Found another great article about Gold by Ben Kramer Miller.   This is just part of the article.  To read the article in it’s entirety, visit  Wall Street Cheat Sheet

So far gold is one of the better performing assets year to date, with the SPDR Gold Trust (NYSEARCA:GLD) trading 7.5 percent higher. This is after we saw a severe bear market in the yellow metal that took prices down from over $1,900/ounce to less than $1,200/ounce.

Thus it should come as no surprise that the gold price is bouncing — even in a downtrend we find short term price appreciations. But is the downtrend over for gold, or is there another leg down?

Gold has been in a very long bull market for the duration of the 21st century. While many claim that it has ended this simply isn’t the case. Gold remains extraordinarily undervalued if we look at many historical metrics. For instance gold is at the lowest price it has been if we compare the value of the U. S. gold stockpile to the Federal Reserve’s monetary base. This means that hypothetically, if the U. S. were to back the dollar with gold, we would have to see a tremendous appreciation in the gold price in order for such a system to function smoothly.

Of course there is little likelihood that the U.S. will back the dollar with gold. However, we are finding more and more that foreigners are less willing to hold dollars and are increasingly swapping these dollars and dollar-denominated assets for gold.

Those that are buying large amounts of gold, however, are extremely patient, and they are more than willing to wait months, or even years, for the price to come to them. This could mean that the downtrend in the gold price has further to go. But then again we saw extremely strong buying from the Chinese at the $1,200/ounce level. Furthermore, the $1,270/ounce level acted as strong resistance prior to its breach a couple months ago. Now we are seeing buyers come in whenever we see downward price action towards that level. Those who are technical analysts know that a price level that was once resistance, once breached, becomes support.

While we could see a breach of the $1,270/ounce level, it will have to come in the face of tremendous buying from central banks and Asian and Middle Eastern investors with very deep pockets. Foreigners, especially in the east, want gold. We have seen tremendous central bank buying from Turkey to Russia to Kazakhstan over the past few years, and this buying goes unabated. While there is no official report of the People’s Bank of China buying, many gold market analysts believe that the PBoC has been the world’s largest buyer, and that its officials are afraid to announce the bank’s official holdings because of the effect it will have on the gold price.

We find that there are other forces supporting higher gold prices as well. Mining companies are having a very difficult time producing gold profitably at $1,300/ounce. While most large gold producers are announcing that they can produce the yellow metal at $1,000 – $1,100/ounce, when all is said and done most of these companies have razor thin margins with the gold price where it is. Many companies were forced to reduce their gold reserve estimates, meaning that they now have less in-ground gold that they can mine profitably. Kinross Gold (NYSE:KGC) has ceased production at one mine, and Barrick Gold (NYSE:ABX) put off construction of another. Most mining companies that paid a dividend last year cut it substantially or eliminated it altogether.

If the gold price remains low, I suspect more drastic action will be taken. More mines will be shut down, and this will reduce global supply.

With supply declining and demand rising, the price must rise, and now that we are consolidating the gains from the beginning part of the year I suspect that some of the larger buyers that I mentioned above will begin to push prices higher.

Gold is generally considered a good asset to have in a diversified portfolio.

Anyone who reads this, follows me on the social sites will know I am very involved in the gold bullion “savings” model program Karatbars. Why?

Because I strongly feel everyone should be saving some of every dollar they earn in gold bullion.

When gold prices drop dramatically like they have recently, ETFs (Exchage Traded Funds) are the first to sell much of their gold related holdings. ETF’s are a big reason for the volatility you see in gold prices and with many reducing their holdings, the next rise will likely be steadier, but there will be a rise.

Most who own gold bullion, certainly those who bought it for the long term, will not be fooled by these fluctuations and continue to hold what they own and actually buy more. NOW is the time to position yourself in gold bullion, which is exactly what Karatbars is all about.  But for those who understand the value in having a savings account, there is also a great additional income to be had by helping others do the same.

Take a look at  are some numbers to chew on if you are interested in being part of our 12 Week Plan.  Watch the 12 week plan video here…12 Week Compensation Plan

This works if gold is $100 an oz or $2,000 an oz. The price of gold is not a critical part of the plan.

A great income will happen  regardless of the package someone starts with…IF IT DUPLICATES!!!.

The key is to get EVERYONE to save $65 a week (1 gram).