How to choose gold investment? Analyzing the 5 major channels' costs and risks, and where to buy real gold at the best price

In recent years, geopolitical tensions and persistent inflation have led more and more people to focus on gold as a traditional safe-haven asset. However, there are many ways to buy gold, from physical gold bars to financial derivatives, each with different cost structures and risk characteristics. This article provides an in-depth analysis of the five main investment channels for gold to help you choose the most suitable method based on your personal situation.

Is Gold Investment Still Worth Considering Now?

Gold prices have experienced significant volatility over the past three years. Between 2022 and 2023, gold prices fluctuated widely between $2000 and $1700, mainly influenced by geopolitical conflicts and Federal Reserve rate hikes.

But starting in 2024, the trend in gold has shifted. Driven by expectations of U.S. rate cuts and record-breaking central bank gold purchases worldwide, gold prices have broken through historical highs. Data shows that global central banks net purchased 1,045 tons of gold in 2024, surpassing the 1,000-ton mark for three consecutive years, directly supporting gold prices to break through $2,700. By September 2025, international gold prices even surpassed $3,700, with Goldman Sachs projecting a mid-2026 target of $4,000 per ounce.

However, it is important to recognize that many factors influence gold prices, and short-term trends are nearly impossible to predict accurately. For long-term investors, the key is not to forecast rises or falls but to find reasonable entry points. Positioning should be diversified rather than rushing in only when prices rise.

Depending on your investment goals, you can choose different strategies:

• Preservation and appreciation: Buying physical gold, gold savings accounts, or gold ETFs, suitable for medium to long-term holding
• Profit from price differences: Gold futures and gold CFDs offer two-way trading opportunities but require understanding leverage risks and technical analysis

Comprehensive Comparison of the Five Major Gold Investment Methods

Method 1: Physical Gold — A Choice for Preservation and Collection

Physical gold includes gold bars, gold ingots, commemorative coins, etc. This is the most traditional way to invest in gold, available for purchase at banks or jewelry stores.

Why isn’t physical gold an ideal investment? Mainly for three reasons: First, physical gold does not generate cash flow or interest income; second, storage costs and insurance fees are required; third, liquidity is relatively weak, with a phenomenon of “easy to buy, hard to sell.” But because you can hold tangible gold, many are willing to hold it for long-term hedging.

Where is the best place to buy gold physically? It is recommended to prioritize purchasing larger gold bars from banks, as banks provide security, quality certification, and lower processing fees. For example, Taiwan Bank’s gold bars come from Swiss bank (UBS AG), with a minimum purchase of 100 grams, and also offer 250g, 500g, and 1-carat options. For smaller quantities, jewelry stores or pawnshops are alternatives, but be sure to verify gold purity to avoid buying high-premium counterfeit bars.

Tax Reminder: Transactions exceeding NTD 50,000 require declaration of personal occasional trade income, taxed at a 6% net profit rate and included in next year’s comprehensive income tax.

Advantages: Low risk, simple transactions, tangible ownership feeling
Disadvantages: High unit price, storage needs, additional costs, poor liquidity

Method 2: Gold Savings Account — Convenient Paper-Based Trading

Gold savings accounts, also called “paper gold,” allow investors to buy gold with the bank holding it on their behalf, recorded only through account statements without holding physical gold. Many large banks offer this service, such as Taiwan Bank, E.SUN Bank, and E.SUN Bank.

There are three ways to buy gold savings: TWD-denominated, foreign currency-denominated, and dual-currency accounts. Using TWD involves exchange rate risk, as international gold prices are quoted in USD; foreign currency accounts require initial currency exchange costs. Overall, costs are comparable, representing moderate friction costs.

Trading Advice: Avoid overly frequent buying and selling, as each transaction incurs fees, which can erode long-term gains.

Tax Reminder: Profits from buying and selling gold savings accounts are considered property transaction income and must be reported in the following year’s comprehensive income tax. Losses can be deducted within the same year, and unclaimed losses can be carried forward for three years.

Advantages: Lower risk, small transactions possible, exchange for physical gold, greater flexibility
Disadvantages: Limited trading hours, only buy low and sell high, currency exchange costs exist

Method 3: Gold ETF — Low-Threshold Fund Investment

Gold ETFs are index funds tracking the spot gold price. As fund products, they charge management fees. Investors can choose Taiwan-listed gold ETFs(00635U) or U.S.-listed gold ETFs(such as GLD and IAU).

Cost Structure:

• Taiwan Gold ETF: management fee 1.15%/year + transaction fee 0.15% + trading tax 0.1%
• U.S. GLD ETF: management fee 0.4%/year + transaction fee 0~0.1% + currency exchange 0.32%
• U.S. IAU ETF: management fee 0.25%/year + transaction fee 0~0.1% + currency exchange 0.32%

Gold ETFs are characterized by low investment thresholds, high liquidity, and easy trading, but only support long-only positions. This makes them more suitable for beginners and retail investors for long-term holding.

Purchase Channels: Buy Taiwan ETFs through Taiwanese securities brokers, or buy U.S. ETFs via overseas brokers. U.S. ETFs have lower costs and tracking errors but require opening U.S. accounts and currency exchange.

