This Is Bullish for These Penny Stocks
The OECD (Organisation for Economic Co-Operation and Development) has joined a growing chorus of organizations downgrading its global economic outlook and warning governments need to use fiscal tools in conjunction with monetary policies to kick-start growth. But where should investors look for growth in the meantime? Penny stocks.
OECD – You have to spend money to make money
The OECD, like virtually every other organization, has taken a good look at the global economy and decided it’s not good. The Paris think-tank downgraded its outlook for the global economy, saying economic growth will be flat this year at three percent. (Source: “Elusive global growth outlook requires urgent policy response,” OECD, February 18, 2016.)
On the surface, that may not sound too bad. At least the global economy isn’t getting worse. Keep in mind that 2015 marked the slowest period of growth in five years. That’s pretty bad, especially when you consider we’re now seven years removed from the 2009 recession.
The organization noted that the current recovery (for those even aware we’re in a recovery) is taking longer than expected, with many countries still far below their long-run growth averages.
Their solution? The OECD went out on a limb, suggesting governments should be doing more than simply relying on artificial interest rates to stoke their economies—because that’s clearly not working.
In addition to record-low or even negative interest rates, the OECD suggests governments should do what it suggests banks and businesses should do. That is, borrow in the low-interest-rate environment to boost spending on infrastructure. The borrowing would, it explains, have a positive impact on growth that, in the long-run, would reduce rather than increase their debt.
That really isn’t in the cards for most economies right now. Neither the U.S. nor many of those in the eurozone are talking about spending their way out of the global slump. In fact, countries with huge budget deficits like Japan, the world’s third-largest economy, are cutting back on spending entirely.
Canada is one of the few counties initiating a spending program. But then Canada’s current government hasn’t seen a tax dollar it isn’t keen to spend. Just how big the country’s deficit is expected to grow remains to be seen.
3 Gold and Silver Penny Stocks Doing Well in This Bear Market
What is an investor to do? After a historic three-day rally saw the S&P 500 rise 2.5% last week, investors need to pay attention to the knee-jerk reactions of Wall Street. For all intents and purposes, the S&P 500 is still in bear market territory. Any glimmer of hope will send stocks higher.
But nothing has changed fundamentally. The economy is still bad. A freeze on oil output (which is still at record levels) isn’t going to do anything to help average Americans pay off their debts, find better jobs, and spend more money.
If anything, the short rally was a result of investors running in to snap up stocks recently kicked to the curb. It had nothing to do with solid economic data coming out of the U.S, China, Japan, or Germany.
The S&P 500 is still down more than eight percent since the beginning of the year, the Dow Jones Industrial Average is off 5.6%, and the Russell 2000 Small Cap Index has lost 11.5% of its value.
Hope springs eternal.
In this chaotic market, it’s tough to invest using a rational strategy. With that said, there are a number of great stocks out there holding up against this ugly market—and stocks doing well because of the ugly market.
Three great gold and silver penny stocks doing well right now are Coeur Mining Inc (NYSE:CDE), Pan American Silver Corp. (USA) (NASDAQ:PAAS), and Nevsun Resources (NYSEMKT:NSU, TSE:NSU).
With interest rates expected to be low for the unforeseeable future and the global economy to be weak until at least 2018, it continues to be a great time to consider well-heeled gold and silver mining companies that are increasing production, decreasing costs, and expanding operations.