I’m looking for dirt-cheap UK shares to buy for my shares portfolio today and have dug out these low-cost stars. One of these British companies trade inside penny stock territory below £1. The other also changes hands for little money under 150p per share.
A top penny stock
I think Shanta Gold (LSE: SHG) could be a great penny stock to ride to play the gold market. This isn’t just because the precious metals digger is taking steps to ambitiously bolster production levels. It’s also due to rising inflationary expectations which should steadily increase demand for non-paper currencies like bullion. Shanta Gold shares trade at 13p apiece.
Prices are soaring because of supply-side disruptions and labour market shortages. A survey by the New York Federal Reserve revealed how strongly inflationary concerns are growing on the back of this, its gauge of consumer expectations just hitting eight-year highs. It’s possible that central banks could keep this inflationary environment going for longer, too, if they maintain their ultra-loose policies to help the recovery.
Though remember that commodities prices can do down as well as up. Signs of progress in the fight against Covid-19 could hit gold prices again like it did at the start of 2021. A more bearish tone by central banks (and especially the Federal Reserve) could hit bullion prices as well, and by extension the bottom line at cheap UK share Shanta Gold.
Another top cheap UK share I’d buy
Tharisa (LSE: THS) is another cheap UK precious metals share I’d buy today. This is because the same drivers that I think will support gold prices will help platinum group metals (PGMs) remain strong. Tharisa changes hands at 110p per share.
There’s the issue of runaway inflation that could prompt a fresh pile-on into safe-haven metals. In addition, concerns over runaway prices in the US — and its impact on the domestic currency — would be particularly positive for expensive metals. These commodities are primarily traded on a US dollar basis. It therefore costs less in foreign currencies to buy PGMs when the greenback drops in value than it would otherwise.
There’s a string of other frighteners that could boost prices of platinum, palladium et al. Direct worries over the direction of travel in the fight of Covid-19 is one. Signs of worsening relations between major economies (and in particular with regards to trade) is another.
But I also think PGM prices will rise as demand for them from the automotive sector grows. New emissions standards coming into effect in China and Europe look set to turbocharge off-take in the near-term (the commodities are used in catalytic converters to reduce emissions). Demand could receive a further boost if, as expected, additional legislation to reduce carbon discharge comes into effect. I’d buy cheap UK share Tharisa despite the difficulties of mining for metals which can have a big impact on profits.