Even though investing in penny stocks is usually reserved for people with high-risk tolerance, you may decrease this risk by considering gold penny stocks. Commodity markets may provide more excellent stability than other industries, and penny gold stocks are abundant.
Investors hoping to profit on inexpensive gold exposure will find the most significant gold penny stocks an exciting investment opportunity, regardless of whether they are trying to build a stake in commodities or invest in a boom-or-bust lottery. The following list of gold penny stocks includes mining firms and commodity dealers.
Table of Contents
An Overview of Gold Stocks
Gold has long been the most popular investment vehicle among precious metals. Some researchers feel that this is due to the malleability of gold. Others believe that gold’s worth is sentimental mainly because it was employed as the value standard for United States money until 1971. That year, the Nixon Shock economic policy actions halted the direct conversion of paper currency to gold and established the fiat currency in use today.
Before the widespread availability of gold stocks, gold was exchanged in the form of pure metal and certificates. Executive Order 6102, issued in 1933, barred American citizens from holding or selling gold bullion. The United States Gold Reserve Act of 1934 obliged all Americans to surrender their gold and gold certificates to the United States Treasury. Both efforts were used to combat the Great Depression’s deflationary monetary cycle.
Contrary to popular belief, it is not prohibited to own gold in physical form. Public Law 93-373, enacted in the 1970s, loosened the regulations of the 1930s. Gold bullion ownership is now conceivable but challenging for the typical American citizen.
Stocks, exchange-traded funds (ETFs), certificates, options, closed-end funds (CEFs), exchange-traded notes (ETNs), futures, and contracts for differences are easier ways to invest in gold today (CFDs). All of these financial instruments are known as gold derivatives.
After the 1930s, it became less customary to possess pure gold. Gold stocks and options emerged as a handy tool for investors to capitalize on gold fluctuations and engage in gold mining businesses. Gold Bullion Securities, the first gold ETF, debuted on the Australian stock market in March 2003 with the GOLD ticker.
How Do Gold Penny Stocks Work?
While the gold trade is a market in itself, the precious metal is surrounded by a broader sector. This covers various gold-related mining, production, sale, research, and marketing firms.
Since gold is such an expensive commodity in terms of both manufacture and acquisition, most of these enterprises have millions of dollars in backing. Many are also subsidiaries of multinational companies that operate in numerous industries. Many will choose to become publicly traded companies to finance their demands. If successful, the value of their shares might skyrocket.
However, comparatively smaller enterprises and start-ups are even within the gold-production business. Similar to their bigger counterparts, most of these businesses are publicly traded. However, in contrast to larger firms, their shares are frequently more inexpensive. As a result, many qualify as gold penny stocks with a share price of less than $5.
Why Should You Invest in Penny Stocks in Gold?
An army of analysts does not analyze gold penny stocks. However, without institutional research, gold penny stocks can see significant price fluctuations, mainly when the firm produces a favorable press release. In the absence of experts, investors depend more heavily on press releases and blog posts to establish conclusions about the company’s fundamentals.
Since these companies are inexpensive and have a modest market capitalization, it is much simpler for investors to tolerate substantial price fluctuations. If a gold penny stock increases from $0.01 per share to $0.03, the return is 200 percent. If a gold stock rises from $10 per share to $16, it represents a 60 percent increase. Psychologically, the $6 increase in the value of the gold stock appears more significant than the $0.02 increase in the value of the gold penny stock.
In percentage terms, however, it is not. Gold penny stocks expose investors to the gold market and a low barrier to participation. Because many are inexpensive, smaller investors may leverage their funds and possibly profit from these enormous movements.
How to Select a Reliable Gold Penny Stock
Not always does mean equal value.
Low-priced equities have the potential to increase if a good trigger is introduced. However, purchasing a stock due to its low price is not a wise idea.
Before selecting to invest in a gold penny stock, there are various significant things to examine, including return on equity, management, balance sheet, project prospects, and many more.
Don’t Follow Without Question.
Wall Street does not cover most of the market’s gold penny stocks. Therefore, you must conduct your due diligence on equities before investing in them.
