Is it easier to make money in gold than stocks?

Discussion in 'Metal Futures' started by turkeyneck, Apr 8, 2008.

  1. You have less things to worry about such as earnings, accounting issues and institutional manipulations with BS upgrades and downgrades. The playing field is more level with just supply and demand. Plus gold will never go to 0. Any thoughts?
  2. Each has its benefits and shortcomings.
  3. bettles


    Only within the past year has gold exceeded its 1980 high. At the time in 1980 when gold was roughly the same price as it is today, the Dow Jones Industrial average was under 1000. So over the past 28 years, you have a 1100% return on the Dow, vs. a few percent return on gold.

    Yes, gold is probably easier to trade. But its direction has no permanent bias, whereas stocks have an upward bias of 5 to 8 percent a year depending what indexes/stocks you are looking at. With stocks, a dumb person can throw darts at the newspaper listings, buy the ones hit (as long as several or more so diversified), hold for 20 years, and sell for several hundred percent or more profit. That same person can buy gold, and it may go up (it has doubled in the past several years), or may go down.

    Besides being easier to research and trade than stocks, other advantages to gold include that it is a hedge (tends to move opposite to the stock market), and can move faster in the short term than stock indexes usually do.
  4. sumosam


    You can also make alot more, IMHO, by trading options on gold futures. I understand, however, that the success rate is abit higher for trades on stocks vs. futures.
  5. What's the success rate like?
  6. bettles


    Success rate for individual investors trading options or futures? Less than 10%. The problem is that futures and options trading is highly leveraged. Take gold futures. These provide about 10 to 1 leverage. So lets say when gold hit $1000 someone thought that it was going much higher and bought gold futures. With 10 to 1 leverage, the decline in gold prices in March would have wiped them out. So now, even if gold goes to $2000, they are out of the game and will not profit. On the other hand, someone who bought a gold ETF is now down around 10% and is still in the game. If gold goes to $2000 in a few years, they will make a 100% profit.
  7. You must be joking.
  8. Well, Gold has a large market. It is universal & all (East or West or North or South) like it. So, maybe you shall gain money. Gold helped many in times of crisis. That is why in poor countries, Gold (even Silver) is precious. It is easy & fast to sell.
  9. there is no answer to this question

    which is better ? you are trying to compare a banana to a rock
  10. piezoe


    Buying gold is a defense against inflation. One can make money short term by trading it, assuming you know what you are doing, but long term very little money in constant dollars can be made buying and holding gold. (At least that's the way it's been in the past)

    To make money over the long haul you need an a return above inflation. It's difficult to achieve that with gold other than on a short term speculative basis.
    #10     Apr 28, 2008