The gold price is falling despite stock market crash fears. I’m buying UK shares

I reckon that UK shares offer a better long-term home for my money than gold.

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I’ve always favoured investing in UK shares over gold. But, at times, I’ve been tempted to load up on the precious metal. The urge usually strikes when stock markets are struggling, and investors are seeking safe havens.

Gold been a store of value for more than 4,000 years and investors like to hold it when stock markets are volatile. Yet here’s the thing. That isn’t happening today. Investors are nervous, but that hasn’t helped gold. It has been falling instead. Safety seekers are buying the US dollar instead.

The gold price has lost its shine

After spiking to $2,043.94 an ounce on 7 March, the gold price has plummeted. At the time of writing, it trades at $1,883, a drop of almost 8%. UK shares have been much more solid.

2022 has been tough on global stock markets. The Nasdaq tech index is down a staggering 24.78% year-to-date, while the S&P 500 is down 14.04%. Yet the FTSE 100 index is down just 1.56%. While US tech stars like Netflix are collapsing, boring old UK banks, mining companies, tobacco and healthcare firms are holding firm. There has been a dramatic investor shift, from whizzy growth stocks to supposedly boring value stocks.

As consumer price growth rockets, the juicy revenues investors were expecting from growth heroes like Netflix, Facebook (now Meta Platforms) and PayPal look risky. Inflation will erode their future value, while customers have less money to spend. It’s a different story with UK shares.

The FTSE 100 is crammed with value stocks. These are companies with steady revenues and solid dividends that have been overlooked by the market. I’m thinking of Barclays and Lloyds Banking Group. Insurers Aviva and Legal & General Group. Cigarette makers British American Tobacco and Imperial Brands

I’d buy these top UK shares today

My list also includes mining giants Anglo American and Rio Tinto. Pharmaceutical stocks AstraZeneca and GlaxoSmithKline. Housebuilders Barratt Developments and Persimmon. These top UK shares now offer investors a combination generous dividend income, which can be locked into at low valuations. 

There are always risks in buying UK shares. Stock prices can crash at any time. Those dividend payments are not guaranteed. Pretty much all of the companies I have listed here have been through rough times lately, for different reasons. If global stock markets suffer a major crash, the FTSE 100 will not be immune. 

Despite that, I would rather buy any (or ideally, all) of these UK shares than gold. Their dividend yields range from around 5% to 12% a year, whereas gold pays no income whatsoever. That gives my portfolio protection against inflation. I can also take those dividends to boost my pension when I retire. Gold still isn’t for me. Personally, I’m buying UK shares.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Barclays, British American Tobacco, GlaxoSmithKline, Imperial Brands, and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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