Want a Reason to Like Gold? How About Five?

This is the perfect time to get into gold.  Here are five reasons why:

1.       Hedge books close.  Most major gold producers have closed their hedge books.  This implies they believe spot prices to rise, and for those prices to remain stable, or on an uptrend.

2.       The record deficit in the USA has just been increased by $1.2 trillion dollars.  That’s not the deficit…that’s the INCREASE in the DEFICIT. And with four Euro economies on the verge of bankruptcy, there is little choice for investors to run to anything other than gold.

3.       Four more banks have just closed in the USA. That’s 26 bank closures since January!  Furthermore, the US Federal Deposit Insurance Corporation (FDIC) has warned that the pace of bank failures is likely to pick up in coming months.

4.       China’s stimulus package is working.  And China is hedging against the US dollar.  The higher income of Chinese citizens, along with an exploding middle class will increase demand for gold for industrial and consumer applications.  The lower investment in US dollars will leave investment dollars that must be deployed somewhere.  Since they’ve already invested in their own country and partnered with oil rich nations the US has alienated, and given the recent instability in the Euro, the only place China can place all its dollars is in gold.

5.       US investor opinion is bearish on gold at the moment.  Dr. Steve Sjuggerud, of DailyWealth, recently wrote:

“Back in December, the "sentiment surveys" showed investors were at highs for the year. Now that has changed. Two weeks ago, public opinion hit its lowest level since last April (when gold was at its lows for 2009, below $900. Now THAT was a time to buy). That's what we want to see.

Investors have also fled gold stocks since December. For example, the Rydex Precious Metals Fund saw its assets fall by more than half from December to today (from over $350 million to $177 million now). Traders like to use Rydex funds to chase trends. They were bullish on gold stocks in December. Now they've given up on gold stocks. That's what we want to see.

Meanwhile, gold's "price action" is just great right now. The dollar has soared in recent weeks. But gold is soaring more. Also, investors who didn't want dollars now don't want euros either. They don't want paper currencies at all. They're buying gold. New highs are part of bull markets, and gold is now hitting all-time highs in terms of euros. That's what we want to see.

The bull market in gold is back!

Typically, I'll try to find a crafty way to get into an attractive asset. I try to find a way that has extraordinary upside with little downside risk.”

For all the reasons above, I agree with Dr. Sjuggerud.

It’s definitely time to pick up gold stocks.  But why not have an extra layer of protection? When buying gold stocks, the best stocks to buy are penny stocks.  And the best bet in pennystocks are those that will soon be promoted.

A favorite in the running is Source Gold Corp. (SRGL.OB).  It’s got great assay results, is in the right location and has recently come off in price along with investor sentiment in gold.  But as stated the penny stock jockey website, www.pennystockjockey.com, a site that prides itself on choosing stocks it believes are about to be promoted, SRGL has a long way to grow.

“We had a great run on SRGL.  Especially for those of us who got in early.  It’s still up 29% from our entry point.  And it’s got room to go.  A lot of room.  As you know, a stock can’t just keep going up.  It has to go back and fill in the gaps.  That’s what it’s doing today, and maybe tomorrow.  In the next month, I still believe a double is possible from this level.  The research report, available at the Rimini Investments website, www.RiminiInvestments.com, is estimating a short term Estimated Price Per Share Projection (EPPSP) of $1.64, and a two year EPPSP of $2.73.  I’m bidding the stock again at $0.78.”

The stock is trading today near historic lows and just may represent a great entry price into a great stock in an uptrending industry.  

 Definitely a crafty way to enter the market.

Penny Stock Jockey Math

It’s time to make cents of penny stock math.

The one characteristic of all millionaires, no matter what field, is their ability to know when they’re making money and when they’re not. They ensure they’re not being “penny wise and pound foolish.” Unfortunately, most penny stock investors don’t think that way.

Lets do the math. Sure penny stocks are cheap. But only if you buy right and then sell right. So lets review the rules of penny stock math.

Rule 1: Buy right. By this, I don’t mean you have to buy at the bottom (although that helps!). It means buy the right quantity. And its important to use the right broker.

Rule 2: Sell right. By this, I don’t mean you have to sell at the top (although that helps!). It means sell at the right time, and for the right price.

Let me explain further.

A lot of people make the mistake of buying the wrong number of shares. If the penny stock is really cheap, they buy way too many shares. This is not a problem if the promoter is able and brings in huge volume. However, if he’s not able, no matter how cheap the stock is, without volume, you will not be able to sell your position and make a profit.

By the same token, a lot of people make the mistake of buying too few shares. If the penny stock is priced closer to a dollar or higher, a lot of speculators will buy about 1,000 shares or less. This limits your ability to profit in two ways. If the promoter brings in volume, 1000 shares need to rise in price much higher in order for you to make a decent profit. And the small amount of shares all need to rise in price much higher in order for you to cover your commissions.

And that leads to the second part of buying right. Since most brokers/analysts don’t bother with penny stocks, why use a full service firm? A full service firm is fine for your blue chip retirement funds, but for penny stocks use an online firm that charges a low price per trade and has no minimum dollar or share order. This will ensure more of your profits stay in your account.

The ideal number of shares you should buy is determined by your risk profile. If you’re a beginner, you need to balance carefully. Just as a business has to keep a close eye on cash reserves vs. investments for growth, so do you. I don’t recommend beginners put more than $5,000 into a penny stock that’s priced above $0.50, and not more than $3,000 into a stock priced under. This will give you enough shares that a commission isn’t a problem, enough shares to make a profit, but not too many that you’ll be stuck if volume doesn’t come in.

Just as important as buying right, is selling right. Greed is dangerous, but necessary, and naturally comes into play. After all, if you weren’t a little greedy, you wouldn’t be investing in penny stocks. So the best time to decide your exit price is right when you buy. Pre-determine for yourself the kind of return you’re looking for, and the amount of time you’re prepared to wait. For example, if you said to yourself I’d like 20% in one month. Then stick to it. As soon as you’re up 20%, whether its in an hour or a month, get out. If it hasn’t hit your target in the time you’ve allotted, re-evaluate. Remember, its not the last deal you’ll ever be in and every dollar you have tied up is a dollar you can’t invest elsewhere.

When a stock is rising quickly its tempting to stay in, but remember, they can reverse direction just as fast. Its not something you control. The only thing you control is the amount of return you want and the time you’re prepared to wait.

Do the math and you’ll profit more times than not.

Become a member of the Penny Stock Jockey Winners Circle and start trading penny stocks for profits today.

www.PennyStockJockey.com