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Is it time to buy ASX 200 gold shares?

ASX 200 gold shares made some strong gains on Friday. While the S&P/ASX 200 Index (ASX: XJO) edged 0.25% lower last week, some of the biggest gold companies jumped higher.

For instance, the Saracen Minerals Holdings Limited (ASX: SAR) share price surged 6.99% higher on Friday and closed 13.23% higher for the week. It was a similar story for fellow ASX 200 gold share Northern Star Resources Ltd (ASX: NST) which climbed 7.75% last week.

Clearly, investors are still unsure of how to price in the coronavirus impacts. There’s a lot of uncertainty about the global and domestic economy including how and when restrictions will be eased.

But despite the current confusion, are Aussie gold shares the best way to invest in 2020?

Are ASX 200 gold shares in the buy zone?

Let’s start with why shares in the Aussie gold miners are climbing higher right now. Gold is seen as a safe haven asset, given it’s been a store of value for thousands of years.

Most investors aren’t too keen to buy and hold physical gold. Let’s be honest, gold bullion isn’t the most convenient investment to have.

So the alternative is to get indirect exposure to gold through another vehicle. That vehicle happens to be ASX 200 gold shares for the average investor. Of course, there is still company risk from buying Northern Star or Saracen shares. But if the price of gold surges due to demand, these companies can get a higher realised price and make more profit.

I’m personally not a big gold investor, but I think Aussie gold shares could outperform in the next few months until the global outlook is a little clearer. However, I’m a long-term, buy-and-hold investor.

That means I’d rather buy high-quality companies with long-term prospects. That’s not to say that ASX 200 gold shares like Saracen don’t have long-term prospects, but that I’d rather not put all my eggs in the one basket.

Foolish takeaway

If you’re particularly bearish on the economy, ASX 200 gold shares could be a great buy. I also think a small exposure to commodities can be good for portfolio diversification. However, I’d rather not speculate on the short-term and focus on buying ASX shares for the next 20 or 30 years.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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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