A cheap UK stock to buy before the ISA deadline!

The deadline is approaching for investors to use their ISA allowance for this tax year. So I’m on the hunt for the best UK stocks to buy for my Stocks and Shares ISA. Here’s an attractive and super-cheap British stock I’m thinking of buying right now.

Going for gold

Gold prices have come off the boil in recent weeks as risk appetite across financial markets has improved and yields on US Treasuries have risen. But I don’t think the yellow metal’s race to new record peaks above $2,000 per ounce is run. I suspect that UK mining shares like Petropavlovsk (LSE: POG) could rise again and rise strongly.

Precious metals like gold are bought by investors as a hedge against inflation. When the value of paper currencies comes under attack from low interest rates and huge monetary stimulus, demand for hard currencies like bullion increases as a result. Gold’s fall to nine-month lows below $1,700 per ounce in recent sessions shows that this idea is yet to play out. But fears over inflation are growing, and I think this could propel gold prices upwards again.

Many City analysts believe that another gold price spurt is on the horizon. It’s why they think earnings at metal digger Petropavlovsk will soar more than 250% in 2021.

Room for more rate cuts?

Fears over a long period of low central bank rates, and their impact on the global economy, are rife today. But a report by the International Monetary Fund suggests that even those banks that have introduced negative rates during the past decade might be able to reduce them even further without derailing the financial system.

The IMF says that “the evidence so far indicates negative interest rate policies have succeeded in easing financial conditions without raising significant financial stability concerns.” There’s no guarantee that central banks will act on its findings, of course. But the report will likely be viewed keenly by institutions, including the Bank of England, which have publicly touted the possibility of negative rates being rolled out.

On top of those inflationary concerns, other macroeconomic and geopolitical factors could also drive bullion prices — and with it profits at UK gold shares like Petropavlovsk — higher. Setbacks in the fight against Covid-19 and resurgent trade spats between major economies, for example, are just a couple of things that could boost demand for safe-haven assets like precious metals.

A top UK value share

It’s not certain that gold prices will soar back to last summer’s record peaks though. Signs of a sustained economic recovery would surely damage demand for flight-to-safety assets like this. And Petropavlovsk itself exposes UK stock investors to risk as exploration and production problems — issues that are extremely common in the mining industry — can seriously dent future earnings.

I still think Petropavlovsk’s cheap share price makes it a good buy today though. Not only does the company trade on a low price-to-earnings (P/E) ratio of 8 times for 2021, it carries an inflation-beating 2.1% forward dividend yield as well.