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Are ASX 200 gold shares a safe buy right now?

The S&P/ASX 200 Index (ASX: XJO) has started the week in familiar fashion with significant volatility, but the ASX 200 gold shares are doing OK.

Some of the biggest Aussie gold miners saw their shares climb higher as investors continue to flock to gold. It’s a very hard market to pick value in right now, with a number of threats to economic growth.

Coronavirus is clearly the biggest factor weighing on markets right now. Dramatic measures in the United States and Europe have Australians wondering what will happen here next. So, while the pandemic looks set to spread and cause more disruptions in 2020, are the ASX 200 gold shares a safe buy?

Should you buy ASX 200 gold shares right now?

Investors can get spooked by market volatility, either scared of the losses or fearing they’ve already missed the gains. The Saracen Mineral Holdings Limited (ASX: SAR) share price rocketed 17.85% higher today to $3.50 per share. Newcrest Mining Limited (ASX: NCM) shares jumped 6.51% to $24.21 per share as at Tuesday’s close.

This seems to indicate that investors aren’t too worried about fundamentals right now. There’s a lot of panic from investors who aren’t sure what’s happening and how ASX companies will be impacted by COVID-19. That’s natural in a choppy environment like this one, but I don’t think ASX 200 gold shares are necessarily a magic fix. 

The problem is that there are multiple things to take into consideration with the public health crisis. There are signs that China could be increasing demand, but it’s still early days. Investors tend to see gold as a safe haven asset but things are quite unknown with this whole pandemic. There’s still the underlying threat that operations could be shut down by just one case of COVID-19 as this pandemic continues to spread in 2020.

So, what’s the good news?

All of that seems like I’m bearish on ASX 200 gold shares right now. There are very few ASX shares that are climbing higher right now, so any gains are welcome for investors. I think there are many more ASX companies that appear riskier than the Aussie gold miners right now. However, I’ve never been a big investor in the mining sector and still won’t be buying.

I think the key to long-term success is to stay calm and trust your strategy. A bear market is not the time to panic and start changing things, but to buckle down, save hard and invest in good-quality ASX shares for the long-term.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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