Gold Investment Guide: Analyzing the Risks and Returns of 5 Major Entry Methods

Why Invest in Gold Now?

Geopolitical risks and ongoing inflation pressures have once again brought traditional safe-haven assets like gold into focus. Market data shows that gold prices have experienced significant volatility over the past few years—oscillating between $1,700 and $2,000 in 2022-2023, and in 2024, due to expectations of Fed rate cuts and record-breaking global central bank gold purchases (net buy of 1,045 tons), prices continued to break new highs, surpassing $3,700 by September 2025. Market institutions estimate that by mid-2026, gold could break through $4,000.

However, gold price movements are complex and unpredictable in the short term. The key to investing in gold is not entering at the high point, but finding the right buying opportunity. Depending on investment goals, choosing suitable tools is crucial.

Comparison of 5 Gold Investment Methods

Five Paths to Gold Investment

1. Physical Gold: Traditional Hedge

Physical gold includes bars, ingots, commemorative coins, etc. Purchase channels are mainly banks and jewelry shops. It is recommended to prioritize gold bars over jewelry, as jewelry involves high processing fees and resale losses.

Buying Tips: Buying large grams directly from banks is safer and cheaper; for smaller amounts, consider jewelry shops. Taiwan Bank is the only bank in Taiwan offering physical gold trading, with a minimum purchase of 100 grams. Focus on purity rather than appearance or brand, as resale is based on weight.

Costs and Taxes: Physical gold requires storage fees, and transactions over NT$50,000 must be declared as personal one-time trade income, with tax calculated at a 6% profit margin.

Risk Assessment: Physical gold does not generate interest, has poor liquidity, and can be “hard to buy and sell,” but remains valuable as a hedging asset.

2. Gold Passbook: Low-Cost Paper Gold

Gold passbook is a bank custodial ledger tool, allowing investors to buy and sell without holding physical gold. Many banks in Taiwan, including Taiwan Bank, E.SUN Bank, and Yushan Bank, offer this service, with options to exchange for physical gold.

Purchase Methods: Banks offer NT$ buy-in, foreign currency buy-in, and dual-currency passbooks. Using NT$ involves exchange rate risk; foreign currency purchases face initial conversion costs. Overall, costs are moderate.

Tax Treatment: Gains from buying and selling are considered property transaction income, included in the following year’s comprehensive income tax. Losses can be deducted, with a carry-over period of 3 years.

Operational Notes: Trading is limited to bank hours; only buying long positions, no shorting. Not suitable for frequent trading due to transaction costs each time.

3. Gold ETF: Entry Ticket to Index Investing

Gold ETFs are essentially gold index funds. Investors can choose Taiwan-listed ETFs (e.g., 00635U) or US-listed ETFs (GLD, IAU). Trading is similar to stocks, executed via brokers.

Cost Structure:

• Taiwan ETF: Management fee 1.15% annually + 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%

Features: Low trading costs, good liquidity, low entry barrier, but only long positions, no shorting, and trading hours are limited. Suitable for long-term holders and retail investors.

4. Gold Futures: Advanced Trading Tool

Gold futures are based on international gold prices, with profits/losses determined by entry and exit prices. Futures support two-way trading, operate 24/7, and leverage margin to enhance capital efficiency, suitable for short-term and swing trading.

Trading Features: High liquidity in international markets, prices linked globally 24/7, difficult to manipulate. Futures contracts have expiry dates; positions need to be rolled over, incurring additional costs. Forced liquidation rules at expiry should be noted.

Cost Advantage: No capital gains tax on futures trading; only a futures transaction tax of 0.025%. Tax burden is relatively light.

Risk Management: Leverage amplifies both gains and losses; proper capital management is essential. Recommended for professional investors.

5. Gold CFD: Low Barrier Derivative

Gold CFDs track spot gold prices; investors do not hold physical gold. Profits come from buy-sell spreads. No expiry date, more flexible than futures. Very low minimum investment, with various leverage options, mainly costs from spreads and overnight fees.

Advantages: Compared to futures, CFDs have no fixed minimum contract size, lower margin requirements; no expiry or rollover costs; no trading commissions or taxes; very accessible for small investors.

Tax Considerations: Income from international gold trading is considered overseas income; exceeding NT$1 million annually must be included in personal basic income, subject to minimum tax rate.

Target Users: Easier to operate than futures, suitable for experienced derivatives traders or beginners testing small amounts.

How to Choose the Most Suitable Investment Method?

Long-term preservation investors: For inflation hedging and asset protection, consider physical gold, gold passbook, or gold ETFs. These methods have relatively controlled risks and are suitable for holding over years.

Swing traders: For profiting from gold price fluctuations and market analysis skills, gold futures and CFDs are more efficient tools. They support two-way trading, operate 24/7, and have low costs, ideal for short-term strategies.

Capital scale considerations: Small investors should prioritize CFDs or ETFs; large investors may prefer futures or physical gold.

Experience level matching: Beginners are advised to start with gold passbook or ETFs to gain experience, then gradually explore futures and CFDs for two-way trading.

Core Logic of Gold Investment

Institutional investors continue to allocate to gold not for its yield, but for its hedging properties. Gold exhibits larger volatility but can demonstrate value during market turmoil, rising inflation, and geopolitical risks. Therefore, it is generally recommended to allocate over 10% of a portfolio to gold.

Historical data confirms this. After the Russia-Ukraine war erupted in 2022, gold prices surged to $2,069; more recently, they broke through $3,700, reflecting increased global uncertainty. As a result, investors often adopt a dual strategy: long-term allocation of gold as a defensive shield, while exploiting short-term volatility for trading.

Final advice for gold investment: Regardless of the method chosen, the key is to enter at the right timing, not blindly chase highs. Long-term investors should seize market corrections to gradually build positions, while short-term traders need to master technical and sentiment analysis. Choosing the right tools allows gold to truly serve your financial goals.