Dec 16, 2012

Posted by in Commodities | 0 Comments

Gold Penny Stocks

Gold Penny Stocks

Understanding Precious Metals and Gold Penny Stocks

Gold prices and gold penny stocks have continued to reach record highs over the last several years. One of the fundamental reasons why this precious metal has seen such historic rise is the continued weak U.S. dollar. Many commodities experts say that the bull market for any type of precious metal should continue in the long-term. The reasoning behind this forecast is the dollar has not shown an ability to recover and continues to lag behind many foreign currencies, most notably the Euro. This opens the door for many gold penny stocks and precious metals for aggressive traders looking to capitalize on high-yields.

It is important to understand that penny stocks are by far and away the riskiest investments available. No company can ever show true liquidity and is subject to volatile swings to the down side. The volume of trades throughout the course of the day is extremely low and one big block purchase could have a tremendous impact on a trader’s long position. This is important to keep in mind if one is looking to place a significant amount of their portfolio into penny transactions.

Best Gold Penny Stocks

Gold Penny Stocks

If one is looking for the best penny stocks to watch, you may want to consider mining stocks that trade on the Over the Counter bulletin board or the Pink Sheets. Generally, these companies are not actually trading for pennies, but they usually cost two to three dollars a share. This can be extremely important for a long position where heavy price movements are kept at bay due to a stronger per share price.

The best gold penny stocks to look for on an individual basis would be those that are in the pre-exploration stage in foreign countries. Countries outside the United States are considered an untapped resource and the company that finds the precious metal will have exclusive rights to the find. This is of course aside from any deal that has been brokered with the foreign country.

Precious metals and commodities are continuously reaching 52-week highs, which makes gold penny stocks quite attractive. The old trading philosophy of buy high and sell higher holds very true with the precious metal markets today. Remember that no investment is a sure thing and there is risk involved with every trade. Understand that penny stocks are the riskiest transaction one can make, so make sure you are educated about the company. At present, commodities are producing some of the highest yields in any market, so now may be a good time to take advantage of gold penny stocks in this incredible bull-market.

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