Don''t be fooled by manipulation of gold futures, analyst says


5:26p ET Monday, June 30, 2003

Dear Friend of GATA and Gold:

The long headline on this CBSMarketWatch story might as
well have added: "And gold bugs STILL don't realize that
they are going to win."

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Gold futures end Q2 with a $10 gain;
metals indexes log gain of at least 18 percent; silver climbs

By Myra P. Saefong
and Mike Maynard
Monday, June 30, 2003

SAN FRANCISCO -- Gold futures closed out the second
quarter up more than $10 an ounce, and metals indexes
ended higher by 18 percent or more from the first quarter.

Gold for August delivery closed Monday at $346.30 an
ounce on the New York Mercantile Exchange, up 80
cents on the session, and up $10.40 an ounce on the

Traders have been focused on the economy and watching
movements in the U.S. dollar.

"What was clear this quarter is that gold was behaving
much more like a currency than a commodity," said Erik
Gebhard, president of Altavest Worldwide Trading. "The
expectation of another Fed rate cut, a constant stream
of murky economic data, currency rate fluctuations, the
daily gyrations of the equity and treasury markets ...
were the fuel that drove gold sentiment," he said.

In foreign-exchange trading, the dollar rose against the
yen and Canadian dollar, but weakened against the euro.
Foreign traders pay close attention to fluctuations in the
greenback since they must swap out of their local
currencies to buy dollar-denominated gold on U.S.
markets. Also, gold is sometimes seen as a currency
itself that competes with the dollar for investor favor.

"The dollar is testing key levels," said Charles Nedoss,
an analyst at Peak Trading Group of Monday's action.
"If it takes out last week's highs, look for gold to test
the $340 area."

Talks this week among some Islamic nations may
have some "implications on the demands for gold over
the coming months," said James Moore, an analyst at in London. The nations will discuss
the practicality of a gold-based dinar in a bid to move
away from U.S. dollar dependency, Moore said. The
dinar is used in several Islamic nations.

Economic data released early Monday was upbeat, but
failed to seriously dent gold's gains. Manufacturing
activity in the Chicago region expanded for the second
month in a row in June, the Chicago Purchasing
Managers said Monday. U.S. stocks closed little

Metals indexes up on quarter

Tracking the sector as a whole, major metals and mining
indexes closed up 18 percent or more from the levels
seen at the end of the first quarter.

The Philadelphia Gold and Silver Index closed at 78.65, up
01.4 percent. The index closed out last quarter at 66.92
so that's a nearly 18 percent gain. The CBOE Gold Index
closed at 65.17, up 1.8 percent on the session and up 18.5
percent from the close in the first quarter. And the Amex
Gold Bugs Index gained 1.7 percent to 148.96, up 20 percent
from the end of the previous quarter.

Among the sector's bigger gainers, Meridian Gold closed
at $11.49, up 33 cents or 3 percent, Anglogold added 84
cents, or 2.7 percent, to $31.90, and Barrick Gold tacked
on 30 cents, or 1.7 percent, to $17.90.

Citigroup starts coverage of Freeport

Citigroup Smith Barney initiated coverage on Freeport
Copper & Gold with an "in-line, high risk" rating and a price
target of $28 a share.

Citigroup Smith Barney analyst John Hill believes Freeport
"holds the industry's most compelling asset and presents a
unique combination of commodity leverage, free cash flow,
and internal catalysts."

The company is "entering its free cash flow 'sweet spot' as
debt service and capex (capital expenditures) ease, heading
into likely cyclical copper recovery in 2004 to 2005," he told
clients. Freeport shares closed up 33 cents at $24.50.

Silver climbs

On Nymex, July silver closed at $4.557 an ounce, up 5.2

"Even though gold has had a disastrous few weeks, even
though copper prices have declined mightily, silver remains
rather firm at recent price levels," Leonard Kaplan, president
of Prospector Asset Management wrote in a note Monday.

Large traders continue to be "rather good buyers," and some
"'quality' buying" has been seen from some long-term
investment concerns, while some "'gunslinger' commodity
funds continue their maniacal methods and keep piling on the
short side of this market," he wrote.

On the supply end, gold inventories stood at 2.58 million
troy ounces late Friday, up 31,817 troy ounces from the
previous session. Silver inventories fell 240,785 troy ounces
to 107.2 million troy ounces.

Copper stocks fell 182 short tons to 321,200 short tons.

Elsewhere, the July copper contract closed down 0.85 cent
at 74.8 cents a pound -- off the session's low of 74.35. July
platinum fell by $2.60 to $670.60 an ounce, while September
palladium closed at $181.35 an ounce, up $4.85.