How to choose gold investment? A comparison guide of 5 major channels from value preservation to short-term trading

Geopolitical tensions are escalating, and inflation persists. Many investors are turning their attention to traditional safe-haven assets like gold. However, there are numerous ways to invest in gold—should you choose physical gold bars, paper gold accounts, or advanced derivative instruments? This article will analyze the costs, risks, and returns of various gold investment channels to help you find the most suitable investment method.

Is Now a Good Time to Invest in Gold? An Overview of Recent Trends and Outlook

Gold prices have experienced intense volatility over the past three years. From a high of $2000 in 2022-2023 to a low below $1700, then breaking new highs in 2024, recently surpassing $3700 per ounce. Factors driving this rally include:

• Rising expectations of Fed rate cuts: The U.S. easing cycle has begun, pushing funds into safe-haven assets
• Record global central bank gold purchases: In 2024, net purchases reached 1,045 tons, exceeding 1,000 tons for three consecutive years, directly supporting gold prices
• Escalating geopolitical risks: Ongoing regional conflicts lead investors to buy gold as insurance

Goldman Sachs’ research team projects a target of $4,000 per ounce by mid-2026, but short-term trends remain uncertain.

The core logic of investing in gold is simple: If your goal is long-term preservation and appreciation, the key is to find good entry points—don’t chase after gains only after prices have risen. If you aim to profit from short-term price differences and can bear risks, you need to choose highly liquid, low-cost trading tools and learn technical analysis.

Comprehensive Comparison of 5 Gold Investment Methods: Costs and Features

Overall Evaluation: Physical gold has the highest cost but lowest risk; paper gold offers many options but watch out for exchange rate risk; ETFs are highly liquid and suitable for lazy investors; futures and CFDs have the lowest costs but higher risks.

Detailed Analysis: Pros and Cons of Each Gold Investment Type

1. Physical Gold—Traditional but Non-Yielding

Buying gold bars, ingots, or commemorative coins falls under physical gold trading, available at banks and jewelry shops. It’s recommended to prioritize gold bars, avoiding jewelry and commemorative coins due to their added manufacturing costs, and selling them involves wear and handling fees, which are not cost-effective.

Issues with physical gold: It is a non-yielding asset—no interest or dividends; storage costs are high, requiring safes or rented vaults; liquidity is poor—“hard to buy, hard to sell”; complex taxation—transactions over NT$50,000 must be declared as personal trade income, assuming a 6% profit margin.

Suitable for: Investors seeking tangible assets, long-term collection, or pure hedging.

Purchase tips: Buy large grams at banks for safety and guarantees, but pay storage fees; for smaller amounts, jewelry shops are fine—just ensure purity. Taiwan Bank is the only bank authorized to buy and sell official gold bars, with a minimum purchase of 100 grams, backed by Swiss bank certification.

2. Paper Gold ### Passbook—The Most Convenient Choice

Also called “Gold Passbook,” banks hold the gold for you but do not deliver physical gold; buying and selling are recorded via the passbook. This solves all storage issues of physical gold and offers better liquidity.

Major Taiwanese banks like Bank of Taiwan, CTBC Bank, First Commercial Bank, and Hua Nan Bank offer such products. The latest is “Dual Currency Gold Passbook,” allowing you to benefit from both exchange rate and gold price fluctuations.

Cost structure: Fees are similar whether purchased in TWD or foreign currency, with moderate friction costs. However, each transaction incurs fees, and currency exchange costs are hard to control—frequent trading can accumulate high costs. Tax-wise, profits are considered property transaction income and included in the annual comprehensive income tax.

Recommended providers: Bank of Taiwan, E.SUN Bank, E.SUN Bank offer relatively favorable terms.

Suitable for: Investors wanting small amounts, low-frequency trading; conservative investors seeking both preservation and flexibility.

( 3. Gold ETFs—Low Cost, High Liquidity

Gold ETFs are index funds tracking gold prices. In Taiwan, there’s 00635U; in the US, GLD and IAU. Transaction costs vary:

• Taiwan Gold ETF: management fee 1.15% + brokerage 0.15% + transaction tax 0.1%
• US GLD: management fee 0.4% + brokerage 0~0.1% + currency exchange 0.32%
• US IAU: management fee 0.25% + brokerage 0~0.1% + currency exchange 0.32%

Key features: Only long positions—no shorting; low entry barrier, high liquidity, easy trading. Ideal for beginners and retail investors for long-term investment.

Suitable for: Passive income seekers, lazy investors avoiding frequent trading; small investors wanting diversified exposure.

) 4. Gold Futures—A Double-Edged Sword for Professional Short-Term Traders

Gold futures are contracts based on international gold prices, with returns depending on entry and exit price differences. The biggest advantage is the ability to trade both long and short, with flexible leverage and nearly 24-hour trading (overseas markets).

Major risks: Futures contracts have expiration dates; rollover costs; forced liquidation risk; leverage amplifies both gains and losses. Tax-wise, futures trading income is currently tax-exempt, with only a 0.025% transaction tax.

Suitable for: Experienced traders with risk management skills; sufficient capital and professional trading experience.

( 5. Gold CFDs )—Entry for Small Investors

CFD tracks spot gold but does not involve physical ownership. It allows two-way trading, no expiration date, flexible leverage. The main attraction is the extremely low entry barrier—some platforms require only a few dollars to start.

Cost structure: Mainly spreads and overnight financing fees, no transaction tax. Taxed as overseas income; exceeding NT$1 million annually must be included in minimum tax base.

Differences between CFD and futures:

• CFD contracts are smaller, suitable for small investments
• CFDs have no expiration; futures require delivery
• CFDs incur no transaction tax; futures do
• CFDs require less capital

Suitable for: Investors with limited funds wanting short-term trading; experienced traders seeking flexible leverage.

Reminder: These platforms vary widely; ensure they are regulated by international financial authorities to avoid scams.

Which Should I Choose? Investment Goals Are Key

Long-term preservation? Prioritize physical gold (strong collection sense) or gold passbook/ETFs (low cost, high liquidity). Focus on staggered entry—avoid all-in bets.

Want short-term gains? Need trading skills and risk appetite. Gold futures and CFDs are options—CFDs have lower barriers, futures suit larger capital.

Prefer passive, hands-off investing? Gold ETFs are the easiest—buy and hold, letting time and gold prices work for you.

Want to test with small amounts? CFDs are the lowest-cost option, but practice with demo accounts first; mastering stop-loss is more important than profit.

Why Gold Continues to Attract Investors? The Ultimate Hedge Asset

Regardless of market changes, gold remains a safe-haven asset due to its characteristics:

• Strong preservation attribute: During inflation, wars, financial crises, gold always becomes a refuge
• Large global market: Extensive trading volume, long history, ample liquidity, difficult to manipulate
• Institutional allocation standard: Nearly all investment institutions recommend allocating at least 10% of portfolios to gold
• Systemic risk indicator: During major geopolitical or economic shocks, rapid gold price swings reflect market sentiment

Because of this, gold serves two types of investors: long-term defenders and short-term traders seeking price swings. The first step is understanding your investment goal, then choosing the tool with the most suitable cost and features.

Currently, gold prices are at historical highs—this is not the time for blind buying but for careful selection of entry methods.