Advantages: Easy to buy and sell, low investment threshold, good liquidity, suitable for regular investment
Disadvantages: Management fees, trading hours limitations, no short-selling

Method 4: Gold Futures — Short-term Trading with Two-way Flexibility

Gold futures are contracts based on international spot gold, with profits or losses depending on the entry and exit prices. The biggest advantage is supporting both long and short positions, longer trading hours, and lower holding costs.

Traders only need to deposit a margin, using leverage to trade. Gold futures prices are linked to international markets 24/7, making them difficult to manipulate unilaterally, with high transparency. This makes them especially suitable for short-term traders and professional investors.

Risk Warning: Futures have expiration dates and require rollover; if not closed before expiry, forced liquidation occurs. Leverage is a double-edged sword—profits can be magnified, but so can losses. Proper risk management and capital control are essential.

Tax Benefits: Since trading gains from gold futures are not subject to futures transaction tax (which has been suspended), only the futures transaction tax applies, with a very low rate of 0.0000025 (25 ten-thousandths of a percent).

Trading Hours: Taiwan Futures Exchange has shorter trading hours, while overseas brokers offer nearly 24/7 trading, with higher liquidity and convenience.

Advantages: T+0 trading, long and short flexibility, leverage enhances capital efficiency, tax advantages
Disadvantages: High leverage risk, need for delivery and rollover, requires trading skills

Method 5: Gold CFD — Flexible, Low-cost Derivatives

Gold CFDs( track the spot gold price, essentially a price contract. Compared to futures, CFDs’ advantages include: no need to hold physical gold, no expiration date, and greater flexibility. Profits come from the price difference between buy and sell contracts, with very low entry barriers and flexible leverage options.

Core Differences Between CFD and Futures:

• CFDs have no fixed minimum contract size, requiring lower margin
• CFDs have no expiration date, can be held long-term
• CFDs do not incur trading commissions or futures transaction taxes
• CFDs require much less capital than futures
• CFD trading rules are more flexible, suitable for small capital

Tax Reminder: Income earned from international gold trading is considered overseas income. If annual income exceeds NTD 1 million, it must be included in the individual’s basic income and taxed under the minimum tax system.

Platform Selection: Many large-scale international CFD brokers exist; choose those regulated by reputable financial authorities to avoid unlicensed platforms. Adjust leverage according to your risk tolerance; beginners are advised to start with low or no leverage for practice.

Advantages: Low minimum trading size, long and short positions, T+0 trading 24/7, easy account opening, relatively low fees
Disadvantages: High leverage risk, requires trading skills, market complexity requires careful selection of brokers

Where to Buy Physical Gold? How Should Investors Decide?

Based on Investment Goals:

If the goal is preservation and inflation hedging, physical gold, gold savings accounts, and gold ETFs are good options. Among these, physical gold is safest but most costly; gold savings accounts are in the middle; gold ETFs are the most flexible and cheapest. All three are suitable for long-term holding without frequent trading.

If the goal is to profit from price differences, gold futures and gold CFDs are the main tools. However, this requires market analysis skills to accurately judge short-term gold price trends. Beginners should start with small amounts to practice and gradually gain trading experience.

Cost Considerations:

• Physical gold has the highest one-time cost)1%~5%(, but no additional costs during holding
• Gold savings accounts have moderate costs)about 1%(, with trading costs accumulating with frequent transactions
• Gold ETFs have the lowest costs)0.25%(, with transparent management fees
• Gold futures and CFDs have very low per-trade costs)0.04%~0.10%(, but frequent short-term trading increases total costs

Liquidity Considerations: Physical gold has the worst liquidity and takes time to sell. Gold savings and ETFs have moderate liquidity, with trading hours limited. Gold futures and CFDs offer the best liquidity, with 24/7 trading.

Why Do Institutional Investors All Allocate to Gold?

Gold remains popular mainly because:

First, its preservation characteristic. Unlike paper money, gold does not depreciate due to central bank policies. Historically, whenever inflation heats up, gold is often the first choice for hedging risks.

Second, the depth of the global market. Gold trading is large-scale and long-established, capable of quickly reflecting major economic events, making it difficult for any single entity to manipulate.

Third, as a hedge against risk assets. During stock market crashes or bond market pressures, gold often rises countercyclically, serving as a “safe harbor” in investment portfolios.

Fourth, hedge against USD depreciation. When the dollar weakens, gold prices tend to rise. During periods of abundant global liquidity, gold becomes a tool to protect purchasing power.

Data confirms this: whenever conflicts like Russia-Ukraine, geopolitical tensions, or economic crises occur, gold prices surge. After the Russia-Ukraine war broke out in 2022, gold prices continued to rise to $2,069. Recently, international gold prices again broke through $3,700, driven by large-scale central bank gold purchases and monetary policy uncertainties worldwide.

Investment Advice: Institutional investors generally recommend allocating at least 10% of their portfolios to gold. This is not for quick profits but to maintain stability amid market volatility. Therefore, gold can serve both as a long-term preservation tool and a short-term trading instrument—finding the right approach depends on individual preferences.