Think of the gold price as ‘big daddy’ and the penny mining stocks as the little children of ‘big daddy’. If the big daddy breaks out to a new all time high and powers higher creating a speculative frenzy, then the little children of big daddy a lot of the time get really excited as well.
My point is that the gold price can sometimes be important to adding speculative fuel to the mining penny stock sector. The same could probably also be said of the uranium price. If the uranium price were to blast higher to new all time highs it could light a tremendous fire under certain uranium penny mining stocks.
I remember many years ago there were two penny mining stocks that shot dramatically higher during the gold price super spike into 2006. They were Franklin Mining and Roanoke Mines. Franklin mining shot higher from .0009 to .15 and Roanoke Mines shot higher from .0001 to .15 cents all within a few months. The amazing fact about the Roanoke Mines move was that this stock was not even a functioning penny mining stock company and was just trading on the pink sheets lingering around with no real operations. That my friends is what a speculative frenzy in the gold price can do.
Having said that, I do not mean to say that any penny mining stock cannot get a good run going if the gold price just stays flat, goes sideways or even moves down. Sometimes specific mining company events take precedent over everything else.
I just did a new post on the SPDR Gold Trust (ETF) which is a proxy for the actual gold price. We are in a very interesting juncture now with the gold price as we approach the seasonally strong month of September. Sometimes the gold price has shot up 5 to 10% during the month of September and right now the stance of the gold price is such that I can see it happening again. This is a development that we are watching closely and will continue to track.
If it does then it would equate to a massive topside breakout and likely get the major mining stock indices breaking out to new all time highs as well.
So the bottom line is that a massive topside breakout in the gold price would certainly be some nice ‘wind in the sails’ for all penny mining stocks as we approach the very seasonally strong month of September for the gold price and the gold mining stocks.
In the future here at our penny stock site I am going to assemble a full list of micro cap mining stocks so that we have a good list to examine for possible opportunities ahead. Be sure to look out for it or subscribe to our daily end of day email updates.