The five major ways to invest in gold explained: Find the trading channel that suits you best

Current Gold Price Trends and Investment Opportunities

As geopolitical tensions escalate and global inflation pressures persist, gold’s appeal as a traditional safe-haven asset is once again highlighted. Gold prices rose from the 1700-2000 USD range in 2022-2023 to reach new highs in 2024. Last year, global central banks net purchased 1,045 tons of gold, surpassing 1,000 tons for three consecutive years, providing solid support for the upward trend of gold prices. As of September 2025, gold has broken through the $3,700 mark, with Goldman Sachs forecasting a challenge to $4,000 per ounce by mid-2026.

However, investors need to recognize that short-term fluctuations in gold prices are difficult to predict, influenced by multiple factors such as Federal Reserve policies, geopolitical conflicts, and exchange rate volatility. Therefore, choosing the right entry timing and trading tools is crucial.

Comparison of the Five Main Gold Investment Channels

Core Selection Logic: For preservation, prioritize physical gold or passbook; for short-term profits, consider futures or contract-based tools.

Method 1: Physical Gold Bars — A Traditional Hedge

Buying physical gold bars or ingots is the most straightforward investment method, but not the most efficient. While physical gold has low risk and simple transactions, it has three major drawbacks:

Cost Burden: Storage requires safes or bank vaults, incurring additional fees; single transaction costs can reach 1%~5%.

Liquidity Challenges: The “easy to buy, hard to sell” phenomenon exists; when selling, you often face wear-and-tear fees, handling fees, and other deductions, which eat into your actual profit.

Tax Considerations: Transactions exceeding NT$50,000 must be declared as personal trading income, taxed at a 6% profit rate, and included in next year’s comprehensive income tax.

Where to buy better: Taiwan Bank is the only bank offering physical gold trading, ensuring quality and relatively low costs, with specifications from 100 grams to 1 kilogram. For smaller amounts, consider jewelry stores, but be sure to verify purity and beware of overly processed “fantasy” gold bars.

Suitable for: Conservative investors seeking long-term preservation and protection against inflation.

Method 2: Gold Passbook — Convenience of Paper Gold

Gold passbooks (paper gold) allow investors to avoid holding physical assets, with banks acting as custodians. Transactions are completed via passbook accounts. Several banks in Taiwan, such as Bank of Taiwan, CTBC, and First Bank, offer this service.

Trading Methods include three options: NT$ purchase (exposing exchange rate risk), foreign currency purchase (incurring currency conversion costs), and dual-currency passbook (launched in 2023, allowing benefits from both exchange rate and gold price fluctuations).

Cost Structure: Moderate friction costs, but frequent trading accumulates currency exchange and handling fees. A low-frequency strategy is recommended. Tax-wise, profits are considered property transaction income and included in next year’s comprehensive income tax; losses can be carried forward for three years.

The passbook also retains the right to physical redemption, allowing immediate cash-out when needed.

Suitable for: Investors seeking lower costs, low-frequency trading, and flexible redemption options.

Method 3: Gold ETFs — Democratizing Index Investment

Gold ETFs (gold index funds) feature very low trading thresholds and excellent liquidity. In Taiwan, options include 00635U, while in the US, GLD and IAU are popular choices.

Fee Breakdown: Taiwan ETFs have an annual management fee of 1.15%, plus 0.15% handling fee and 0.1% trading tax; US GLD has an annual fee of 0.4% plus 0.32% currency conversion; IAU has an annual fee of 0.25% plus 0.32% exchange costs.

Main Advantages: Easy to buy and sell, very low entry barriers, and high liquidity. Main Limitation: Only long positions are possible; no short selling, making them suitable for long-term holdings rather than short-term trading.

Purchasing Taiwan ETFs via domestic brokers is most convenient; overseas accounts can trade US versions, but evaluate currency conversion costs yourself.

Suitable for: Beginners, retail investors seeking low-cost, long-term allocation.

Method 4: Gold Futures — Professional Leverage Trading

Gold futures are based on international gold prices, with profits derived from price differences between entry and exit points. Compared to spot trading, futures have three main advantages:

Trading Flexibility: Supports both long and short positions, operates 24/7 with international markets, and is difficult to manipulate.

Cost Benefits: Very low transaction tax (0.025%), and margin deposits allow leverage to maximize capital utilization.

Holding Costs: No storage fees compared to physical gold.

Key Risks: Futures have expiration dates; positions must be rolled over, and contracts nearing expiry may be forcibly closed if not managed properly. Leverage amplifies both gains and losses; strict risk management is essential.

Taiwan Futures Exchange trading hours are limited; overseas brokers offer nearly 24-hour trading with better liquidity and volume.

Suitable for: Traders with risk tolerance, technical analysis skills, and short-term trading experience.

Method 5: Gold CFDs — Low-Barrier Derivative Trading

Gold CFDs track spot gold prices without requiring physical ownership or expiration constraints, offering greater flexibility than futures.

Entry Costs: Leverage options are flexible, with very low minimum margin; main costs come from spreads and overnight fees.

Trading Features: Supports both long and short positions, T+0 trading, and simple logic—just judge the gold price direction, no need to pick stocks.

Risk Warning: Leverage magnifies losses; traders must have solid trading skills and strict capital management.

Tax Regulations: Overseas trading profits exceeding NT$1 million annually must be included in personal income, subject to minimum tax.

Suitable for: Experienced derivative traders seeking flexible swing trading.

Futures vs. CFDs: Short-term Traders’ Dilemma

Both are suitable for short-term trading, but key differences include:

• Contract Size: Futures have fixed minimum sizes; CFDs have no limit, requiring lower margin.
• Expiration: Futures expire and require rollover; CFDs do not.
• Trading Costs: Futures incur transaction tax; CFDs only spread and overnight fees.
• Capital Requirements: CFDs have much lower entry barriers than futures.

Fundamental Logic of Investing in Gold

Why do smart investors allocate to gold?

Although gold offers no fixed income, it provides intangible security and confidence. Institutional investors generally recommend allocating at least 10% of a portfolio to gold. Whenever inflation heats up or markets become volatile, demand for gold rises sharply.

Historical data illustrates this: after the Russia-Ukraine conflict erupted, gold surged to $2,069; recently, it broke through the new high of $3,700. Systemic risk events often trigger rapid gold price swings, which is why investors use gold both for long-term hedging and short-term profit-taking.

Final Advice

Before choosing a gold investment method, ask yourself three questions:

1. What is your investment goal? Preservation against inflation? Or short-term profit?
2. Do you have sufficient time and energy? Long-term holdings suit passbooks/ETFs; short-term trading requires monitoring and technical analysis.
3. What is your risk tolerance? Conservative investors prefer physical gold/passbook; advanced traders may consider futures/CFD.

Regardless of the method, remember one key point: Timing is more important than the method of entry. Gradually building positions during dips is far better than chasing highs.