Gold shares like Serabi Gold (LSE:SRB) have been among the most popular stocks to buy as President Trump’s trade policy shakes market confidence. Bullion’s all-time highs above $3,500 per ounce in April was struck against the backcloth of rising trade tensions. It’s a trend I expect to continue.
Uncertainty over US trade policy — and the impact of thumping tariffs on economic growth — are natural drivers of safe-haven assets. Gold’s receiving extra support, too, from concerns that escalating tariffs will bolster inflation and reduce central banks’ appetite to cut interest rates.
Gold remains heavily supported by a broadly weaker dollar, uncertainty around tariff announcements and fears about a global recession.
Lukman Otunuga, senior research analyst at FXTM
Given this situation, Serabi’s share price has rocketed 152% over the past year. It’s also been propelled higher by the falling US dollar and rising geopolitical tensions. But the Brazilian miner still looks cheap, leading to speculation of further price gains. Its forward price-to-earnings (P/E) ratio is just 3.5 times for 2025. It drops to 3.3 times for next year.
Going for gold (stocks)
Buying gold shares exposes investors to the risks and unpredictability of the mining industry. This makes it a more dangerous option than buying physical metal, or a fund that simply tracks the gold price. Serabi, which operates in Brazil but reports in US dollars, is also vulnerable to currency volatility.
However, this strategy also offers exceptional opportunities to create wealth when the yellow metal surges.
Serabi’s all-in sustaining costs (AISC) are $1,636 per ounce. If gold prices rise further from current levels of $3,300, every extra dollar will flow straight into the bottom line. This ‘leverage effect’ means the miner’s profits can grow much faster than the bullion price itself (though they can also fall faster when gold drops).
The leverage factor partly explains why Serabi’s 152% share price gain since last August has outpaced the 36% rise in metal prices.
However, it’s not the only reason for the company’s outperformance. Serabi has also:
- Reported its highest quarterly production for eight years
- Raised its mineral resource estimate
- Made good progress towards more than doubling annual output by 2028
The company’s earnings are tipped to rise 87% year on year in 2025. A further 5% rise is tipped for next year.
A cheap share I’m considering
I hold an exchange-traded fund (the L&G Gold Mining ETF) in my portfolio to capitalise on the leverage effect as gold prices rise. And given its excellent value, I’m also considering buying Serabi shares when I next have cash spare to invest.
As well as that having that low P/E ratio, the miner’s price-to-earnings growth (PEG) ratio of below 0.1 underlines its cheapness in relation to predicted profits. This is well under the widely accepted value water mark of one. And things remain that way for 2026, with Serabi’s PEG coming in at 0.6.
While it’s not without risk, I think Serabi Gold could be one of the best shares to consider buying in the current climate.
