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A top penny stock I’d buy in my ISA in April

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I’m on the hunt for top penny stocks to buy for my Stocks and Shares ISA before the 5 April deadline. Penny stocks are UK shares which cost less than £1 each to buy. A problem of buying stocks like this is that their cheapness can make them prone to extreme price volatility.

However, this can create an indirect benefit for eagle-eyed investors to pounce upon. It means that many quality stocks have been overlooked by the market, allowing those that do their research an opportunity to nip in and grab a bargain or two.

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Let me talk you through an attractive penny stock I’m thinking of buying this April after recent price weakness.

Gold set to rebound?

Major global stock markets might be trading higher than at beginning of 2021. But investor nerves remain frayed as the Covid-19 crisis threatens to explode again at any moment. The third wave of infections washing across Europe, and the subsequent reintroduction of severe restrictions in the region, is being watched carefully by market makers.

This explains why gold prices have continued to trade within a tight range during March. Sure, yellow metal prices might be some $300 off last summer’s record peaks. But I believe investor demand for safe-haven assets like gold could soar again before long.

In fact, with low interest rates likely to persist for long into the future, and huge money-printing exercises continuing in order to stimulate the global economy, I think there’s plenty of reasons to expect bullion prices to spike soon.

Gold medal

A 24-carat penny stock

A fresh price spike would play into the hands of penny stock Solgold (LSE: SOLG). This UK share explores for the shiny stuff primarily out of the Andean copper belt in Ecuador, though it also has operations in Australia and the Solomon Islands.

It’s therefore in prime position to benefit from any fresh rise in gold prices. The Cascabel formation in the Andes is one of the largest untapped gold resources on the planet. And penny stock Solgold’s Alpala asset sits slap bang on top of it.

Bear in mind though, there’s no guarantee gold prices will soar again. Any rise in risk appetite and rising bond yields could well put pay to that. On top of this, the business of commodities exploration is packed with risk and is hugely costly. This means operators like Solgold can quickly find themselves in a massive financial hole.

That said, I think Solgold’s shares are still worth close attention at current prices. The UK mining shares have almost halved in value in less than six months and were recently trading around 22p. Ongoing drilling work at its core Ecuadorian projects continues to reap encouraging results. And, again, there are very good reasons to expect gold prices will shoot higher before long.

Solgold is one penny stock I’d be happy to buy in my Stocks and Shares ISA this April.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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