A comprehensive analysis of the five major ways to invest in gold: how to choose to achieve the best benefits?

Geopolitical tensions and persistent high inflation have led more and more investors to focus on traditional safe-haven assets like gold. In addition to traditional physical gold, modern investors have various efficient ways to allocate gold. This article introduces five different gold investment channels in detail, comparing and analyzing them from multiple dimensions such as risk, cost, and convenience, helping you find the most suitable buying and selling methods based on your investment goals and style.

Is Now a Good Time to Invest in Gold?

In recent years, gold prices have experienced dramatic fluctuations: between 2022 and 2023, international gold prices oscillated between $1,700 and $2,000, mainly influenced by geopolitical conflicts and Federal Reserve interest rate hikes.

Entering 2024, the trend in gold prices has shifted significantly. Expectations of interest rate cuts in the US have gradually increased, global central banks are eager to buy gold, and market risk aversion sentiment is rising, among other factors. The net gold purchases by central banks worldwide in 2024 reached a record 1,045 tons, surpassing 1,000 tons for three consecutive years, directly supporting gold prices to break through the $2,700 mark. By 2025, gold prices even exceeded $3,700, with institutional investors optimistic about the future.

However, it must be recognized that gold prices are affected by many complex factors, making short-term trends difficult to predict precisely. The key to long-term holding of gold is to find the right entry point, rather than rushing in only after prices rise. If the goal is long-term appreciation and preservation, consider purchasing physical gold, gold savings accounts, or gold ETFs.

If you aim to achieve higher profits through short-term trading and can tolerate market volatility, then mastering technical analysis is necessary. Leverage tools such as gold futures and gold CFDs may be suitable. These derivatives require only a relatively low initial capital to enter, with the key being understanding price trend analysis and making profits through long or short positions.

Comparison and Analysis of Five Gold Investment Methods

First: Buying Physical Gold

Physical gold includes bars, ingots, commemorative coins, etc., usually available at banks or jewelry stores. It is recommended to prioritize high-purity gold bars; be cautious with gold jewelry and commemorative coins, as they include processing fees, and selling involves handling fees and wear-and-tear deductions, making overall investment efficiency lower.

The fundamental limitation of physical gold is its non-interest-bearing nature. Holders need to invest in secure storage, insurance, and other additional costs, and face obvious liquidity issues such as “easy to buy but hard to sell.” Nevertheless, because you can physically hold shiny gold, many investors are willing to bear these costs, using it as a long-term preservation and hedging asset.

Tax Reminder: If physical gold transactions exceed NT$50,000, personal trade income must be declared. Profits are taxed at 6%, included in the following year’s comprehensive income tax.

Suitable for: Asset preservation-focused investors, those valuing hedging functions, and long-term holders.

Advantages:

• Relatively low risk
• Simple and transparent transaction process
• Has collectible value

Disadvantages:

• High unit price
• Requires dedicated storage facilities
• Higher holding costs
• Limited liquidity

Channels for purchasing physical gold

Taiwan Bank is a relatively trustworthy choice and the only bank in Taiwan offering physical gold trading. Bank gold bars are usually minimally processed, with reasonable rates and guaranteed quality. The minimum specification for Taiwan Bank gold bars is 100 grams, with options for 250g, 500g, and 1kg.

For small amounts, jewelry stores or pawnshops may be more suitable. Regardless of where you buy, purity is the key factor, as prices are based on actual weight at resale. Avoid purchasing illusionary gold bars, as bargaining space is too large. Also, consider the safety and costs involved in physically storing gold.

Second: Gold Savings Account Investment

Gold savings accounts (commonly called “paper gold”) operate on the principle that investors buy gold, banks handle storage, and provide account records, with no physical possession required. Buying and selling are done entirely through the account, making it much more convenient than purchasing gold bars. Many large banks offer this service, including Taiwan Bank, CTBC Bank, First Commercial Bank, and Hua Nan Bank. Gold savings accounts can also be exchanged for physical gold.

Banks offer three purchase methods: TWD purchase, foreign currency purchase, and dual-currency gold savings accounts (a new product launched by Taiwan Bank in 2023, allowing benefits from both TWD and USD exchange rate fluctuations).

Different methods have different handling fees. When buying in TWD, exchange rate risk must be borne, as international gold prices are quoted in USD. Foreign currency purchases involve currency exchange costs from the start. Overall, the total costs of both methods are similar, at a moderate friction level. Be aware that each transaction incurs fees; frequent trading can accumulate higher costs, so low-frequency operation is recommended.

Tax Reminder: Profits from buying and selling gold savings accounts are considered property transaction income, included in the following year’s comprehensive income tax. Losses can be deducted from property transaction income, with unclaimed amounts carried forward for 3 years.

Suitable for: Investors seeking low-cost long-term allocation, with infrequent trading.

Advantages:

• Relatively low risk
• Supports small investments
• Can be exchanged for physical gold at any time

Disadvantages:

• Trading hours limited to bank business hours
• Only one-way operation (buying long, no short selling)
• Involves exchange rate risk

Recommended banks for gold savings accounts

Among major Taiwanese banks, Taiwan Bank, E.SUN Bank, and E.SUN Bank each have advantages in gold savings accounts. Investors can choose based on fee standards and service quality.

