Franklin Mining, Inc. (FMNJ)

[NYBob]

americano, the continued weakness of the USD
is just one of the factors that could lead to
a rally in precious metals this week.

Gold May End 3-Week Slide on Speculation Dollar Will Decline

June 5 -- Gold may end its three-week slide on speculation
the dollar will drop against the euro and yen, boosting
the metal's appeal as an alternative investment to U.S.
stocks and bonds.

Fifteen of 28 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on June 1 and June 2 advised buying gold, which fell 2.5 percent last week in New York. Five recommended selling, and eight were neutral.

Gold is up 24 percent this year as the dollar fell 7.7 percent against a basket of six major currencies.
The Standard & Poor's 500 Index climbed 3.2 percent this year, and Treasuries have lost 1.6 percent. Traders say that U.S. Treasury Secretary nominee Henry Paulson will continue a Bush administration push for a weaker dollar.

``Investors are going to start realizing the U.S. is on a deliberate campaign to debase the dollar,' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, which manages about $400 million.
``When the dollar comes under a lot of pressure, there's a
very strong case for owning gold.'

Gold futures for August delivery fell $16.40 last week to $641 on the Comex division of the New York Mercantile Exchange.
The decline surprised a majority of analysts surveyed May 25 and May 26. The Bloomberg survey has forecast the direction
of prices accurately in 68 of 110 weeks, or 62 percent
of the time.

Three-Week Slump

The precious metal has tumbled three straight weeks since reaching a 26-year high of $732 on May 12. The slide was the longest since July. Funds and large speculators slashed holdings after the metal soared by almost $200 an ounce from the start of the year through mid-May.

``The fundamentals that took gold to over $700 an ounce are still in place,' said Joseph Foster, who helps manage
the $451 million, New York-based Van Eck International Investors Gold Fund that has doubled in the past year.
``We'll go to new highs, and it's possible that we could
test the 1980 high' of $850 an ounce in
the next 12 months, he said.

Hedge-fund managers and large speculators cut their bets in Comex futures in the week ended May 30, U.S. Commodity
Futures Trading Commission data showed on June 2.
Speculative long positions, or bets that prices will rise, outnumbered short positions by 101,487 contracts.
Net-long positions fell by 9,611 contracts, or 9 percent.

``The speculators are going to jump back on board as long as the U.S. dollar continues to decline,' said Josh Harris, a senior trader at Infinity Brokerage Services Inc.
in Chicago.

Investment Demand

Investment demand helped drive the value of the StreetTracks Gold Trust exchange-traded fund to $8.2 billion last month. Each share represents a 10th of an ounce of gold.

``On the investor front, buyers have come back below $650 and more below $635,' said Jon Nadler, an investment-products analyst at Kitco Inc., a gold-trading company in Montreal.

Slowing job growth in the U.S. may change investors'
outlook on the dollar and help boost gold prices,
analysts said.

The U.S. currency historically moved in the opposite direction of gold. That relationship changed last year when gold rose 18 percent while the dollar climbed about 14 percent against the euro and the yen.

The U.S. added only 75,000 jobs in May, lower than the 170,000 estimated by economists.

``The jobs report has me concerned,' said Jim Pogoda, an investor in Summit, New Jersey, and a former precious-metals trader for Mitsubishi Ltd. ``The euro could gather fresh momentum on a breakout, aiding a rebound in gold.'

Pogoda correctly predicted gold would decline the past three weeks.

Wide Price Swings

Wide price swings may discourage buyers. The StreetTracks Gold Trust had the seventh highest volume of any U.S. exchange traded fund in the past 20 trading days, according to data compiled by Bloomberg. An average of 12 million shares were traded in May, double the volume in April.

``For small-time investors, it's very difficult to follow the volatile market,' said Pom Chong Kim, assistant manager at Hansung Co., a precious metals trading company in Seoul.
``So I think a hit-and-run type of trade will continue
for a while.'

Price fluctuations also may keep jewelers out of the market, said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. About 40 percent of his clients are jewelers.

``Jewelers are not big buyers on volatility,' Kaplan said. ``When prices started to come down like they did this past week, they tend not to buy, even if the price is good. They naturally think it's going to fall more.'

Jewelers accounted for 73 percent of purchases last year, according to the producer-funded World Gold Council
in London.



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