General Comments

Gold prices stabilized after three weeks of heavy selling pressure as the US Dollar showed some early signs of a downside reversal. The reprieve from Dollar strength helped Gold hold more or less even on the week as many cross-currents continue to impact the market. Nevertheless, Gold prices ended lower for the fourth time in five weeks with the yellow metal closing lower to end the week at $724.40, down 9.80 on the week (1.33%). For Silver, a stabilizing outcome in the global stock markets, and a surge in commodity related currencies helped spark a recovery from the depths of the abyss. For Silver, prices closed higher to end at $9.76 per ounce, up 4.83% or $.45/oz on the week. The advance snapped a month-long losing streak for spot Silver, which is down 51.87% from its March 3rd peak at $20.28. Spot Platinum prices also bounced, recovering a meager $25.00 per ounce or 3.13% to close at $823.00, with Platinum prices down 13 of the last 16 weeks. During that period of time, Platinum plunged from a high of $2085 on June 25th, to a recent intra day low of $745 last week, a decline of 64.26$ in just 16 weeks.

With the temporary stabilization in metals prices, large cap mining stocks staged a reasonable bounce with the XAU Index gaining 14.39% to end the week at 81.06. While some may be impressed with a 14% + rally, placed in context of the past few weeks, the recovery rally barely scratches the surface as mining stocks of all stripes have been decimated. Over the last few weeks, the XAU lost 18.94% the week ended 10/3. 10.29% the week ended 10/10. 14.62% the week ended 10/17, and 17.47% the week ended 10/24/08, the worst four week showing in decades and possibly the worst showing of all time.

Over this period of time, Junior Miners were not spared and despite what had been months and months of decline, prior to the collapse of the equity markets and prior to the collapse of the large cap seniors, the carnage has continued unabated in juniors. In fact, so much activity has taken place that we have been almost unable to keep up with our normal workload ballooning on the order of two to three times. Ideally, with this week's update we will be getting back on our regular track and to assist readers. In bridging our unintended hiatus, we have constructed special tables for each index in this update. In each table, we give the back data over the last few weeks dating back to our last full update, along with the weekly percentage change, weekly 50 day and 200 day moving average closes. Needless to say, the action in Juniors does not make uplifting reading as many issues are down more then 80% from the highs. Reflecting the widespread devastation, we note that from high to low, (High 4/13/07 to Low 10/27/08) the Financial Sense Junior Mining Index was down 75.23% at its worst and ended the week down 70.65% from its April 2007 peak. Instead of discoursing on each index, we let the tables this week speak for themselves with Development issues pacing the advance, while credit dependent Exploration issues brought up the rear.

Financial Sense Junior Gold Index™

Junior Gold Mining Index

Above: the Financial Sense Junior Gold Index (40 stocks)
Below: Data table for Financial Sense Index

Financial Sense Junior Gold Index™
Junior Producers

Above: the Financial Sense Junior Producer Index
Below: Data Table for Junior Producers

Financial Sense Junior Gold Index™
Junior Development

Above: the Financial Sense Junior Development Index
Below: Data Table for Junior Development issues

Financial Sense Junior Gold Index™
Junior Exploration

Above: the Financial Sense Junior Exploration Index
Below: Data Table for Junior Exploration Index

Financial Sense Junior Gold Index™
Junior Development & Exploration Index

Above: the Financial Sense Junior Development and Exploration Index
Below: Data Table for Development and Exploration Index

Financial Sense Junior Gold Index™
Junior Producers vs. Development & Exploration Issues

Above: Close up view of Producers versus Development and Exploration Issues.

Over the last few weeks, companies that have current production and therefore cash flow, have held up better then companies that are in burn rate mode and need financing for survival.

Financial Sense Junior Gold Index™
Longer Range View of Producers, D & E Issues, and
Ratio of Producers to Non-Producers

Above: a longer range view, Producers on top, D&E Issues middle, and Ratio of Producers
to Non Producers on the bottom.

The Non-producers fell to nearly all time lows over the last few weeks, while shares for producers overshot, but did not hugely exceed the prior low seen in May 2005.

Financial Sense Junior Gold Index™
Index vs. Spot Gold

Above: Relative to physical Gold, junior mining shares have moved to record multi-years lows in recent weeks.
The FSO Index versus Gold.

That’s all for now,
Frank

© 2008 Frank Barbera. All rights reserved.
Financial Sense Junior Gold Index Archive

*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.

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