Companies

Above: FSO Junior Development Index

Finally, Junior Exploration stocks remained near the lows of the last 12 months, with the FSO Exploration Index ending at 170.39, up 7.45 index points or 4.57% from last weeks close of 162.94. On the week, the Exploration Index ended below the 50 day average at 179.06, and below the 200 day average at 195.21. As we have noted for some time, the relative strength of Juniors versus Seniors has been quite weak, virtually unprecedented for a market place in which metals prices have been so strong. The only conclusion which seems plausible to explain this outcome, one protracted for a full year, seems to be a hesitation of serious capital to commit to smaller cap names employing a very risk adverse investment approach.

Financial Sense Junior Gold Index™

Exploration Companies

Above: The FSO Junior Exploration Index

Financial Sense Junior Gold Index™

Exploration Companies

Above: The Relative Strength Ratio of Juniors vs. Seniors

In the table below, we recap for our loyal readers, all of the weekly closing and moving average data for the FSO Indices going back over the last 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.