Guide to the Five Major Investment Channels in Gold: Cost-Effectiveness and Risk Overview

Amid rising geopolitical risks and persistent inflation expectations, gold, as a traditional safe-haven asset, is once again attracting attention. As of September 2025, international gold prices have broken through $3,700, reaching a new high. However, for investors looking to enter the market, the key question is not “whether to buy,” but “how to buy most cost-effectively.”

Why Are Gold Prices Repeatedly Reaching New Highs?

Reviewing the trend, gold prices experienced intense volatility during 2022-2023, falling below $1,700 at one point due to geopolitical conflicts and the Fed’s rate hikes. In 2024, the situation reversed—expectations of rate cuts in the US increased, and global central banks set records in gold purchases (net annual purchases reaching 1,045 tons for three consecutive years), directly pushing gold prices above $2,700. Goldman Sachs even forecasts reaching $4,000 per ounce by mid-2026.

Despite the optimistic long-term outlook, short-term trends remain unpredictable. This explains why strategies for investing in gold vary significantly: long-term holders seek preservation and appreciation, while short-term traders rely on price arbitrage.

Cost Comparison of Five Gold Investment Methods

Value Preservation Investment: Physical Gold and Gold Passbook

Physical Gold — The Most Traditional Safe-Haven Choice

Buying gold bars or ingots directly is the oldest form of gold investment. Advantages include low risk, simple buying and selling, and actual possession. But the disadvantages are also clear—high unit prices (minimum 100 grams at Bank of Taiwan), the need for secure storage, lower liquidity, and the dilemma of “easy to buy but hard to sell.”

When purchasing physical gold, note:

• Larger quantities can be bought directly at banks (e.g., Bank of Taiwan), with quality assurance, but storage fees apply.
• Smaller quantities can be bought at jewelry shops, paying attention to purity labels; transparency may be lower.
• Avoid counterfeit gold bars and commemorative coins, as processing and handling fees can significantly eat into profits.

Tax Tip: If the sale of physical gold exceeds NTD 50,000, it must be declared as personal occasional trading income, taxed at a 6% net profit rate.

Gold Passbook — Digital Holding Method

The “paper gold” concept solves storage issues of physical gold. Investors do not need to hold physical assets; banks keep the gold on their behalf, and transactions are recorded via passbook—moderate transaction costs, small-scale operations possible, and relatively good liquidity.

There are three ways to buy gold passbooks:

• NT dollar purchase — bears exchange rate risk
• Foreign currency purchase — faces currency conversion costs
• Dual-currency gold passbook — benefits from both exchange rate and gold price fluctuations

Note: Frequent buying and selling can accumulate currency exchange costs; low-frequency operation is recommended. Banks such as Bank of Taiwan, E.SUN Bank, and E.SUN Bank offer this service.

Tax Treatment: Gains from buying and selling are considered property transaction income, combined into the following year’s comprehensive income tax. Losses can be deducted; if not fully offset, they can be carried forward for 3 years.

Growth-Oriented Investment: Gold ETF

Gold ETFs are “gold index funds,” mainly including Taiwan stock gold ETFs (e.g., 00635U) and US stock gold ETFs (GLD, IAU).

Core Advantages: Low investment threshold, high liquidity, convenient trading, suitable for beginners and retail investors for long-term holding. But limitations are also evident—only long positions, no short selling, and trading hours are restricted.

Cost breakdown (using US gold ETF IAU as an example):

• Management fee: 0.25% per year
• Transaction fee: 0%-0.1%
• Currency exchange cost: 0.32%

Compared to physical gold’s 1%-5% costs, ETFs are more efficient. However, note that regular management fees will erode returns over time; long-term holders should factor this into their calculations.

Arbitrage Investment: Futures and CFDs

For investors seeking short-term gains and willing to bear risks, gold futures and gold CFDs are two powerful tools.

Gold Futures — Institutional-Grade Trading Instruments

Gold futures allow two-way trading (long and short), operate 24 hours, use margin mechanisms, and amplify leverage. But they also face:

• Expiration risk: contracts have expiry dates, requiring rollover, which incurs additional costs.
• Delivery pressure: open positions in delivery months may be forcibly closed.
• Leverage risk: while profits are magnified, losses can also grow exponentially.

Taiwan Futures Exchange trading hours are relatively short; overseas futures brokers operate nearly 24/7, offering better liquidity and trading volume.

Tax Advantage: Futures trading income tax has been suspended; only a futures transaction tax of 0.0000025 applies, resulting in minimal tax burden.

Gold CFD — The Most Flexible Derivative

CFD (Contract for Difference) tracks the spot gold price, no physical possession required, no expiry date, two-way trading, very low entry barrier. Compared to futures:

• No fixed contract size; margin requirements are lower.
• No expiry date; positions can be held indefinitely.
• No trading tax; only spreads and overnight fees are charged.
• More suitable for small capital entries.

Tax Tip: CFD income is considered overseas income; if annual income exceeds NTD 1 million, it must be combined with basic income and included in the minimum tax system.

Risk Warning: CFD markets are mixed; when choosing a broker, ensure they are regulated by reputable international financial authorities (e.g., ASIC, CIMA, FSC) to avoid blacklisted platforms.

Investment Strategy Decision Tree

What is your investment goal?

Goal 1: Long-term preservation and asset allocation → Recommended: Physical gold, gold passbook, gold ETF → Features: Low risk, manageable holding costs, suitable for passive holding → Suggested allocation: 10%-15% of your portfolio

Goal 2: Short-term arbitrage and swing trading → Recommended: Gold futures, gold CFD → Features: High leverage, 24-hour trading, low costs → Preconditions: Good technical analysis skills, ability to bear losses, strong risk awareness

Goal 3: Balance between returns and risks → Recommended: Gold ETF + dollar-cost averaging → Features: Automatic averaging, no need to time the market, good liquidity

Why Do Institutional Investors Favor Gold?

Gold’s enduring appeal lies in its unique properties:

• Global pricing: Traded 24/7 worldwide, huge market size, difficult to manipulate
• Systemic risk hedge: During wars, inflation, financial crises, gold prices often surge
• No fixed income: Unlike deposits with interest or stocks with dividends, gold is unaffected by corporate fundamentals
• Psychological security: Thousands of years of monetary history give gold credit backing

Whenever the economy is turbulent, large capital flows into gold. After the Russia-Ukraine conflict erupted in 2022, gold prices soared to $2,069; recent central bank gold purchases pushed prices to $3,700. This resilience explains why nearly all institutional investors allocate over 10% of their portfolios to gold.

Core Recommendations

If you are new to investing in gold: Start with ETF or CFD demo accounts, no need to risk real money immediately.

If seeking stable returns: Choose gold passbook or ETF with dollar-cost averaging, ignore short-term fluctuations, focus on 5+ years gains.

If experienced and with sufficient capital: Consider combining futures and CFDs, but always set stop-loss points, and do not leverage beyond your risk capacity.

Final reminder: Gold’s long-term annualized return is generally not high (usually 5%-8%), and real gains come from arbitrage and swing trading. Choosing the right investment method is more important than blindly chasing market peaks.