Why is Gold trading so Difficult?
- underexposed...Lv 78 years agoFavorite Answer
money aside...it is difficult trading in gold or gold stocks (mining etc) because there is no real industrial use for the metal....a small amount is used in circuitry (I am old enough that I remember the first calculators in the early 1970's worth over $300.00 and they could add/subtract/multiply/divide PLUS do Square Roots....they were made by HP and had gold circuitry ....beat the heck out of the slide rule...LOL)...But I digress
Since there is little industrial use, it is only jewelery and hedge against world apocalypse that drives people to buying it....it is emotion and you have to gauge that factor. As you can see that combine that with speculation on the world situation and it becomes very difficult to figure out.
Personally as far as stocks go....I have found that gold mines that are producers but very small producers to be the best gold stocks to buy. Why? because they are future targets for takeover buy the larger gold companies like Goldcorp, Barrack, IamGold etc. The larger companies are valued by how much gold they have in reserve so if they did not acquire more gold properties their value would drop by more than normal as their reserves dwindle. BUT it is expensive for them to have prospecting/development divisions out searching for more properties and it takes a long time (5-10 years) to become productive if they do....so it is less expensive to buy-out a small producing mine with decent reserves.
UNFORTUNATELY...in the USA you don't have access to most of those potential junior gold stocks in your major markets (NYSE,NASDQ,AMEX)...they don't list there.
Also I am now a firm believer that pennies in the USA are scams for the most part and most of these stocks I am talking about start at $0.20 and as they become developed rise to $1.00 to $4.00.
These pennies are very profitable when you do find the good and separate them from the bad and the ugly. Actually this applies to junior Mining and Oil & Gas stocks in general. There is a difference in Canadian and American pennies in these sectors...mainly because Canadian exchanges lead the world in listings of these types of stocks.
Scams like GDSM would not get much play in Canada...they are easily recognizable...but in the USA there are a lot of gullible investors that seem to be scammable.(sp?)
I have in previous posts shown how to find such Canadian stocks lurking in the PINK/OTCB market...they are good plays long term but due to low volumes are not daytradeable....you are looking for Canadian mining stocks that list in Canada and USA...most of those pennies are decent...though in order to do your due diligence you would do it on the Canadian listing where financial information is ALWAYS available.
Anyway...I have ranted long enough....it is Emotion that drives the price of gold and associated stocks. the only products that I find attractive are junior gold stocks and it takes a fair bit of work to find the good ones.
- falsi fiableLv 78 years ago
Commodity trading is not for novices.
The spot price quoted in the news is for 100 ounce lots. Most people do not have $170,000 to invest in gold.
- exactdukeLv 78 years ago
Trading gold is not all that difficult. In fact, it works much like most stocks. You type in the ticker symbol - GLD & click on buy. Then when you want to sell, you simply click on the sell button.
Trading gold is relatively easy. MAKING MONEY TRADING is the tough part.
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- JoeyVLv 78 years ago
Maybe falsi fiable needs to actually try trading gold before he comments on it. Trading 100 oz of gold does not require anything like $170,000. Interactive Brokers, for instance, has a margin requirement of $10,125 for 100 oz of gold. Nobody fully funds commodity positions. Nobody....
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