Analysis of the five major channels for gold investment: physical gold, savings passbook, ETF, futures, and CFD—how to choose?

Global geopolitical instability and rising inflation risks have led more investors to turn to gold as a safe haven. But beyond traditional physical gold, modern investors have a variety of efficient channels to choose from. This article provides an in-depth analysis of five mainstream gold investment methods to help you select the most suitable tools based on your risk tolerance and investment goals.

2024-2025 Gold Price Trends Review: Is Now the Right Time to Enter?

The gold market has experienced significant volatility in recent years. From 2022 to 2023, gold prices fluctuated between $1,700 and $2,000, mainly influenced by geopolitical conflicts and interest rate hikes. As we enter 2024, the situation shows signs of change:

• Expectations of Fed rate cuts boost gold prices
• Global central banks record-breaking gold purchases, with net purchases reaching 1,045 tons in 2024, exceeding 1,000 tons for three consecutive years
• Gold prices break through key resistance levels, surpassing $2,700 within the year
• By September 2025, gold prices have surged above $3,700, with major institutions forecasting a mid-2026 target of $4,000 per ounce

However, investors should recognize that gold prices are affected by multiple factors, making short-term trends difficult to predict. Therefore, the core strategy is:

Long-term value preservation investors should focus on finding low entry points, suitable for purchasing physical gold, gold savings accounts, or gold ETFs.

Short-term traders who can withstand market volatility may consider gold futures and gold CFDs, profiting from price differences. The latter’s advantage is minimal initial capital requirement, with just $50 needed to start trading.

Comparison Table of Five Gold Investment Methods

Decision Logic for Choosing Investment Methods

Where is the most cost-effective place to buy gold? The answer depends on your investment goals.

For hedging against inflation, buying physical gold bars, coins, etc., is the traditional choice, but requires significant initial capital and storage costs. For large quantities, buying directly from banks is recommended for safety and assurance. For smaller amounts, silver shops are an option, but pay attention to purity and pricing.

For small-scale long-term investment, paper assets like gold savings accounts and gold ETFs are suitable, with lower costs but no short-selling ability.

For short-term profit from price differences, gold futures and CFDs are suitable, but require risk management skills. Note that long-term returns on gold are limited; short-term trading is where profit opportunities lie.

Method 1: Buying Physical Gold—Traditional Safe-Haven Asset

Physical gold includes bars, ingots, jewelry, and commemorative coins, available at banks and jewelry shops. It is recommended to prioritize buying bars to avoid additional processing fees and potential wear and tear associated with jewelry and coins.

Features of Physical Gold:

• Non-interest-bearing asset, no cash flow
• Extra costs for storage and insurance
• Poor liquidity, “hard to buy, easy to sell”
• However, physical possession provides psychological comfort and long-term collection value

Tax Tip: Transactions exceeding NT$50,000 must be declared as personal occasional trade income, taxed at a 6% net profit rate.

Suitable for: Collectors, long-term value investors, investors seeking psychological security

Evaluation of Physical Gold Purchase Locations

Taiwan Bank is the only bank offering physical gold trading nationwide, sourcing from Swiss banks, ensuring quality and lower costs. Sizes range from 100 grams to 250g, 500g, and 1kg.

For small amounts, jewelry shops or pawnshops are options, but purity is key since resale is based on weight. Avoid buying illusionary gold bars with high bargaining costs. Also, carefully evaluate storage costs.

Method 2: Gold Savings Account—“Paper Gold” Convenience

Gold savings accounts, known as “paper gold,” are bank-managed gold holdings where investors only hold a certificate. Compared to physical gold, this method offers much greater convenience. Major banks such as Taiwan Bank, CTBC Bank, First Bank, and Hua Nan Bank provide this service.

How to buy and sell gold savings accounts:

• Purchase with TWD (exposes exchange rate risk)
• Purchase with foreign currency (incurs currency exchange costs)
• Dual-currency gold savings accounts (participate in both exchange rate and gold price fluctuations)

All methods involve moderate friction costs. Buying with TWD faces exchange rate risk; foreign currency purchases involve initial exchange costs. Frequent trading can accumulate high fees; a low-frequency trading strategy is recommended.

Tax Tip: Gains from gold savings accounts are considered property transaction income, to be reported in the following year’s comprehensive income tax. Losses can be deducted; any remaining loss can be carried forward for three years.

