Business & Investment

Two cheap penny stocks to buy as inflation soars

I think it’s a good idea to be exposed to gold amid rising inflation.One way I’m thinking of doing this is to buy a metal producer Petropavlovsk (LSE: POG).. This penny stock is currently trading at a price-earnings ratio of 5.1 times, providing excellent value for money.

Gold prices reached about $ 1,842 per ounce, the highest since mid-November. They are currently within an astonishing $ 2,069 record high in August 2020 and may be preparing for a new run.

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I think Petropavolvsk will have a great share in the UK to ride this boom. Also, in the long run, we are steadily increasing production from the low-cost Pokrovsky pressure oxidation (POX) production base in Russia, so I think there are many things I like.

Get ready for the gold rush

It is said that a central bank rate hike could damage gold prices and thus the interests of companies like Petropavlovsk.This can hit the value of precious metals When Holding an asset like gold is more expensive.

This is a possibility I need to consider. However, I also know that such tightening may actually have little effect on bullion prices. The World Gold Council (WGC) said:Rate hikes can create gold headwinds, but history shows that their effects can be limited... “

In addition to this, WGC believes that real interest rates (inflation-adjusted interest rates) will continue.depressionEven if the central bank acts again.This is written as importantBecause gold’s short-term and medium-term performance tends to react to real interest rates.. “

Another top penny stock owned

Considering purchase Jubilee Metals Group (LSE: JLP) There are several reasons today. First of all, this mining share also specializes in the production of precious metals. In this case, carry platinum group metal (PGM) from the ground. These so-called hard currencies attract the attention of investors to large safe havens when inflation soars.

But as a long-term investor, I’m paying attention to the important role of jubilee metal in the green economy. PGM is purchased in large quantities in the automotive industry and loaded into catalytic converters to reduce emissions. These materials are in increasing demand in trucks and passenger cars as environmental laws are steadily becoming stricter.

The growing popularity of green hydrogen can also overwhelm the demand for Jubilee Metal products. Platinum is ideal as a catalyst for hydrogen fuel cells because of its ability to withstand high temperatures and complex chemical changes. As a result, the World Platinum Investment Council predicts that green hydrogen could boost annual platinum demand by up to 600,000 ounces by 2030.

Jubilee Metals is trading today with a price-earnings ratio of only 8.6 times. Deteriorating economic conditions can also have a major impact on its semi-periodic product demand and Jubilee’s profits. But all in all, I think the potential rewards of owning this penny stock far outweigh the risks.

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Royston Wild There are no positions in any of the above stocks. The Motley Fool UK does not have a position in any of the shares mentioned. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, given the various insights, A better investor than us.

Two cheap penny stocks to buy as inflation soars Two cheap penny stocks to buy as inflation soars

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