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.

More reading

• How is the ASX 200 soaring despite rising unemployment?
• The 5 ASX shares that were last week’s biggest fallers
• Is the Mirvac share price about to soar?
• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble
• Meet the ASX 200 company that just posted a 90% surge in profit

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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At the mid cap side of the market I believe there are a good number of shares which have the potential to grow into large caps over the next decade.

This could make it well worth investing in them with a long term view.

Three top mid cap ASX shares that I would buy right now are listed below. Here’s why I like them:

Clover Corporation Limited (ASX: CLV)

Clover is a producer of ingredients such as omega-3 oils that go into infant formula, supplements, and baby food. It has been growing at a very strong rate over the last few years thanks largely to increasing demand from infant formula manufacturers. Given potentially favourable changes to ingredient requirements in a number of key markets, I expect demand to grow over the coming years and drive strong earnings growth.

Electro Optic Systems (ASX: EOS)

I think Electro Optic Systems is a mid cap share to watch. It is Australia’s largest aerospace company and the largest defence exporter in the Southern Hemisphere. The key product in its portfolio in my eyes is its Remote Weapon System. This system allows the military to remotely operate weapons and machinery. Electro Optic Systems has partnerships with major global aerospace giants and a massive backlog of work that alone looks set to underpin solid earnings growth over the next few years.

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imagery technology and location data company. Its growth has taken a bit of hit this year due to the loss and downgrade of a number of large contracts. While this is disappointing, it is important to note that these customers have not been lost to the competition. I still believe Nearmap is head and shoulders above its rivals and well-placed to capture a greater slice of this growing global market over the next decade.

More reading

• 2 ASX tech shares to buy with stellar growth prospects
• 30% off: 3 ASX 200 shares to buy on the cheap
• Where I’d invest $1,000 into ASX shares right now
• 2 ASX shares that every investor should own
• How to build your first ASX share portfolio

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Electro Optic Systems Holdings Limited and Nearmap Ltd. 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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Xero Limited (ASX: XRO) shares have opened the week strong today, banking a 2.5% rise to $77.19 at the time of writing. Even so, the Xero share price is still down 7.6% over the past week.

Xero is one of those shares that doesn’t seem to ever dip too much, so is this a rare buying opportunity?

Why has the Xero share price dipped?

Xero shares fell last week after the company released its FY20 results to the market. Xero reported some strong numbers, including a 26% increase in subscribers, a 30% increase in revenues and an inaugural profit of NZ$3.3 million. Free cash flow also increased by 320% to NZ$27.1 million.

But despite these numbers, investors were clearly expecting a little more out of this WAAAX market darling. Xero shares dipped in response, falling from nearly $84 on Wednesday to around $75 by the end of the week.

Does this mean Xero is a buy today?

Although the Xero share price has come off the boil, I’m still not convinced it’s at a compelling level today.

Xero is a company investors are pricing for a high growth future and it does have a long growth runway, for sure. Governments around the world are pushing for their taxpayers to switch to digital providers like Xero, which is a great long-term tailwind for the company to enjoy. Further, Xero has shown its product is extremely sticky, with most customers remaining on its platform after onboarding.

But with a current price-to-earnings ratio over 3,500, I think investors are seeing a little too much future potential based on current levels. Remember, this is a company that has just turned its first profit of NZ$3.3 million, yet has a market capitalisation of nearly $11 billion.

Furthermore, I still have concerns that Xero might run into increased competition which, in turn, may slow the astronomical rate of its subscriber growth. Intuit Inc. (NASDAQ: INTU) is one of Xero’s major competitors and has also been growing its market share in North America.

Perhaps on current prices, the market is treating Xero like a future monopoly in its cloud accounting space, rather than one of several strong players.

Foolish Takeaway

Xero is a high-quality company to be sure, and one I wouldn’t mind owning shares in at some point. But I think the current market environment is not one we should be making high-growth bets in. Therefore, today’s Xero share price is still a little out of my comfort zone. Call me if the Xero share price falls back to under $60 where it was a year ago and we might have a different conversation!

More reading

• 5 ASX 200 winners and 5 losers of the week
• ASX 200 up 0.25% this week, CBA reveals Q3
• Top brokers name 3 ASX 200 shares to sell next week
• Top brokers name 3 ASX shares to buy next week
• ASX 200 finishes up 1.4%, gold miner share prices surge

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Intuit. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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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