There are five major channels for gold investment. Where should you start? A comprehensive analysis of risk, return, and costs.

Is it a good time to invest in gold now?

Geopolitical tensions and persistent inflation pressures have once again made gold a focal point as a traditional safe-haven asset. The gold price has indeed experienced fluctuations—oscillating between $1,700 and $2,000 from 2022 to 2023, and in 2024, buoyed by expectations of Federal Reserve rate cuts and record-breaking global central bank gold purchases (annual net gold purchases reaching 1,045 tons, exceeding 1,000 tons for three consecutive years), it broke through the $2,700 mark. Entering 2025, gold prices hit new highs, surpassing $3,700, with institutional forecasts suggesting it could reach $4,000 by mid-2026.

However, it is important to note that short-term fluctuations in gold prices are difficult to predict accurately, as they are influenced by multiple factors. The key to a long-term holding strategy is to grasp reasonable entry points, rather than being attracted to upward trends and only then entering. Depending on different investment goals, investors can choose physical gold, gold savings accounts, or gold ETFs as hedging tools; for higher returns and risk tolerance, short-term and swing trading are worth considering. Gold futures and gold CFDs can track international prices, allowing traders to go long or short based on technical analysis to profit from price differences.

Five channels for investing in gold, an overview of costs and returns

Different investment methods in gold have their own characteristics. Physical gold investment has moderate entry barriers, is limited by trading hours, incurs higher costs (1%~5%), but carries the lowest risk; gold savings accounts also have moderate thresholds, with bank trading hours, about 1% handling fee, and exchange rate considerations; gold ETFs have lower entry barriers, traded during broker trading hours, with fees around 0.25%; gold futures require higher capital, support leverage and two-way trading, with transaction costs around 0.1%; gold CFDs have the lowest threshold, traded 24/7, with costs only about 0.04%.

Which channel is most cost-effective for investing in gold? It depends on individual trading goals. If the focus is on inflation hedging and asset preservation, buying physical gold bars is the traditional choice. Bank purchases are relatively safe and secure but require storage fees; small gold items are recommended to buy at jewelry stores, paying attention to purity. If the goal is to profit from buying and selling price differences, physical gold has limited liquidity and is less convenient. In this case, gold savings accounts or gold ETFs are suitable for low-cost long-term investment; or short-term trading can be done via gold futures or gold CFDs. It should be noted that, long-term holding usually yields lower returns, and tools suitable for short-term trading like futures and CFDs are more appropriate.

Method 1: The hedging value of physical gold

Physical gold includes gold bars, gold ingots, jewelry, and commemorative coins, mostly purchased at banks or jewelry stores. It is recommended to prioritize gold bars, as jewelry and commemorative coins include processing fees, and selling them involves handling fees and wear-and-tear costs, making them less cost-effective.

Physical gold is not an interest-bearing asset and requires specialized safekeeping facilities like safes. Its liquidity is relatively poor, with the “easy to buy but hard to sell” situation. However, because investors can physically hold gold, many still favor it, mainly for long-term preservation and collection. Tax-wise, transactions exceeding NT$50,000 must be reported as personal occasional trade income.

Applicable scenarios: collection, hedging, asset preservation
Advantages: lower risk, simple purchase process
Disadvantages: high unit price, requires proper storage, additional costs

Method 2: Convenience of gold savings accounts

Gold savings accounts (paper gold) allow investors to buy gold while the bank holds it on their behalf, eliminating the hassle of physical possession. All transactions are completed through bank accounts. Many large financial institutions offer this service. Currently, there are three trading methods: NT dollar-denominated, foreign currency-denominated, and dual-currency products, each with different fees.

Buying with NT dollars involves exchange rate risk, as international gold prices are quoted in USD; foreign currency purchases incur exchange costs upfront. Overall, the friction costs of both methods are comparable, considered moderate. Be aware that frequent buying and selling can accumulate costs and exchange rate expenses, so excessive trading is not recommended.