The absence of institutional research has allowed bloggers and newsletters to influence this arena. However, ensure that what you’re reading is objective and not written by someone “promoting their stance.”
Ask yourself the same question while searching for information on social media: is the poster serious, or are they just attempting to boost their position?
Diversify
The majority of gold penny stocks fail, and they cannot generate income and ultimately sink into debt. Diversify your portfolio and avoid placing a significant amount of your holdings in a single position.
Transparency
The most significant gold penny stocks are transparent and provide investors with the information to make educated selections.
10 Best Gold Penny Stocks
1. Harmony Gold Mining Co (NYSE: HMY)
South Africa’s largest gold mining enterprise is Harmony Gold Mining. The corporation has a total of thirteen mines. There are nine underground mines and one open-air mine, and the remainder is surface activities. Harmony has a presence in both South Africa and Papua New Guinea. However, this is restricted to a single procedure.
Harmony is now trading for less than $5 a share, yet it barely meets a gold penny stock criteria. However, this price may not last long as the store has been on an uptrend over the previous six months, and Harmony has already surpassed the $5 threshold many times. Now could be the perfect time to invest at a bargain in this gold mining enterprise.
2. Dundee Precious Metals Inc.
Dundee Precious Metals is a multinational mining business headquartered in Canada that acquires, explores, develops, mines, and processes precious metal resources.
Chelopech owns and runs a gold, copper, and silver mine in Bulgaria; Krumovgrad is developing a gold property in Bulgaria. Tsumeb owns and operates the company’s Namibian concentrate processing plant.
Dundee Precious Metals also has over-the-counter (OTC) shares that trade under the symbol DPMLF in the United States. In February, the company’s board of directors declared a quarterly dividend of $0.04 per share of common stock, due on April 18. The distribution represents a 33 percent increase in the quarterly dividend of the corporation.
3. Hycroft Mining (HYMC)
AMC Entertainment (NYSE: AMC) recently took a move that Wedbush Securities analyst Michael Pachter deemed “idiotic” and “embarrassingly stupid”: the business purchased a considerable amount of Hycroft Mining stock (NASDAQ: HYMC).
According to this organization, purchasing gold penny stocks is not always foolish. A phone conversation with The Verge indicates that “it is wrong for a movie theater corporation to walk so far out of their main business and into a wholly unrelated sector that will not generate people to their cinemas.”
Nevertheless, HYMC stock has benefited from the decision, regardless of how you feel about it. With a year-to-date increase of 235 percent, it is one of the best gold penny stocks. However, given the primary rationale for the shift to precious metals (fear trade), HYMC should be considered by speculative funds.
4. Platinum Group Metals (AMEX: PLG)
Platinum Group Metals Ltd manages the Waterberg Project, an underground PGM deposit in South Africa. Platinum Group found Waterberg, which is being developed in collaboration with Implants. The Japan Oil, Gas, and Metals National Corporation (JOGMEC) and Hanwa Co. Ltd. Waterberg have the potential to produce palladium, platinum, rhodium, and gold at a low cost and on a large scale. It works geographically in Canada and South Africa.
5. Calibre Mining Corp (TSE: CXB)
Calibre is another multinational gold producer that operates in multiple countries. The company’s headquarters are in Canada, and it works in both North and South America. There are mines in Nicaragua and the state of Nevada in the United States.
The latter came as part of a deal Calibre made to acquire Fiore Gold through stock and cash. This increased Calibre’s business portfolio diversification and gave it a presence in the United States. Following the announcement of the finalized agreement on January 12, 2022, share prices increased by 16%.
6. Gold Resource (AMEX: GORO)
GORO is a prominent American gold mining firm with activities in the United States and Mexico. Gold Resource’s primary location is the Don David Gold Mine mine near Oaxaca, Mexico, specializing in gold and silver production. However, the corporation is actively focusing on extending its Back Forty Project in Michigan.
While GORO’s stock is nowhere near its historical all-time high of approximately $30 per share, it does not indicate that the firm has no promise. Numerous analysts and industry professionals feel the stock is now cheap and will soon see a price increase.
