Investors in ASX shares have endured quite a rollercoaster ride over 2025 to date. As it currently stands, the S&P/ASX 200 Index (ASX: XJO) remains down by just over 5.5% this year so far.
But that figure is quite deceptive when we consider that the index has swung almost 15% from February's peak to this month's trough.
It might be tempting for many investors to wish they had all of their money invested in gold rather than ASX 200 shares. After all, while the share market has whipsawed and retreated, gold has continued to climb this year. The precious metal began 2025 at a price of just over US$2,600 per ounce. Today, that same ounce will set an investor back US$3,238 at the time of writing.
That's a 2025 gain of 24.5%. And it's only April.
So it's obvious that an investment in gold has outperformed an investment in ASX 200 shares since January
But what should investors do today? Is gold still a better buy right now than quality ASX shares?
Gold vs ASX 200 shares: Which is the better buy today?
I think, given the geopolitical uncertainties that remain in the global economy, there's every chance that gold continues to outshine the share market this year. However, that is merely an educated guess. Neither I nor anybody else can predict what might happen on the global markets tomorrow, next week, next month, or any other time.
As such, I think investors would be better off thinking with a long time horizon.
Gold has proven to be a decent investment over the past two decades. Ten years ago, an ounce of gold was going for around US$1,500. 20 years ago, it would have set an investor back just US$550.
That's a ten-year return of around 7.9% per annum, and a 20-year return of about 9.2% per annum – very similar to what the hare market has delivered.
However, there are a few caveats to point out before you go out and buy gold. Firstly, gold's returns can only come from buying low and selling high. The metal will actually cost you money while you own it. It pays no dividends, and you will probably have to fork out cash to store it, insure it, and keep it safe.
In contrast, shares don't cost you anything to hold. And they can also pay you dividends while you hold them, ensuring a constant stream of returns.
Secondly, in order to make returns from gold, you consistently have to buy bullion when it is cheap, and sell it when it is expensive. It's very difficult to get the timing of this right, which nullifies those on-paper returns above.
ASX 200 shares, on the other hand, are far easier to just 'buy and hold' while your wealth compounds.
Foolish takeaway
This is why I tend to think ASX 200 shares are the better investment over long periods of time for most investors. Sure, there's nothing wrong with holding a little gold in an ASX 200 share portfolio. But anything more than that is a risky game for most investors, in my view.
