The S&P/ASX 200 Index (ASX: XJO) has had a rollercoaster start to the year. Despite initially being hammered by the coronavirus pandemic shutdown and oil price war, the ASX 200 has had a comeback in recent weeks. In fact, the benchmark index has surged 20.78% since bottoming out at 4,546 points on 23 March.

But despite the recovery, there is still plenty of uncertainty in the markets. Just last week we saw that Australia’s unemployment rate jumped to 6.2% in April with 600,000 jobs lost during the pandemic.

So, how is the ASX 200 still climbing higher despite the bleak economic data?

Why is the ASX 200 soaring higher?

One thing that is helping the Aussie share market in 2020 is better-than-expected data. While COVID-19 has hit the economy hard, economists had forecast much higher unemployment. In fact, Treasury estimates have forecast unemployment to reach 10% in the June quarter. That means that last week’s unemployment figures (while devastating for Aussie businesses and individuals) paint a picture that’s less bleak than expected.

The other bit of good news is the easing of coronavirus restrictions. Australia is slowly coming back to life with many states easing restrictions on gatherings. That’s good news for operators in some of the hardest-hit sectors like domestic travel, hospitality and leisure. 

There’s a long way to go, but the ASX 200 has been climbing higher due to some broader positivity. Share markets are inherently forward-looking, which means investors are pricing in the future rather than the present.

However, there’s another big factor driving the ASX 200 higher right now: money supply. The Reserve Bank of Australia has injected a lot of cash into the economy while the official interest rate is sitting at 0.25%. That means high-interest savings accounts are starting from as little as 0.01% right now.

So, if you’re looking to invest your money, a savings account doesn’t seem like a great return on investment. It’s a similar story with term deposit rates, while bonds are yielding very little. Property in most Aussie towns and cities is very expensive right now, which makes it inaccessible to many investors.

That leaves us with ASX 200 shares. Those Aussies who are still working throughout the pandemic are putting their spare cash into shares to get some sort of return on investment. That’s helping boost the share market higher despite concerns over economic growth, migration and other factors hampering the economy.

More reading

• Is it time to buy ASX 200 gold shares?
• 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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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.

The post Is it time to buy ASX 200 gold shares? appeared first on Motley Fool Australia.

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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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