Is Gold Easier To Profit From Than Other Metals
There has been a lot of speculation in the media and around the dinner table, that buying and selling gold almost guarantees you a profit at some time or another. Interestingly, people who have traded gold with a long term view, tend to agree that gold is a much more favorable market to trade than any other financial market out there. So is this really the case, or is it just the equivalent of an urban legend? Let's find out.
In analyzing the ease of making a profit from buying and selling gold, we need to take in to account the historical trend that gold prices have taken, since the market for the commodity was created. To do this, we need to travel back only as far as 1970 - the the gold market as we know it today, began trading. At this time, the price of gold was set at $35 USD per troy ounce. Additionally at this time, the price was highly stable, as other financial instruments were pegged to the gold price - and hence government agencies had the dubious task of trying to counteract any gold price fluctuations.
Gold Price Explosion.
Over the next 10 years, from 1970 to 1980 - anyone who had bought even the slightest amount of gold would have been rewarded generously, as the price per ounce skyrocketed from a mere $35 to a whopping $589.50 (that's not a typo). That represents over a 1000% return on any investment in the commodity.
Given what we now know about financial markets, and their reactions to large rises and falls in price, such as the 1970 - 1980 move, most people would have expected the price of gold to return to a more reasonable level. However - it didn't. In fact, it continued to outperform almost all other metals, commodities, stocks, and bonds over time. Here are a few price levels in key years:
1970 = $37.40 per ounce
1980 = $589.50 per ounce
1990 = $353.40 per ounce
2000 = $272.70 per ounce
2008 = $865.00 per ounce
An Understandable Phenomenon
Perhaps the price movements of gold help to explain why people believe that it's easier to profit from it trade than other investments. Whilst there have been some fairly substantial moves over time - the general direction has been up, meaning that gold still to this very day represents a "safe" investment idea.
