Bloomberg desperately underplays and obscures the Cheuvreux report

9:31p ET Sunday, February 5, 2006

Dear Friend of GATA and Gold:

Look how desperately Bloomberg News Service
underplays and obscures the Cheuvreux report
on the suppression of the gold price by central
banks. And yet that Bloomberg feels compelled
to mention the report at all is a great triumph
for our side. It just gives you another
indication of how much gold and its friends are
up against from the financial and news media
establishments. But we're winning.

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

* * *

Gold Prices May Rally From 25-Year High on Iran, Survey Says

Pham-Duy Nguyen
Bloomberg News Service
Monday, February 6, 2006

http://www.bloomberg.com/apps/news?pid=10000101&sid=aEPv6qkw2upg&refer=j...

Gold prices, already at a 25-year high, may rally for a third
straight week as mounting tensions over Iran's nuclear program spur
investor demand for bullion as a haven, a Bloomberg News survey
shows.

Twenty of 29 traders, investors and analysts surveyed from Sydney to
Chicago on Feb. 2 and Feb. 3 advised buying gold, which last week
reached $579.50, the highest since January 1981. The outlook is the
most bullish in two months. Four respondents recommended selling,
and five said gold will be little changed.

Gold jumped 10 percent in January, the biggest monthly gain since
September 1999, as Iran's escalating dispute with the U.S. led
investors to buy commodities as an alternative to stocks and bonds.
The U.S. says Iran, the world's fourth-largest oil producer, is
building a nuclear bomb. Iran says it wants to develop nuclear-power
plants.

"Gold is being driven by considerable worry about what's going to
happen with Iran," said Daniel Vaught, an analyst at A.G. Edwards &
Sons in St. Louis. "The gold market could spike pretty substantially
if the Western powers are forced to take some type of action to
cripple their nuclear program."

Gold futures for April delivery rose 1.4 percent last week to
$571.60 an ounce on the Comex division of the New York Mercantile
Exchange. The increase was anticipated by the majority of analysts
surveyed from Jan. 26 to Jan. 27. Bloomberg's survey has forecast
the direction of prices accurately in 55 of 93 weeks, or 59 percent
of the time.

The 35 percent rally in gold during the past year, driven partly by
concern that high energy costs will stoke inflation, accelerated in
the past month as the U.S. and other nations accused Iran of
secretly developing nuclear weapons.

Iran so far has refused to stop processing nuclear fuel. The United
Nations International Atomic Energy Agency, at the request of the
U.S., Germany, France and the U.K., voted on Feb. 4 to refer the
matter to the Security Council, where Iran may face censure or
sanctions. Iranian President Mahmoud Ahmadinejad yesterday vowed his
country will continue its nuclear program.

"Gold at $600 is going to be taken out blindfolded if they announce
sanctions" against Iran, which would disrupt oil shipments and boost
energy prices, said John Licata, a New York- based independent
analyst who has increased his holdings of gold and gold equities by
5 percent in the past year.

Higher energy costs may spur more investors to own gold as an
inflation hedge. Oil prices have gained 7 percent this year, after
jumping 40 percent last year and reaching a record $70.85 a barrel
on Aug. 30. Oil jumped after Iran said Jan. 9 it would resume
nuclear research.

"Buy gold because of inflation," said Patrick Lyn, an analyst at
Tembec Inc. in Montreal. "Energy prices are still high."

Some investors buy gold in times of inflation to preserve purchasing
power. The precious metal surged to $873 an ounce in 1980, when
consumer prices jumped more than 12 percent. In January 1981, gold
was as high as $612.

Gold also may gain as investors seek better returns than from U.S.
stocks and bonds. Gold outperformed the Standard & Poor's 3 percent
return in 2005 and the 2 percent return from the benchmark U.S. 10-
year Treasury.

Shares of Google Inc., the most-used Internet search engine, fell
7.1 percent on Feb. 2, after fourth-quarter profit missed analysts'
estimates. The Nasdaq Composite Index fell 1.9 percent last week.

"Because earnings have not been so good, money came out of the tech
stocks and they've been buying gold," Licata said.

Fund investments in commodities will soar almost 50 percent to $120
billion this year, Standard Bank in London said in a report Feb. 2.

Prices may rally as demand outpaces supply. Gold production in 2004
had its biggest decline since the 1940s. It was little changed in
the first half of last year at 1,172 metric tons, according to
precious metals researcher GFMS Ltd. South Africa, the world's top
source of gold, produced 15 percent less in the third quarter, the
biggest drop in at least nine years.

Even a small transfer of money into gold from other assets would be
enough to boost prices, analysts said. One percent of the value of
U.S. equities and bond markets is equivalent to $350 billion, or
19,800 tons of gold, Credit Agricole SA analyst Paul Mylchreest said
in a report on Jan. 31.

"This amounts to 13 percent of all gold in existence and eight times
the annual production of mined gold," Mylchreest wrote.

Credit Agricole's report suggested some central banks may not have
as much gold as they have indicated. Many central banks sold or
leased gold to speculators in the 1990s to generate money from the
asset as prices slumped. Gold in New York reached a 20- year low of
$253.20 in 1999.

Central banks have loaned out 10,000 to 15,000 tons of gold
reserves, between a third and half of the reported total, Mylchreest
said. The bank said gold will reach $900 by 2009, up from a previous
forecast of $750.

"This report will cause many participants in the gold market to
reevaluate their intermediate and long-term outlooks," said Paul
Yusem, a Lombard, Illinois, gold investor. He boosted his forecast
for gold to average $640 an ounce in 2006, up from $574, after
reading Credit Agricole's report.