Looking for gold stocks? Consider buying this UK small-cap at 345p

Gold soared to a record $3,578 per ounce earlier this week, driving up gold miners and exchange-traded funds (ETFs) linked to the precious metal. This will leave some investors asking: is there a stock to consider buying to capitalise on the gold boom?

Hereâs one I think is worth a look at 345p.

Benefitting from the trend

Ramsdens Holdings (LSE:RFX) isn’t a gold producer, but the bull run in the yellow metal has been a gift for the AIM-listed pawnbroker.

As gold prices surge higher, more customers are dusting off their jewellery boxes and flocking to Ramsdensâ 169 stores to cash in unwanted pieces. Items suitable for resale are channelled through its Jewellery retail division, while the rest are melted down and sold via its Purchase of Precious Metals unit.

It also has a foreign currency exchange segment, as well as the pawnbroking operation, giving the firm ample cross-selling opportunities across the four divisions.

In the six months to 31 March, gross profit from its precious metals unit jumped 53% year on year, a direct result of soaring gold prices and an increase in gold purchased. Group revenue increased 18% to Â£51.6m, while pre-tax profit rocketed 54% to a record Â£6.1m.

The sustained exceptionally high gold price — which recently reached new record levels — coupled with the investment in the new gold buying website, is attracting new customers and increasing the weight of gold purchased. In the short term, we expect the gold price to remain high.

Ramsdens.

Management expects full-year profits to exceed Â£15m and analysts see this translating into a 34% rise in earnings per share.Â

Starting in October, the company also plans to open six to eight new stores each year.

Risks

There are risks, of course. One is that Ramsdens faces lots of competition in the foreign currency exchange market. And while it’s launched a new in-house international payments service, this is also a very competitive space.

Speaking personally, I transfer cash into foreign currencies on my Revolut app. However, I also use Ramsdens for holiday cash. In H1, its click and collect service volumes grew 20%.

Of course, a sudden drop in the gold price could weigh on future profits, though Ramsdens’ diversified business model should cushion this somewhat.

Where’s gold heading?

Looking ahead, I remain very bullish on the price of gold with President Trump in power. As well as imposing tariffs, which are fuelling both uncertainty and likely inflation (both good for gold), he’s undermining the independence of the US central bank. This is another thing benefitting gold.

Meanwhile, government deficits are ballooning in the West, yet public spending continues apace. In July, renowned hedge fund manager Ray Dalio said the UK is stuck in a “debt doom loop“. He said people should consider putting some money into gold.

In my view, a combination of things — Trump, tariffs, US dollar volatility, rising inflation, high government borrowing, geopolitical uncertainty — are likely to push the gold price higher. JP Morgan sees it hitting $4,000 by mid-2026.

Good value

Ramsdens’ stock’s up 48% year to date, yet still looks decent value at 10.3 times this year’s forecast earnings. There’s also a 3.8% dividend yield on offer.

For investors who are bullish on gold, I think Ramsdens deserves a look as an indirect play.

The post Looking for gold stocks? Consider buying this UK small-cap at 345p appeared first on The Motley Fool UK.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Ben McPoland 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.