Re: trading/investing in commodities - why do/have people prefer equit
I won't discuss commodities vs. general equities. But if you want to invest in copper/gold or whatever, you have much more leverage with equities. For example, let suppose a gold mining companies that produces gold with a cost of 300$/oz. If gold jumps from 600$ to 1200$ (a 100%) gain, your company will profit 900$/oz instead of 300$/oz. So basically the share price of the company shoud increase by 200% on a 100% raise of the spot price. If you use the same example but you suppose tha the company produces gold at 500$/oz, then you get tremendous leverage as they would profit 700$/ instead of 100$, a 600% gain.
I follow commodities very actively but I trade the resource sector equities... More risk, more volatility and more upside.
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