ASX gold shares have been climbing higher in 2020. While the S&P/ASX 200 Index (ASX: XJO) has slumped 21.09% lower this year, many of Australia’s largest gold companies are rising in value.
It’s not unusual to see investors flock to gold when times are tough. The coronavirus pandemic has spooked many into buying the perceived safety of the precious metal.
But are Aussie gold shares your best friend right now, or should you invest elsewhere?
Should you buy ASX gold shares today?
Aussie gold shares have been climbing higher, but that’s not enough for me to buy. I’m not worried about missing out on potential gains given it looks to be a largely defensive play right now.
I think the real question for investors right now is where is the value in ASX shares. If your investing strategy wasn’t to buy ASX gold shares before, then I’m not sure it’s time to jump ship today. It doesn’t make much sense to change your strategy in the midst of the pandemic just because shares have gone down.
Sure, there will be tactical buying opportunities and ASX gold shares may be one of them. But it’s important to recognise that betting on short-term gains is largely gambling, whereas buying shares in high-quality ASX companies for the long-term is investing.
I do think that some of the larger Aussie miners’ shares could be worth buying. I’m not a big gold investor, but I like the look of Saracen Mineral Holdings Limited (ASX: SAR) shares after the Super Pit Mine acquisition.
What are the alternatives?
If you’re bearish in 2020 but don’t want to buy ASX gold shares, there are still options. I like to look at alternative defensive options like companies with non-cyclical earnings. That could be Coles Group Ltd (ASX: COL) in the Consumer Staples sector or AGL Energy Limited (ASX: AGL) in the Energy sector.
Whether its ASX gold shares or another defensive buy, it’s important to remember your strategy and your motivation. If you can invest in solid companies with strong earnings and growth potential, your chances of investing success could be dramatically improved.
Where to invest $1,000 right now
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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