Suitable for: Long-term investors seeking low costs, those who prefer less frequent trading

Recommended banks: Taiwan Bank, E.SUN Bank, E.SUN Bank each have advantages.

Method 3: Gold ETF—Low Barrier Index Fund

Gold ETFs are essentially gold index funds, which charge management fees. Investors can choose Taiwan stock gold ETFs or US stock gold ETFs.

Common Gold ETF Comparisons:

• Taiwan ETF(00635U): Annual management fee 1.15% + transaction fee 0.15% + trading tax 0.1%
• US ETF(GLD): Annual management fee 0.4% + transaction fee 0-0.1% + currency exchange 0.32%
• US ETF(IAU): Annual management fee 0.25% + transaction fee 0-0.1% + currency exchange 0.32%

Advantages of Gold ETFs:

• Very low investment threshold, high liquidity
• Easy to buy and sell
• Suitable for beginners and retail investors

Limitations:

• Only long positions, no short-selling
• Annual management fees apply
• Trading hours limited by exchanges

Suitable for: Cost-conscious long-term investors, those avoiding complex derivatives

Purchasing Taiwan ETFs can be done via domestic brokers; US ETFs require opening a US account and currency exchange, with relatively low costs but some operational barriers.

Method 4: Gold Futures—Leverage Trading Instruments

Gold futures are contracts based on international gold prices, with profits or losses depending on the price difference between entry and exit.

Advantages of Gold Futures:

• Support both long and short positions
• Long trading hours, linked to international markets
• Leverage amplifies capital efficiency
• Relatively low holding costs

Risks of Gold Futures:

• Contracts have expiration dates; rollover required
• Positions held at expiration without offset are forcibly closed
• Leverage magnifies both gains and losses
• Requires capital management and risk awareness

Tax Benefits: Gold futures enjoy a 25% transaction tax rate on futures trading income.

Trading Locations:

• Taiwan Futures Exchange has shorter trading hours
• Overseas brokers offer nearly 24-hour trading, with better liquidity

Suitable for: Short-term traders, professional investors, those with larger capital

Method 5: Gold CFD—Ultra-Low Barrier Derivative

Gold CFDs are contracts tracking spot gold prices, allowing traders to speculate without physically holding gold.

Core features of Gold CFDs:

• Support both long and short positions, no physical ownership
• No expiration date, more flexible than futures
• Very low entry barrier (start with as little as $50)
• Flexible leverage options
• Simple analysis—just judge gold price movement

Comparison: Gold CFD vs. Gold Futures

Tax Tip for Gold CFDs: Income from international gold trading is considered overseas income; amounts exceeding NT$1 million annually must be included in basic income calculations.

Choosing a CFD Broker: Beware of unlicensed or clone platforms. Ensure the broker is regulated by reputable authorities such as ASIC, FSC, CIMA. Evaluate trading costs, customer service, and fund security.

Suitable for: Short-term traders, small-capital investors, those seeking flexible trading options

Deep Logic of Gold Investment: Why Do Institutional Investors Love Gold?

( The Four Major Characteristics of Gold

◆ Store of Value — Historically maintains purchasing power
◆ Global Investment Market — Large trading volume and liquidity
◆ Safe-Haven Asset — First choice for risk aversion during turmoil
◆ Inflation Hedge — Traditionally counteracts USD depreciation and rising inflation

) Why Do Institutions Allocate to Gold?

Gold does not offer fixed income like deposits nor unlimited upside like stocks or futures, but it provides psychological security and certainty, helping to cope with market uncertainties and financial crises. Nearly all investment institutions recommend including gold in portfolios, with a suggested allocation of at least 10% of total assets.

( Drivers of Gold Prices

Whenever inflation risks rise or markets become turbulent, enthusiasm for gold investment surges. Historically, systemic risk events (such as geopolitical conflicts, wars, economic crises) often trigger sharp gold price swings. For example, after the Russia-Ukraine conflict erupted in 2022, gold prices soared to $2,069; recently, prices broke through $3,700 again.

Because international gold trading is large-scale and highly liquid, gold prices can quickly reflect major systemic events, which can lead to rapid rises and falls, creating opportunities for short-term trading and providing a hedge for investment portfolios.

Before investing in gold, it is recommended to clarify your goals (value preservation vs. profit), risk tolerance (low vs. high), and time horizon (long-term vs. short-term), then choose the most suitable investment tools based on the comparison table. Different tools are not inherently good or bad, only whether they meet your individual needs.