How to Choose the 5 Major Ways to Invest in Gold? Understand the Risk and Return at a Glance

In recent years, geopolitical tensions and inflationary pressures have not eased, prompting many investors to reevaluate the hedging value of gold. Besides traditional physical gold bars, modern investors have numerous channels to participate in gold price movements, each with vastly different risks, costs, and returns. This article provides a detailed analysis of five mainstream gold investment methods to help you find the most suitable entry strategy based on your needs.

Is Gold Investment Still Worth Considering Now?

Over the past few years, gold prices have experienced dramatic fluctuations, approaching $2000 in 2023 from a high point, then dropping below $1700, mainly influenced by US Federal Reserve interest rate policies and geopolitical conflicts. Since entering 2024, the situation has changed significantly.

Global central banks have increased their gold reserves, with net purchases reaching 1,045 tons in 2024—surpassing the 1,000-ton mark for three consecutive years. This institutional-level buying has directly driven gold prices above $2,700. As of September 2025, international gold prices have soared above $3,700, with some international banks even predicting that mid-2026 gold prices could challenge the $4,000 level.

However, it’s important to note that short-term gold price fluctuations are influenced by multiple factors and are difficult to predict precisely. Therefore, the core of gold investment is finding the right entry point, rather than waiting to buy at a higher price after a rise. Depending on your investment goals, you can choose between long-term allocation strategies or short-term trading strategies.

Long-term holding strategies are suitable for investors seeking preservation and appreciation of assets. Options include physical gold, gold savings accounts, or gold ETFs, with the focus on buying at relatively low points.

Short-term trading strategies are suitable for investors willing to accept volatility risks and who possess market analysis skills. They can use gold futures or contracts for difference (CFDs) to perform two-way trading and profit from price differences.

Five Gold Investment Methods Compared

Method 1: Physical Gold Bars — The Most Traditional Preservation Choice

Buying physical gold bars, ingots, or commemorative coins is the oldest form of investment. Physical gold can be purchased at banks or gold shops, with larger single investments and relatively simple purchase procedures.

The advantage of physical gold is its relatively low risk, tangible possession, and psychological comfort. The downside is that it does not generate interest income, requires secure storage (usually with safekeeping fees), has lower liquidity, and can be difficult to sell quickly. Additionally, gold jewelry and commemorative coins include processing fees, and selling them involves paying handling fees and wear-and-tear costs, making them less suitable as investment assets.

Tax Reminder: If the transaction amount exceeds NT$50,000, you must declare personal occasional trade income, taxed at a 6% net profit rate.

Suitable For: Long-term preservation, diversified asset allocation, risk-averse investors

Purchase Tips: Buying directly from banks (e.g., Bank of Taiwan) offers more security, or purchasing small grams from gold shops. Be sure to check purity, as resale is based on weight, and brand or appearance do not carry premiums.

Method 2: Gold Savings Account — The Convenience of Paper Gold

Gold savings accounts (also called “paper gold”) are managed by banks that hold the gold on behalf of investors. Investors only need to buy and sell through their account without physically holding gold bars. Many banks in Taiwan offer this service, such as Bank of Taiwan, CTBC Bank, E.SUN Bank, etc.

There are three purchase options: TWD-denominated, foreign currency-denominated, and recently introduced dual-currency products. Choosing TWD involves exchange rate risk; foreign currency options require initial currency exchange costs. Overall costs are moderate, but frequent trading can accumulate costs, so a low-frequency strategy is recommended.

Gold savings accounts can be exchanged for physical gold, providing flexibility. The purchase is considered property transaction income, reported in the following year’s comprehensive income tax, and losses can be deducted.

Suitable For: Investors seeking low-cost allocation, conservative strategies, low-frequency trading

Purchase Tips: Institutions like Bank of Taiwan, E.SUN Bank, and Yushan Bank offer competitive products and service conditions.

Method 3: Gold ETF — The Most Liquid Index Product

Gold ETFs are index funds tracking gold prices, and investors can buy them directly through stock accounts. Popular products include Taiwan Gold ETF (code 00635U) and US gold ETFs (such as GLD, IAU).

The annual total cost of Taiwan Gold ETF is about 1.15% management fee plus 0.1% trading tax; US gold ETFs have lower management fees (0.25%-0.4% per year), but require currency exchange costs. Low entry barrier and good liquidity make them suitable for beginners and retail investors, but they can only go long, not short, and are more suited for long-term investment.

Suitable For: Newcomers to gold investment, cost-conscious investors, passive investors

Purchase Tips: Use domestic brokers for Taiwan ETFs or open overseas broker accounts for US ETFs; the latter offers better rates but involves currency exchange.

Method 4: Gold Futures — High Leverage, Two-Way Trading

Gold futures are contracts based on international gold, with profits depending on the difference between entry and exit prices. Futures support two-way trading (long and short), operate 24 hours internationally, and have ample liquidity, making prices difficult to manipulate.

Investors only need to deposit a certain margin to leverage their capital significantly. The downside is that futures have a fixed expiration date, requiring periodic rollover, which incurs additional costs. If positions are not closed before expiry, they are forcibly liquidated. Leverage amplifies both gains and losses, so risk management is critical.

Tax-wise, gains from gold futures are temporarily untaxed, with only a futures transaction tax of 0.025% (25 basis points), making the tax burden very light.

Suitable For: Experienced investors, larger capital, short-term traders willing to accept volatility

Trading Tips: Taiwan futures markets have limited trading hours; using international futures brokers allows 24-hour trading with better liquidity and conditions.

Method 5: Gold CFDs — The Lowest Cost for Quick Entry

CFDs (Contracts for Difference) are derivatives tracking the spot gold price, with the main advantage of extremely low entry barriers, allowing trading with minimal capital. CFDs support two-way trading, have no expiration date, and are more flexible than futures.

Profits come from the bid-ask spread, without needing to physically hold gold. Investors can freely adjust leverage, with fees mainly from spreads and overnight financing costs. Trading only requires predicting the price direction, much simpler than stock picking.

If overseas income exceeds NT$1 million annually, it must be included in the basic income calculation, subject to minimum tax.

Differences between Futures and CFDs:

• CFDs have no minimum contract size, lower margin requirements
• CFDs have no expiration date, suitable for long-term positions
• Futures incur transaction tax; CFDs only spread costs
• CFDs require less capital

Suitable For: Small investors, quick entry seekers, short-term traders willing to learn trading skills

Trading Tips: Choose regulated brokers with international licenses (e.g., ASIC, FCA) to avoid scams.

The Core Value of Gold Investment

Why does gold always occupy an important position in investment portfolios? The main reasons include:

Hedge Property: Gold maintains long-term purchasing power and is a traditional tool against inflation.

Global Market: Gold trading is large-scale and historic, with high transparency, making price manipulation difficult.

Safe Haven: During economic turmoil, geopolitical tensions, or financial crises, gold often becomes a safe haven. After the Russia-Ukraine conflict and during major rate hikes by central banks worldwide, gold prices rose significantly.

Institutional Recognition: Almost all mainstream investment institutions recommend including gold in portfolios, with suggested allocations of at least 10%.

Because of its high volatility yet relatively independent nature—neither offering fixed returns like deposits nor unlimited growth like stocks—gold provides investors with psychological stability and crisis resilience. As a result, many investors use gold as a long-term asset allocation tool or as a short-term profit target from price differences.

Choosing the most suitable investment method is the key to success—whether pursuing steady preservation or active gains, the gold market can meet different investment styles.