How to choose gold investment? A detailed explanation of the costs and benefits of five major trading methods

Currently, with geopolitical conflicts intensifying and inflation continuing to trouble the global economy, gold, as a traditional safe-haven asset, has once again become a focus of investor attention. However, many people first think of buying physical gold bars when considering gold investment. In fact, there are many ways to invest in gold beyond physical gold, including paper gold (gold savings books), gold ETFs, futures, contracts for difference (CFDs), and other derivatives—each with its own risk, cost, and return characteristics. This article will analyze these five major gold investment paths in detail to help you find the most suitable method.

Is it really cost-effective to buy gold now?

Review of gold price trends

Over the past few years, gold prices have been quite volatile. Between 2022 and 2023, gold prices fluctuated sharply between $2000 and $1700, mainly due to geopolitical conflicts and the Federal Reserve’s rate hikes. In 2024, the situation reversed. On one hand, expectations of interest rate cuts in the US increased; on the other hand, global central banks continued record-breaking gold purchases—net purchases by central banks worldwide reached 1,045 tons in 2024, exceeding the thousand-ton mark for the third consecutive year, directly supporting gold prices to break through $2,700. By October 2025, gold prices even surged to $4,200 before pulling back due to market overbought positions and policy uncertainties.

Differences in investment strategies

It’s important to note that gold prices are influenced by many complex factors, and short-term fluctuations are nearly impossible to predict precisely. Therefore, your investment strategy largely determines which tool to choose:

Long-term hold investors: If your goal is long-term appreciation, the key is to find a good entry point at a low price rather than regretting missing the rise. These investors can consider buying physical gold, gold savings books, or gold ETFs, and enjoy the benefits of rising gold prices during the holding period.

Short-term traders: If you pursue higher returns and can tolerate market volatility, short-term and swing trading are options. This requires some chart analysis skills to capture price differences for profit. Gold futures and gold CFDs are designed for such investors, both tracking international gold prices and allowing two-way trading (long or short). As long as you master price trend analysis, you can profit from both upward and downward movements.

Cost and return comparison of five major gold investment methods

Different gold investment tools vary greatly in entry barriers, trading hours, fees, leverage, etc. Let’s analyze each one:

Physical Gold: The traditional choice for preservation and collection

Investment forms

Physical gold includes gold bars, gold ingots, jewelry, and commemorative coins, usually purchased at banks or jewelry stores. It’s recommended to focus on gold bars; jewelry and coins should be approached cautiously because they include processing fees, and selling them involves fees and wear-and-tear costs, often resulting in less favorable prices.

Costs and returns

Buying physical gold involves higher costs (requiring large capital), with fees ranging from 1% to 5%, plus storage costs. Most importantly, physical gold is not an interest-bearing asset; it does not generate interest or dividends. Its other major issue is low liquidity—there’s a phenomenon of “easy to buy but hard to sell”—buying is easy, selling is often difficult.

Suitable for and regional purchase tips

• Malaysia: Major banks like Maybank, CIMB, Public Bank, RHB Bank offer standardized gold bars (1g, 5g, 10g, 1oz, etc.), with good buyback policies, suitable for long-term holders. Small grams of gold can be purchased at jewelry stores, but purity verification is necessary.

• USA: Major banks such as JPMorgan Chase, Bank of America, Wells Fargo provide gold investment services with high market regulation, but transaction costs are relatively high.

• Hong Kong: HSBC, Hang Seng Bank, etc., offer physical gold trading and custody services. The Hong Kong gold market is highly liquid and trading is convenient.

Tax tips: In Malaysia, purchases exceeding 50,000 MYR must be declared to relevant authorities.

Advantages: Low risk, simple purchase process, tangible ownership.
Disadvantages: High unit price, storage requirements, additional fees, poor liquidity.

( Gold Savings Book: Paper gold without physical holding

Investment forms

Gold savings books (paper gold) are a convenient alternative. After purchasing gold, the bank holds it for you and provides a savings book as proof. All transactions are conducted through banking channels, avoiding storage and security issues, with much better liquidity than physical gold.

Costs and returns

Fees for gold savings books are about 1%, which is moderate. In Malaysia, banks typically offer three trading methods: buy with MYR, buy with foreign currency, or dual-currency savings books. Buying with MYR involves exchange rate risk (since international gold prices are quoted in USD), while buying with foreign currency involves currency exchange costs. Overall, the friction costs of both methods are similar, but frequent trading can accumulate fees and exchange costs, so over-trading is not recommended.

Suitable for and regional purchase tips

• Malaysia: Maybank, Public Bank, HSBC, RHB Bank, CIMB Bank all offer gold savings account opening, supporting small transactions and physical gold exchange.

• USA: Most US banks provide gold-related investment and custody services.

• Hong Kong: HSBC, etc., offer similar services, but currency exchange issues should be considered.

Tax tips: If frequent buying and selling of gold savings books are deemed commercial activities, profits should be included in personal income tax declarations.

Advantages: Lower risk, supports small transactions, can exchange for physical gold, no need for self-storage.
Disadvantages: Limited trading hours, only long positions (no shorting), currency exchange costs are hard to control.

) Gold ETFs: Low-cost fund investment approach

Investment forms

Gold ETFs (Exchange-Traded Funds) track gold price indices. You can buy and sell them on stock exchanges just like stocks. Investment options include domestic ETFs and overseas ETFs. Common products include Malaysian gold ETF###0828EA(, US gold ETFs)GLD###, and(IAU).