Tax perspective: profits from gold savings account transactions are considered property trading income and must be included in the following year’s comprehensive income tax declaration. If losses occur, they can be deducted from property trading income, and any remaining losses can be carried forward for up to three years.

Applicable scenarios: long-term low-cost holding, low-frequency trading
Advantages: relatively low risk, supports small transactions, can exchange for physical gold
Disadvantages: limited trading hours, only supports long positions, no short selling, exchange rate costs

Method 3: Liquidity advantage of gold ETFs

Gold ETFs are gold index funds; as fund products, they charge management fees. Investors can choose between domestic gold ETFs or overseas gold ETFs. The former has management fees of about 1.15% per year plus 0.25% handling fee; overseas products have management fees around 0.25% to 0.4% annually.

Gold ETFs are traded directly with brokers, with investment thresholds being relatively low, and liquidity is good. However, they only support long positions, making them suitable for beginners and retail investors for long-term allocation. Compared to mutual funds, costs are more transparent and generally lower.

Applicable scenarios: low-cost long-term holding, low-frequency trading
Advantages: convenient trading, low investment threshold, good liquidity
Disadvantages: need to monitor management fees, limited trading hours

Method 4: Double-sided mechanism of gold futures

Gold futures are based on international gold prices. Returns depend on the price difference between entry and exit. Futures support two-way trading and extended trading hours, with lower holding costs. Usually, only a certain percentage of margin is required to leverage trading, suitable for short-term trading and experienced investors. Gold prices are linked 24/7 with international markets, making manipulation difficult.

The downside is that contracts have expiration dates, and rollover costs are involved; if not closed before expiration, positions are forcibly liquidated. Leverage can amplify both gains and losses, requiring strict risk management. Tax-wise, trading gains from gold futures are no longer taxed, only a small futures transaction tax applies, with very low rates.

Applicable scenarios: short-term trading, swing trading, larger capital scale
Advantages: T+0 trading 24/7, supports long and short positions, leverage improves capital efficiency
Disadvantages: high leverage risk, need to handle contract expiration and rollover

Method 5: Low-threshold feature of gold CFDs

Gold CFDs track spot gold prices, support two-way trading without physical possession, and have no expiration limits, making them more flexible than futures. Profits come from the price difference of buy and sell contracts. Entry barriers are extremely low, with flexible leverage options. Costs mainly come from spreads and overnight financing fees.

Trading gold CFDs is simpler than stock trading, requiring only analysis of gold price trends. Compared to futures, CFDs have no minimum contract size, lower margin requirements, no expiration date, no delivery, no trading fees or taxes, and lower capital requirements.

Tax considerations: income from international gold trading is considered overseas income. If annual income exceeds NT$1 million, it must be included in the individual’s basic income, subject to minimum tax.

Applicable scenarios: short-term trading, swing trading, small capital
Advantages: small investment, very low threshold, supports two-way trading, T+0 24/7, easy account opening
Disadvantages: high leverage risk, requires certain trading skills

Why does gold investment continue to attract funds?

As a preservation commodity, gold has a global investment market and is regarded as a “safe haven” during market turbulence. It has historically served as a hedge against US dollar depreciation and rising inflation. This is not just old talk; institutional investors often allocate gold in their portfolios, generally recommending that gold account for at least 10% of total investments.

Although gold can be volatile, it does not offer fixed returns like fixed deposits, nor does it promise unlimited gains like stocks or futures. Instead, it provides investors with a sense of security and confidence to cope with market uncertainties and financial crises. Whenever inflation heats up or markets experience sharp fluctuations, enthusiasm for investing in gold tends to rise.

Looking at historical trends, any major economic, geopolitical, or war-related systemic risks tend to cause significant fluctuations in gold prices. For example, after the Russia-Ukraine conflict erupted in 2022, gold prices continued to rise to $2,069; recently, international prices again broke new highs, reaching $3,700.

Because international gold trading is large-scale and long-established, the market can quickly reflect major systemic events, leading to rapid rises and falls. This is also why investors often use gold as a “short-term buy and sell for profit” trading tool or as a hedge in their investment portfolios.