In addition to its anticipated price appreciation, GORO stock also provides dividends to its owners. This is a valuable extra benefit that few gold penny stocks give. So far, the corporation has disbursed more than $113 million to its shareholders with no difficulty. However, the dividend yield is only 1.41 percent, which is not impressive by industry standards. Remember that this is not the only reason to buy in GORO, which is its growth potential.
7. B2Gold (BTG)
Even though B2Gold has a speculative character, the mining company has been on the rise, earning over 16% YTD. As a global gold producer capitalizing on its low-cost profile, BTG has long been appealing as a bet on the fear trade. Under the conditions, however, its exposure to more stable nations fetches a premium.
Russia dominates news both domestically and internationally. It is easy to perceive the optimistic thesis of geopolitical stability as a banal element due to its frequent exposure. Boeing has proved that minimizing exposure to combative regimes may provide longer-term tailwinds. While Boeing reduced its reliance on Russian construction materials, its competitors did not follow suit. Now, Boeing’s competitors are behind the eight-ball.
Similarly, B2Gold is well-positioned because, unlike gold penny stocks related to dubious ventures, it does not need to glance over its shoulder continuously. This dynamic does not guarantee future gains, but any edge matters when it comes to speculative trading.
8. Paramount Gold Nevada (NYSEMKT: ZPG)
Paramount is a somewhat riskier alternative in terms of investing in gold penny stocks. Although its price is substantially less than the rest, at less than $1, it comes with a great deal more uncertainty. The firm currently has two major initiatives. The first is the Nevada Sleeper mine. Since 2019, Paramount has held this and is utilized to locate and extract any residual gold reserves.
Meanwhile, the company’s second important project is located in the Oregon region of Grassy Mountain. Here, Paramount is the only operator and owner of several mining claims. Even though these are currently only claims, Paramount possesses the necessary rights and is anticipated to commence operations shortly. It would be the first mining operation in Oregon since the 1990s, which is a significant fact.
Therefore, Paramount has ample development potential for both the immediate and far future. It is worthwhile to investigate this high-risk, high-reward gold penny stock.
9. Avino Silver & Gold Mines Ltd (NYSEMKT: ASM)
Avino is a Canadian mining business that extracts gold, silver, and copper. The company’s headquarters are in Toronto, and it has operations across North and South America. Mexico is home to two of these gold mines. First is the San Gonzalo mine, which ceased active mining in the fourth quarter of 2019, and Avino solely continues exploratory activities at the location.
The Avino mine produces gold and copper and is located next to the San Gonzales mine. This mine accounted for 1,125 ounces of Avino’s gold production in the third quarter of 2021.
ASM has continued operations during the COVID-19 outbreak and has even achieved production and revenue growth. According to the company’s balance sheets, liabilities have also been reduced, enhancing Avino’s position. This is no small feat, especially considering the pandemic’s profound impact on the mining industry.
10. Nornickel (NILSY)
Russia’s Nornickel is the most contentious name on this list of gold penny stocks, and not everyone should invest in it. Indeed, you likely need to be an agnostic speculator, concerned with profit and not ESG (environmental, social, and governance) issues.
If Nornickel can be separated from the underlying politics, NILSY appears to be an intriguing gamble. A few days before the violence, the price of NILSY was in the upper $20 level. NILSY plummeted to a shockingly low value of $3 just as the Russian stock market collapsed due to severe sanctions. Specifically, two cents more than $3.
Even though Russia has essentially reopened its trade market, the future of Nornickel and other prominent Russian equities is uncertain. But if you can get NILSY for prices in the single digits, you must assume that it will increase in value over time.
Final Thoughts
Investing in gold might be pretty challenging at times. Despite its apparent simplicity, the gold mining and production sector is complicated. Even more so due to the low interest and awareness of the general population about the topic. Consequently, you should constantly conduct thorough research and ensure that you fully comprehend the company’s situation and future viability.
Nonetheless, investing in the gold sector may be pretty rewarding and significantly augment one’s wealth if done correctly. It is also an excellent method for diversifying commodities investments while keeping relatively close to the same market.