Costs and returns

Cost structures of various gold ETFs:

• Malaysian gold ETF(0828EA): management fee 1%/year + transaction fee 0.1%-0.5% + currency exchange 0.3%-1%
• US gold ETF(GLD): management fee 0.4%/year + transaction fee 0%-0.1% + currency exchange 0.32%
• US gold ETF(IAU): management fee 0.25%/year + transaction fee 0%-0.1% + currency exchange 0.32%

Overall, US ETFs tend to have lower costs than local ones. The key feature of gold ETFs is long-only (no shorting), suitable for investors optimistic about long-term gold price increases.

Suitable for and regional purchase tips

• Malaysia: Purchase Malaysian gold ETFs via local brokers, or open US stock accounts to buy US ETFs—lower costs but requires currency exchange.

• USA: Offers many well-known gold ETFs like SPDR Gold Shares(GLD), iShares Gold Trust(IAU), VanEck Merk Gold Trust(OUNZ), with high liquidity and low fees.

• Hong Kong: Can buy Hang Seng Gold ETF(7800), Huaxia Gold ETF, etc., through Hong Kong banks or brokers, noting currency exchange issues.

Advantages: Easy to buy/sell, low investment threshold, high liquidity, low transaction costs.
Disadvantages: Management fees, limited trading hours.

( Gold Futures: Professional leverage trading tools

Investment forms

Gold futures are contracts based on the future price of gold in the international market. Profit or loss depends on the price difference between opening and closing. Futures support two-way trading and leverage, allowing investors to control positions much larger than their capital with a margin deposit.

Costs and returns

Futures costs mainly include low fees (~0.1%) and interest on borrowed funds. More importantly, futures have expiration dates; before expiry, you must settle or rollover, which incurs additional costs.

Risks and features

While leverage can amplify gains, it also magnifies losses. This requires strict risk management. Futures are suitable for professional traders or experienced investors engaging in short-term or swing trading.

Regional purchase and trading tips

• Malaysia: Bursa Malaysia Derivatives is the only local futures exchange, with limited trading hours (daytime on weekdays). Many investors prefer overseas brokers with 24-hour trading, better liquidity and volume.

• USA: CME Group is the largest futures exchange, offering COMEX gold futures)GC(, with high liquidity and small spreads, supporting nearly 24-hour trading.

• Hong Kong: HKEX offers USD-denominated gold futures contracts. Trading hours are 09:15-12:00, 13:00-16:30, with night trading from 17:15-23:30. Many local and international brokers like UOB, Merrill Lynch provide services.

Tax tips: Profits from gold futures are subject to capital gains tax, GST, and other relevant taxes.

Advantages: Supports T+0 trading, two-way (long/short), leverage enhances capital efficiency.
Disadvantages: High leverage risk, requires regular rollover, delivery costs, high skill requirements.

) Gold CFDs: The lowest threshold derivative trading

Investment forms

CFD (Contract for Difference) is a derivative contract tracking the spot gold price. Its main advantage is maximum flexibility: supports two-way trading, no need to hold physical gold, and no expiry issues. Compared to futures’ fixed contracts, CFDs allow smaller positions and lower entry barriers.

Costs and returns

CFD costs mainly come from spreads and overnight financing fees, with significantly lower commissions than futures. Since there’s no minimum contract size, initial margin requirements are very low, allowing beginners to experience derivatives trading with minimal funds.

Risks and features

CFD also uses leverage, amplifying both gains and losses. However, CFDs are more flexible: positions can be opened and closed at any time, without waiting for expiry; leverage options range from 1X to 20X or more, suitable for practice.

Regional purchase and trading tips

• Malaysia: No local CFD exchange; investors trade through regulated overseas CFD brokers. Most forex platforms offer gold CFDs, so choose reputable international brokers regulated by ASIC, CIMA, FSC, etc.

• USA: CFDs are not mainstream due to SEC and CFTC regulations; most US brokers do not offer CFDs. US investors often choose futures or options instead.

• Hong Kong: CFD products are well accepted; many local and international brokers like IG Markets, Plus500, Dukascopy offer CFD trading.

Warning: The CFD market is mixed, with many unregulated or fake platforms. Always verify whether the broker holds proper licenses from reputable authorities; avoid unlicensed or clone platforms.

Advantages: Lowest investment threshold, flexible two-way trading, T+0, easy account opening.
Disadvantages: High leverage risk, requires trading skills, platform selection is critical.

Summary of the five major gold investment methods

How to choose the most suitable gold investment method for you

Step 1: Clarify your investment goals

Are you aiming for long-term preservation and inflation hedge, or short-term trading profits? Your goal determines the tool.

Step 2: Assess your own conditions

• Available funds: Sufficient capital favors physical gold or futures; limited funds prioritize ETFs or CFDs.
• Trading experience: No experience? Passive investments like ETFs are better; experienced traders can try futures or CFDs.
• Risk tolerance: Conservative investors prefer low-risk options; aggressive investors may accept leverage.
• Time commitment: Long-term investors don’t need frequent monitoring; short-term traders need to watch markets closely.

Step 3: Consider market environment

• When gold prices are at bottom: prioritize long-term holdings (physical gold, savings books, ETFs).
• When prices are high and volatile: short-term trading tools (futures, CFDs) are more effective.
• When uncertain: consider phased deployment to average costs.

Step 4: Set cost and return expectations

Physical gold and savings books have clear costs but limited returns; ETFs have low costs but weaker liquidity; futures and CFDs have low costs but higher risks and potential returns.

In summary, regardless of the method chosen, the key is to find suitable entry points, set clear stop-loss and take-profit levels, and manage funds well. Gold’s status as a traditional safe-haven asset won’t change in the short term; the crucial factors are choosing the right tools and timing.