Are ASX gold shares like Newcrest (ASX:NCM) still good value?

ASX gold shares like Newcrest Mining Limited (ASX: NCM) have surged in value this year, so is there any reason to buy right now?

| More on:
ASX gold inflation gold bull figurine standing on stock price charts representing rising asx share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's hard to know if ASX gold shares like Newcrest Mining Limited (ASX: NCM) are in the buy zone.

Many of Australia's top gold miners have seen their values surge in 2020 as investors have looked for a safe haven away from the coronavirus pandemic-induced volatility.

So, as markets continue to move, is there still time to buy ASX gold shares?

Why ASX gold shares are still a good buy

It's important to distinguish between strategic and tactical investing. Investors should generally have a long-term view towards investing and portfolio construction.

However, that doesn't mean there can't be short-term deviations from the plan to capitalise on good opportunities.

The Newcrest share price has jumped 9.8% in 2020 while the S&P/ASX 200 Index (ASX: XJO) has fallen 12.1% lower.

It's even better news for investors in some of the other large ASX gold shares. The Saracen Mineral Holdings Limited (ASX: SAR) share price has surged 56.6% higher this year thanks to strong investor demand.

I'm not personally a big investor in ASX gold shares. However, some pure play shares can provide some benefits within a diversified portfolio.

One is a downside hedge of sorts given gold prices often push higher amid market volatility and bear markets. These stocks could also provide some protection through a higher gold price if we see inflation start to rise in 2021.

I think investors still need to be careful when picking tactical investments, especially at the moment. I personally prefer to buy those with strong cash flow generation like Saracen rather than some of the prospectors.

Foolish takeaway

It's easy to think that ASX gold shares are overvalued in the current market. However, with bond yields at all-time lows and other defensive shares also surging, there aren't a lot of options for downside protection.

I wouldn't say gold is the ultimate defensive share but it may provide some benefits if we enter another bear market or a period of high inflation.

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.

More on Gold

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Gold

Why ASX 200 gold stocks dazzled shareholders in March

March proved a profitable month for investors in ASX 200 gold stocks.

Read more »

a man in a green and gold Australian athletic kit roars ecstatically with a wide open mouth while his hands are clenched and raised as a shower of gold confetti falls in the sky around him.
Gold

Why are ASX 200 gold stocks surging again on Thursday?

ASX 200 gold stocks are racing ahead of the benchmark today.

Read more »

rising gold share price represented by a green arrow on piles of gold block
Dividend Investing

1 Australian dividend stock quietly crushing the ASX today

The ASX 200 dividend stock has soared 38% since early October.

Read more »

a man wearing a gold shirt smiles widely as he is engulfed in a shower of gold confetti falling from the sky. representing a new gold discovery by ASX mining share OzAurum Resources
Gold

This ASX 200 gold stock could rise 25%+

Analysts expect golden returns from this mining stock.

Read more »

Woman holding gold bar and cheering.
Gold

Buy this ASX 200 gold share with 30% upside before it's too late

This stock could generate golden returns for investors according to Bell Potter.

Read more »

Woman holding gold bar and cheering.
Gold

Is it too late to join the booming ASX gold rush?

The gold price notched new record highs, adding fuel to the ASX gold rush.

Read more »

Calculator and gold bars on Australian dollars, symbolising dividends.
Gold

The gold price just reached its highest level ever: Which miners are buys?

Here's why the precious metal just hit a record high.

Read more »

A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price
Gold

ASX 200 gold shares are booming on Monday. Here's why they could keep shining bright

Today’s strong rally among ASX 200 gold stocks may be just the beginning, according to this expert forecast.

Read more »