Gold Investment Complete Guide: 6 Major Methods and Financial Planning Options Alongside Stocks

Gold Prices Surge: Why Is It Now a Hot Investment?

Since the outbreak of the pandemic in 2020, central banks worldwide have been releasing liquidity to stimulate the economy, causing gold prices to rise from around $1,500 per ounce. As of October 2025, international gold prices have surpassed $4,300 per ounce, an increase of over 104%. This rally reflects global economic uncertainties and inflation pressures.

For young people just starting to manage their finances, what does gold represent? Simply put, it is a symbol of stability and an important tool for diversification.

Why Include Gold in Your Investment Portfolio?

Hard currency for value preservation and inflation hedge

Prices rise year after year, but wages often lag behind. Keeping cash in banks over the long term erodes purchasing power. Gold’s value, however, is different—it is a tangible asset, globally recognized precious metal that won’t depreciate due to a single country’s policies. Historical data shows that gold performs particularly well during periods of high inflation.

Risk hedge and safe haven

Don’t think of gold as a way to make quick profits; it’s more like insurance. If your portfolio is solely stocks or cryptocurrencies, market volatility can cause assets to shrink rapidly. After the Russia-Ukraine conflict in 2022, gold prices surged sharply; recently, due to increased trade policy uncertainties, gold hit new highs again.

Many professional investors recommend allocating 5%–15% of assets in gold to hedge risks without hindering overall growth.

Diversified trading options, accessible to small investors

You don’t have to buy gold bars. Gold savings accounts, ETFs, CFDs, futures—these tools allow investors of different scales to participate. In 2024, the daily average trading volume of gold reached $227 billion, second only to the S&P 500, indicating ample liquidity.

Psychological reassurance

Although subjective, psychological factors are indeed important. Holding gold or gold ETFs can provide a sense of security and stability during market turbulence and stock fluctuations.

Can Gold Truly Preserve Value? The Truth

Theoretically, yes. As a tangible asset, gold doesn’t depreciate like paper money due to policies. But reality is more complex.

Warren Buffett, the legendary investor, never invests in gold because it doesn’t generate wealth or dividends. Over the past 50 years, gold has experienced two clear bull markets, but most of the time it has been flat or declining. Meanwhile, the stock market, despite crashes, shows a more consistent long-term upward trend.

In other words, short-term gold can be highly volatile, and its ability to preserve value isn’t linear. Beginners should not be scared by short-term gains nor blindly follow the trend. The key is understanding gold’s characteristics and choosing the right strategy.

Comparison of Gold Investment Methods: 6 Major Approaches, Each with Pros and Cons

Method 1: Physical Gold (Bars, Coins)

The most traditional way—buy physical gold directly. Available at banks, jewelry stores, pawnshops.

Advantages: Hard currency, preserves value, tangible reassurance
Disadvantages: Higher costs, poor liquidity, storage costs, potential loss or damage when reselling

Note: Prefer bars and coins, verify brand, weight (99.99% purity), quality, and certificates. Gold jewelry and commemorative coins are not ideal for investment.

Method 2: Gold Savings Account (Paper Gold)

Records ownership digitally, price linked to spot gold. Can be converted to physical gold anytime, but once converted, cannot revert to savings account. Many banks in Taiwan offer this service.

Advantages: Low minimum (starting from 1 gram), no account opening fee, worry-free storage
Disadvantages: Higher transaction costs, no interest, not suitable for short-term trading

Method 3: Gold ETFs

Exchange-listed open-end funds, tradable like stocks. The largest global gold ETF is SPDR Gold Shares (GLD.US). In Taiwan, Yuanta S&P Gold Inverse ETF (00674R.TW).

Advantages: Low entry barrier, low fees, easy to operate, suitable for beginners, real-time trading
Disadvantages: Trading hours limited, management fees paid to fund providers

Method 4: Gold Mining Stocks

Trade stocks of gold mining companies like Barrick Gold (ABX.US), Newmont Mining (NEM.US), Goldcorp (GG.US).

Advantages: Low entry barrier, easy trading, low transaction fees
Disadvantages: Heavily influenced by company management and structure, tracking gold prices can deviate significantly

Method 5: Gold Futures

Buy and sell gold futures contracts through exchanges or futures brokers. Major markets include CBOT, CME, NYMEX. Micro gold futures are available, with a minimum of a few hundred USD.

Advantages: Leverage, high capital efficiency, T+0 trading, two-way trading (long/short)
Disadvantages: Contracts have expiry dates, require delivery or rollover, leverage can amplify losses, high entry threshold, not suitable for beginners

Key Point: Standard gold futures contracts are 100 ounces per lot, requiring closing or rolling over before expiry.

Method 6: Gold CFDs (Contracts for Difference)

Contracts tracking spot gold prices, with XAUUSD as the underlying. Usually opened via forex brokers. Features include T+0 two-way trading, no expiry, simple rules.

Advantages: Very low investment threshold, long/short flexibility, simple contract rules, small contracts friendly to small capital, no time limit, high flexibility
Disadvantages: Leverage can be risky, use cautiously

Key Point: Minimum 0.01 lot to start trading, flexible contracts, user-friendly interface, can open a position with just $10.

Gold Futures vs. Gold CFDs: How to Choose?

How to Start Trading Gold?

Step 1: Choose the Right Trading Tool

Based on your capital, risk tolerance, and trading style. Short-term traders may prefer CFDs or futures; medium to long-term investors might choose gold savings accounts or ETFs; conservative investors can consider physical gold.

Step 2: Analyze Market Environment

Gold prices are affected by multiple factors—inflation, central bank policies, market sentiment, economic trends. Use technical indicators like gold-silver ratio, gold-oil ratio to gauge trends.

Step 3: Develop a Trading Plan

Set take-profit and stop-loss levels to control risk per trade. Leverage can magnify gains but also losses—beginners should start with small positions and low leverage.

Gold Investment Tips: Understanding the “Rhythm”

Watching daily gold price fluctuations can be exhausting. In reality, gold’s long-term trend has its own rhythm. Historical data shows that roughly every 10 years, gold experiences a clear bull market, followed by a few years of correction.

This is closely related to economic conditions, USD strength, interest rate trends, and global risk sentiment. When stocks are volatile, inflation rises, and economic outlook is uncertain, gold tends to be in demand; conversely, during stable economies and booming markets, gold may cool off.

Some mention a longer-term “super cycle”—driven by structural changes like rapid growth in emerging markets and increased resource demand—potentially leading to continuous bull markets for over a decade.

For beginners, it’s unnecessary to monitor gold prices daily. Observing the USD, interest rates, and risk sentiment indicators can roughly tell you if gold is entering its next upward phase.

Gold Investment for Small Investors

Don’t worry about limited funds. Gold savings accounts, ETFs, or online CFD platforms offer low-cost entry. Many platforms provide demo accounts to practice without risk, helping you get familiar with trading before investing real money.

For those interested in swing trading, gold CFDs are a good choice due to low transaction costs, two-way flexibility, and small lot sizes. But remember—use leverage cautiously, and always employ take-profit and stop-loss tools for long-term survival.

The golden rule of gold investing is simple: Understand your tools, respect risks, and stay patient. No matter which method you choose, these three principles always apply.