Penny stocks are a center of opportunity – one of the biggest margin producers for stock investors across the world. With low buying prices and massive potential for overnight value gains, they’re a cornerstone of many high-yield investments. Many low-volume fortunes have been produced from penny stocks, with thousands of other high-yield low-volume investments also appearing over time.
However, with high yield comes high risk, and penny stocks are amongst the most risky shares out there. Many low-turnover businesses are publicly traded, with small changes in the market often a cause for big changes to their business model. While penny stocks are inexpensive to purchase, it’s far from uncommon to hear of a ‘cheap’ investment in penny stocks that went bottoms-up quickly.
It’s also far from uncommon to hear of stock scams affecting penny stocks, even those in relatively secure industries such as gold and other precious metals. The infamous ‘pump and dump’ scan was built around penny stocks, and despite SEC regulation and the constant eye of public agencies, it’s still a concern today. Penny stocks, for all their fast value, can often become a potential liability.
However, with the right strategy, penny stocks, particularly penny stocks in gold and silver, along with other precious metals, can become a lucrative investment. The global demand for jewelry and other high-value items produced using precious metals, is growing daily, fueled by the new wealth of nations such as China and India. In many ways, penny gold stocks are the ultimate investment.
Today, we’ll look at the investment opportunity in penny gold stocks, the best penny gold stocks to invest in, and strategies for finding and assessing ‘winners’ before investing your own money. As in any investment situation, none of the advice offered is absolutely risk-free, and no investment will ever offer no-risk returns. However, with the right strategy, gold penny stocks can work for you.
Let’s begin with the definition of penny gold stocks. While the term ‘penny stocks’ certainly implies stocks that fall below the single-cent price point, the term actually applies to almost all stock in the gold and precious metals industry that’s priced below a single dollar. This stock, while priced at an all-round low level, has massive potential for overnight gains in value and sudden trading increases.
Penny gold stocks are typically traded in gold mining and production companies, particularly small outfits that lack the large expenses of a major operation. As demand for gold increases, with nations such as India leading global demand for gold jewelry, the value of small companies that capitalize on these growing markets is going to increase dramatically – along with their stock’s sales price.
These penny gold stocks are also relatively unhedged, with the companies holding them lacking the low-risk, low-return hedging that their larger competitors take part in. While this increases the risks associated with these stocks in a period where the global market for gold takes a hit, it also adds to the potential gains found by investing in these stocks during a period where the market is strong.
Buying penny gold stocks is like buying any other form of penny stock – it’s all about having the right information on your side. Research gold mining companies that are invested in foreign high-growth markets, as these are the ones most likely to grow into cash producers. Markets in Asia are particularly hot for jewelry right now, with developing economies like India leading the way.
Alongside this growing demand is a growing price for gold, with many producers purchasing gold at over $1,400 per ounce dependent on its quality. This, combined with growing demand in most of the world’s high-growth economies, could soon create a hockey stick-style growth chart not unlike those seen at some of the world’s fastest-growing online and technology-based companies.
Investments in foreign penny gold stocks are also backed by currencies that are, in many cases, in a stronger position than the domestic dollar. With a number of impending financial bills due to move the dollar into an uncertain position, it seems likely that domestic stocks may face a relatively swift and uncertain future. However, this could spell an increase in international demand for gold items.
As tempting as it can be to think that the secret to finding these ‘killer’ gold penny stocks to invest in is a magical system or ‘magic bullet,’ the truth is that it’s mostly about hard work and information. A skilled investor with information on their investment opportunities is likely to capitalize on gold or silver penny stocks. Get researching, as that’s where the key, ultra-valuable information will be.
Remember, nobody can tell you which stocks are going to go up and which are going to go down – or at least no one without an information advantage. Stocks are a guessing game, to a point, but one game where information is certainly of assistance. Market trends can indicate the intervals at which gold or silver will increase, and when you have that knowledge, you have a major advantage.
There’s a saying that ‘smart money follows gold,’ and it’s certainly a truthful one in this economy. A smart investor would put their money on high-growth penny gold stocks, and with the right strategy that smart investor could very well be you. Gain an information advantage, work to find the stocks that will benefit in the new economy, and spend it all on the best penny gold stocks to invest in.
