Gold Penny Stocks Could Save Your Portfolio
Slowing global economies, 0% rates, low yields; these are just a few things that come to mind when searching for a perfect time to buy gold stocks. While no one has a crystal ball, you can’t ignore the fact that gold stocks are something investors seek out during times of economic uncertainty. We believe that time is now and the current market is already showing early signs of what’s to come, in our opinion.
There could be a mounting domino effect in the works right now. The main cause: COVID-19. “Gold’s ‘outlook remains bullish as the world adjusts to never-ending promises of monetary easing, but the next rally may be more of an escalator ride than elevator one,” said Edward Moya, senior market analyst at Oanda, in an interview. Meanwhile, the physical gold market may also be drying up with supply becoming a huge factor right now.
“There’s no gold. There’s roughly a 10% premium to purchase physical gold for delivery. Usually, it’s like 2%. I can buy a one-ounce American Eagle for $1,800; $1,800!” said Josh Strauss, partner at money manager Pekin Hardy Strauss in Chicago. He’s one of many who are finding low supply, high demand pairs in the physical gold market. Could this mark a perfect time to start buying gold stocks?
Why Gold Penny Stocks Will Outperform The Majors
While the juniors tend to be more volatile than the majors, falling further in routs, they also jump faster in rallies. If the current state of affairs is suggesting the next bull run for gold, juniors are the place to look right now. History has been a great guide at showing how important it is to be in front of the best junior gold stocks before they strike it big. Take Wheaton Precious Metals (WPM) for instance. The gold stock was trading under $3 a share in October of 2008, just as the last gold bull market began.
Over the course of the breakout period, Wheaton managed to run well-beyond $47 a share. During that same time, one of the largest gold stocks, Newmont (NEM) recorded a gain of 237%. While multiple triple-digit gains are amazing, the fact that Wheaton produced quadruple-digit gains shouldn’t be ignored.
Even recently, we’re seeing a similar trend in small-cap gold stocks. Harmony Gold Mining (HMY) for instance, was trading around $0.50 not long ago. Not only did the gold penny stock reach highs of over $4.50 earlier this year to mark an 800% run, it now sits more than 300% higher around $2.20 a share. For investors to lock in profits like this, it all came down to timing and execution.
Right now, we’ve identified that timing could once again present immense opportunities in the gold sector. As far as execution is concerned, we may have just identified the next major gold penny stock alert on a company that has just signed the papers to a multi-million-dollar acquisition for a property in one of the most sought-after regions in North America.