A Penny Stocks Value

Not so long ago, hedge funds and traders made massive gains by going long commodity stocks and shorting the U.S. dollar. The trade became very crowded and finally reversed. However, at the tail end of that trade commodity stocks like Newmont Mining (NYSE:NEM) and Potash (NYSE:POT) trading near or at highs. Right now, the dollar is very weak and most commodity stocks are in the middle of a trading range.

This condition of the dollar could provide trading opportunities. Not only in the large cap commodity based stocks, but with OTCBB mining penny stocks as well. Most gold bugs have the mentality that gold is the currency of last resort and site limited demand issues in their analysis. Their mentality often causes them never to take profits and lose hard earned gains.

By no means are we saying to buy and hold gold penny stocks for 5 or 10 years. Mainly because commodities often trade in cycles and in this environment, a bird in hand is often better than two in the bush. We are simply suggesting that a rally in large cap gold stocks could trickle down, even to stocks on the Pink Sheets. For instance, if we see a major rally in the mid and large cap mining stocks, common sense says that investors may take a look at a micro-cap name trading under $1 too.

For now, monitor the news flow on the weak dollar and watch how other gold stocks and gold ETF (GLD:NYSE) reacts to the news. Then form a penny stock list that contains your favorite mining plays. Then if your ready, act quickly. This trend may not last long, so take your profits. Recently, we highlighted Gold American Mining Corp. (OTCBB:SILA) and you may see more mining ideas from us shortly.