This year shows high promise for the gold stock traders, although recently it presented a pronounced drop in the market. Even so, there are still high rewards and gold is a solid investment opportunity for those who do the proper research and focus on How to Find Gold Stocks and gold prices that can Go up 1000%.
If you are a sound researcher and an avid trader with tolerance for high risk and high reward, then the gold stock market is just the ideal place for you to be. Since penny stocks, in general, are not for the faint of heart and are indeed a volatile market, here are some recommendations, quick notes, pros and cons of gold penny stocks on the penny stock market that will help you decide if the precious metals industry is the right investment strategy for you.
Before we go into detail, and for the sake of covering the basic ground and not overlooking any essentials, let’s remember that penny stocks are usually how we refer to any share purchase or sale that is below $5 on the penny stock market.
It’s also important to remember that most penny stocks trade outside the major market exchanges and that the usual penny stock is a small company with highly speculative and illiquid shares; thus, the high risk to the investors is involved. With that said, let us jump right into the heart of gold penny stocks and trading penny stocks.
The Positive and the Negative
One of the main benefits of gold penny stocks is that it allows traders to get into the gold stock market and other precious metals at the considerable low rate of less than $5 per stock and the potential to reap high profits.
Another valuable thing to remember is that gold has historic precedent strengths that do not change easily like its traditional store of value, liquidity, and refuge in difficult economic times. What’s more, gold has always had a strong industrial demand; it is used for jewelry and is often used to create technological components. Therefore, we can establish that investment in gold stocks can be stable enough, but you must remain patient. Commodities, like any other funds or stocks, are a long-term investment.
On the other hand, investing in gold penny stocks comes with high risk as we said before and the decline of gold prices in the last few years have taken a huge toll on gold stocks. Additionally, speculation on the price of gold makes it even two-times riskier for investors when speculating on the price of gold penny stocks.
With this in mind, it is advised to maintain your investments within the penny stocks that are listed on AMEX (American Stock Exchange) or NASDAQ since they are thoroughly regulated. Moreover, by this point, it is only a friendly reminder to say that any investor interested in penny stocks should take on the necessary precautions, such as a stop-loss order predetermined before entering the trade.
Now it’s a matter choosing the right company to invest in and there are some characteristics that can help you get the most out of your investment if you follow the Top 5 Gold Penny Stocks to Watch in 2017.
In order to invest your money with the least worry of risk and loss, it is recommended that the companies you invest in meet these requirements:
- The penny gold company should have an experienced management team supervising projects and ongoing mining operations.
- The company financials should be strong enough to attract investment capital for business growth.
Even though penny gold stock shares (as any other penny stock share) sell at less than $5, mining stocks can turn around quickly and share prices can skyrocket if the miners hit a vein or if the company becomes an acquisition target of a larger mining operation.
Be sure to verify the company operations, make sure that the company actually owns or has access to land with verified gold reserves. You can do this by checking the U.S. Bureau of Land Management if the land is public.
When doing your research, it is safer if you investigate the company’s regulatory compliance by looking at the company’s filing history with regulatory agencies. The companies you are interested in and find attractive for investment should at least meet the minimal filing requirements of the OTCBB (Over the Counter Bulletin Board).
Last, but not least, be sure to check that the company’s management staff is educated enough and competent to improve the company status from OTCBB to a major stock exchange. Additionally, check if the company has in-field engineers and geologists that have the “know-how” to successfully locate and extract the gold from the mines.
When a company meets the requirements listed above it is only a matter of taking the step of investing, feeling confident that your research will yield productive results.
If you take the necessary precautions and do the proper research any penny stock exchange demands, you are likely to make excellent choices when investing your capital in gold penny stocks.
Taking into account all of the above it if safe to say the following:
- It is unsafe to go into the stock market with the intention of investing without any knowledge of how it works, and how dangerous it can be for those not sufficiently prepared or with enough research done.
- If the investor is well prepared and has a high tolerance for high risk and high rewards, such investor could be gaining substantial profits in a matter of months.
- The stock market is less a game of luck and more a game of statistics and the study of patterns and again, it demands a high tolerance for risk and turnarounds.
- Any penny stock will be highly risky and is likely to take a turnaround that can wipe accounts clean of fill their reserves overnight. So, take all the advice given into consideration.
The market is volatile and it is difficult to keep track of all the stocks moving up and down. However, if you focus your efforts in gold penny stocks, by doing thorough research and by taking the necessary precautions, such as the stop-loss order and investing in the stocks that are listed on AMEX, you should be reaping stable rewards in no time.
Sources of information: