Financial Sense Junior Gold Mining Index Review by Frank Barbera 11/17/2008

General Comments

Despite another weekly gain on behalf of the US Dollar, spot Gold prices managed to advance with the gold price ending at $741.68, up 7.68 from last weeks close of $734.00. While gold managed to gain ground for the second week in a row, both Silver and Platinum suffered declines with Silver losing $.50 to close at $9.50, while spot Platinum ended lower by $13 to close at $839. Among large cap mining indices, the XAU ended down -4.83 index points or 5.68% to finish at 80.20, while the HUI ended down 7.29% or -14.68 index points to close at 186.43.
With large cap miners ending lower, small cap stocks also retreated in kind. The Financial Sense Junior Mining Index ended down 12.43 index points, or 11.65% to finish at 94.22, down from 106.65 the prior week. The Junior Producer Index fell 10.74%, with the Development Index down 14.91%, and the Exploration Index down 9.63%, a little nightmare all the way around. In the table that follows on the next page, we show the weekly closes for each of the Financial Sense Indices and the respective 50 and 200 day moving averages. Needless to say, with the colossal drubbing of the last few weeks, all of the indices are below both the 50 day and 200 day averages.

Financial Sense Junior Gold Index™

Junior Gold Mining Index

Above: Financial SenseJunior Gold Mining Index

table

In the chart above, we show the Financial Sense Junior Mining Index with the 200 day trading bands. The 200 day lower band ended at 94.66 with prices still outside the lower band ending at 94.22. On the next chart, we attempt to make a simple point, which might be slightly forward looking. Our observation runs to the idea that after such an extensive multi-week percentage decline, usually, an equally extensive base building period is need to allow prices to bottom out and eventually reverse course. While we may still be way early, there is a chance based on the fact that prices are so oversold, that perhaps such a base building process could get underway. Again, this makes the huge assumption that some kind of final low is at hand, which may or may not turn out to be the case. Nevertheless, if prices are indeed in the general vicinity of a more important low, odds are high that a base building process would look like a large trading range unfolding over perhaps six months. In the case of Junior Mining Index, the top was 6 months, so it is reasonable to conclude that the bottom may be a mirror image. Clearly, only time will tell but we see some hints that this kind of outcome may be what lies ahead.

Financial Sense Junior Gold Index™

Junior Gold Index with Potential base outlined

Above: the Financial Sense Junior Mining Index with potential base outlined.

Financial Sense Junior Gold Index™

Junior Development & Exploration Index

Above: The Financial Sense Junior Development adn Exploration Index

Financial Sense Junior Gold Index™

Junior Producer Index

Above: FSO Junior Producer Index

Financial Sense Junior Gold Index™

Junior Development Index

Above: FSO Junior Development Index

Financial Sense Junior Gold Index™

Junior Exploration Index

Above: Financial Sense Junior Exploration Index

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.