Want to invest in gold? Gold ETF Beginner's Guide and a List of Quality Picks in Taiwan and the US

Why Is Gold Worth Investing In? Ask Yourself These 3 Questions First

Before diving into Gold ETFs, clarify: why invest in gold?

As a traditional safe-haven asset, gold offers the dual advantages of inflation resistance and risk diversification. Central banks worldwide continue to increase their gold reserves, coupled with rising economic uncertainties, all supporting gold prices. In fact, from 2023 to 2024, gold prices have hit record highs, and many market institutions still expect prices to continue rising.

Most importantly, the entry barrier for investing in gold has significantly lowered. Physical gold traditionally requires tens of thousands of dollars to start, whereas gold ETFs can be participated in with just a few hundred dollars. This is why gold ETFs are becoming the first choice for more and more investors.

What Are Gold ETFs? The 3 Types and Their Strengths

Gold ETFs are exchange-traded funds that directly track gold price movements. Compared to other ETFs, gold ETFs tend to have lower volatility because gold prices themselves are relatively stable.

Based on their operational principles, gold ETFs can be divided into three main categories:

Beginners are advised to start with spot gold ETFs, as they are less risky.

4 Major Advantages of Gold ETFs Compared to Traditional Investment Methods

Unmatched Trading Convenience: Open your brokerage app, click a few times, and buy or sell—just like trading stocks. No restrictions on time or location; trade whenever you want.

Significant Cost Reduction: Physical gold involves 5%-10% handling fees plus storage costs. Futures trading requires locking in large margin deposits. Gold ETFs have management fees of only 0.2%-0.5%, making costs clearly advantageous.

Stable Anchor for Investment Portfolios: Gold has low correlation with stocks and bonds, making it a suitable asset allocation tool. Studies show that adding 5%-10% gold assets to a portfolio can improve returns and effectively control risk.

Transparent Information, Peace of Mind: Spot gold ETFs regularly disclose physical reserves, and other types reveal investment holdings and trading strategies, giving investors clear insight into their assets.

Are Gold ETF Volatilities Really Low?

Volatility depends on the underlying asset. Spot gold ETFs’ prices are closely linked to spot gold prices, and overall volatility is indeed lower.

However, note that gold is not entirely risk-free. Increased economic uncertainties, monetary policy adjustments, and geopolitical events can trigger gold price fluctuations. Historically, from 2017 to 2022, gold’s volatility was significantly lower than oil, copper, 10-year government bonds, and the S&P 500.

If you choose gold mining stock ETFs (like mining companies’ stocks), volatility will increase notably because, besides gold prices, they are affected by stock market fluctuations, company performance differences, and mining costs.

Gold ETF vs. Gold CFDs: Which Should You Choose?

In simple terms:

• For long-term, steady participation in gold markets → choose gold ETFs;
• For short-term trading and quick capturing of volatility → consider gold CFDs (but be cautious of leverage risks).

How to Develop a Gold ETF Investment Plan?

Option 1: Asset Allocation Based on Risk Tolerance

Investors with different risk preferences should tailor their portfolios accordingly:

• Aggressive: 50% stock index ETFs + 25% gold ETF + 20% bond funds + 5% others
• Balanced: 42% bond funds + 30% stock index ETFs + 25% gold ETF + 3% others
• Conservative: 40% bank deposits + 30% bond funds + 15% stock ETFs + 15% gold ETF

Option 2: Fixed Dollar Cost Averaging

Invest a fixed amount in gold ETFs on a regular date each month (e.g., payday). The advantage is automatic averaging; buy less when prices are high, more when prices are low. Remember: the key to gold ETF investing is persistence. Plan for a holding period of 3-5 years; frequent buying and selling only increase costs.

Option 3: Timing and Increasing Investment

A more advanced approach than fixed dollar cost averaging is active timing: increase investments when gold prices fall, reduce when prices rise. This requires some judgment of gold trends and is suitable for investors with experience.

Finally, setting reasonable profit targets is crucial. Most investors aim for 30%-50% returns; once achieved, they take profits. If you are very optimistic about the asset, you can also sell in parts or raise your target.

Taiwan Stock vs. US Stock Gold ETFs: Which to Choose?

The US market is the largest trading venue for gold ETFs. The two biggest global gold ETFs are SPDR’s GLD and iShares’ IAU.

Overview of Taiwan Stock Gold ETFs

Among these, Yuanta S&P Gold ETF has the largest scale and highest liquidity, making it a friendly choice for beginners. Leveraged and inverse products are more volatile and not recommended for novices.

Overview of US Stock Gold ETFs

Which Performs Better?

Based on asset size, liquidity, cumulative returns, and maximum drawdown, US gold ETFs generally perform more stably. GLD is the largest and most liquid; IAU offers low management fees (0.25%) appealing to cost-sensitive investors; SGOL provides physical delivery options, with lower risk of loss but less liquidity.

What Indicators Should You Consider When Choosing a Gold ETF?

Issuer and Size: Prefer products issued by reputable large institutions. Larger assets mean better liquidity and reliability, making buying and selling easier.

Underlying and Historical Performance: Choose those tracking international spot gold prices, and review 3-5 year returns and maximum drawdowns to assess risk. Avoid poorly performing products unless they are undervalued with good prospects; otherwise, low liquidity can hinder exit.

Timing and Costs: Buy when gold prices are relatively low to reduce average costs. Also, pay attention to management fee differences—lower fees (around 0.5%) can make a significant difference over the long term.

Summary

Gold ETFs combine convenience, low costs, and risk diversification, making them excellent tools for ordinary investors to participate in the gold market. Beginners can start with Taiwan’s Yuanta S&P Gold ETF or US ETFs like GLD and IAU; more advanced investors can choose flexibly based on risk appetite and investment horizon.

Most importantly: investing in gold ETFs requires a calm mindset, long-term holding, and regular review—avoid frequent trading. Let time work for steady appreciation, which is the true essence of this type of investment.