Third: Gold ETF Allocation

Gold ETFs are essentially gold index funds, which involve management fees. Investors can choose domestic Taiwan gold ETFs or overseas gold ETFs. Common products include Taiwan Stock Exchange Gold ETF (00635U), US gold ETFs (GLD), and (IAU).

Cost structures vary:

• Taiwan ETF: Management fee 1.15%/year + handling fee 0.15% + transaction tax 0.1%
• US ETF (GLD): Management fee 0.4%/year + handling fee 0-0.1% + currency conversion cost 0.32%
• US ETF (IAU): Management fee 0.25%/year + handling fee 0-0.1% + currency conversion cost 0.32%

Gold ETFs are traded via brokers, with low entry barriers and ample liquidity. However, they can only go long, not short, suitable for conservative investors wanting to participate in gold appreciation while avoiding downside risk. Compared to other methods, ETFs are more suitable for beginners and retail investors for long-term investment.

Suitable for: Investors seeking low-cost long-term investment, low trading frequency, and moderate risk tolerance.

Advantages:

• Convenient buying and selling, low entry barrier
• Good liquidity
• Transparent cost structure

Disadvantages:

• Need to monitor fund management fees
• Trading has time restrictions
• Cannot be used for short selling arbitrage

How to buy gold ETFs

Domestic ETFs can be purchased through local brokers. If you have an overseas broker account, you can buy US gold ETFs, which feature lower fees, smaller tracking errors, but require opening a US stock account and bearing currency conversion costs.

Fourth: Gold Futures Trading

Gold futures are contracts based on international gold prices. Your profit or loss depends entirely on the price difference between entry and exit points. Futures contracts have fixed expiration dates, after which settlement is required.

The core advantage of futures is support for two-way trading, long trading hours, and lower holding costs. Investors only need to pay a certain margin to trade with leverage, making it especially suitable for short-term operations and professional traders. Gold futures prices are linked to the international market 24/7 and are less susceptible to manipulation by single parties.

The main risk of futures is the expiration date, which involves rollover costs. If positions are held into the delivery month without closing, forced liquidation occurs. Due to leverage, profits are amplified, but so are losses. Investors must have good capital management awareness.

Tax-wise, gold futures are subject to a futures transaction tax (0.025%), which is the lightest tax burden.

Suitable for: Short-term traders, swing traders, investors with larger capital.

Advantages:

• T+0 trading, high time flexibility
• Supports both long and short positions
• Leverage enhances capital efficiency

Disadvantages:

• High risk due to leverage
• Contract expiration and rollover costs
• Requires management of rollover positions

Market for gold futures trading

In Taiwan, futures trading is conducted through the Taiwan Futures Exchange, with relatively limited trading hours. Overseas futures brokers offer nearly 24-hour gold futures trading, allowing anytime long or short positions, with better liquidity and volume. Many overseas brokers provide Chinese-language platforms, making operation more convenient.

Fifth: Gold CFD(CFD)

Gold CFDs are contracts tracking spot gold prices. If you have derivatives trading experience, CFDs are a quick way to enter the gold market.

CFDs support two-way trading, do not require actual possession of gold, and have no expiration constraints, making them more flexible than futures. Investors profit from the price difference between buy and sell contracts, with very low entry barriers, flexible leverage, and fees mainly from spreads and overnight costs.

Trading gold CFDs is simpler than stocks; you only need to analyze gold price trends, with lower difficulty.

Tax-wise, profits from trading gold CFDs are considered overseas income. If annual income exceeds NT$1 million, it must be included in the basic personal income.

Suitable for: Investors with basic derivatives trading experience, seeking small entry amounts, short-term swing trading.

Advantages:

• Very low entry barrier, small amounts possible
• Supports long and short positions
• T+0 trading all day
• Easy account opening

Disadvantages:

• High leverage risk
• Requires trading skills and experience
• Needs active position management

( Differences between futures and CFDs

• Contract size: Futures have fixed minimum specifications; CFDs have no such restrictions, requiring lower margin.
• Expiration management: Futures have expiration dates requiring rollover; CFDs do not.
• Cost structure: Futures charge commissions and transaction taxes; CFDs mainly have spreads.
• Capital requirements: Futures generally require higher capital.

Core Value of Gold Investment

Why does gold investment always attract attention? The main reasons include:

Gold’s preservation attribute: Over the long term, gold can protect purchasing power and hedge against inflation.

Global unified market: Gold has a worldwide liquid market, with transparent prices and large trading volume.

Safe haven function: During geopolitical turmoil and market panic, gold often becomes a safe harbor for capital.

Inflation hedge: Historically, gold has been a primary tool for hedging US dollar depreciation and rising inflation.

These characteristics are not new concepts, but precisely because of these traditional traits, institutional investors who are “smart money” always maintain gold allocations in their portfolios. It is generally recommended that gold account for at least 10% of total investments.

Whenever inflation intensifies or markets become turbulent, gold investment activity clearly increases. Historically, during major economic, geopolitical, or war-related systemic risks, gold prices tend to fluctuate sharply. For example, after the outbreak of the Russia-Ukraine war in 2022, gold prices continued to rise, reaching a high of $2,069. Recently, gold prices have again broken new highs, surpassing $3,700.

Due to the large and long-established international gold market, it reacts quickly to major systemic events, creating rapid surges and drops. This makes gold an attractive short-term trading target for “profit from price differences” or a hedging tool in investment portfolios. Investors can choose their trading methods flexibly according to their goals.