In-Depth Analysis of the Five Major Gold Investment Channels: Gold Bars, Passbooks, ETFs, Futures, and CFDs

Global geopolitical conflicts intensify, inflation expectations return, and gold, as a traditional safe-haven asset, once again becomes a focal point. But if you want to invest in gold, facing multiple options such as physical gold, paper gold, index funds, derivatives, etc., how do you determine which method best suits your needs? This article will compare the cost structures, risk characteristics, and return potentials of five mainstream gold investment channels in detail to help investors find the most suitable entry method.

Current State of Gold Investment: The Logic Behind Price Breakthroughs to Record Highs

The gold market has experienced dramatic fluctuations in recent years. Between 2022 and 2023, gold prices fluctuated significantly between $1,700 and $2,000, mainly influenced by geopolitical conflicts and Federal Reserve rate hikes. Starting in 2024, gold prices have continued to hit new highs, surpassing $3,700 by September 2025. Goldman Sachs forecasts it will reach $4,000 per ounce by mid-2026.

The main drivers of this surge include: rising expectations of US rate cuts, record-breaking central bank gold purchases (in 2024, global central banks net bought 1,045 tons of gold, exceeding 1,000 tons for three consecutive years), and escalating geopolitical risks.

However, investors should note that many factors influence gold prices, making short-term trends difficult to predict. Therefore, whether holding long-term for preservation or trading for short-term profits, the key is to find the right entry point. Long-term investors may consider physical gold, gold savings accounts, or gold ETFs; while those seeking higher returns and willing to accept volatility may consider gold futures or CFDs.

Overview of Five Gold Investment Methods

Detailed Analysis: Five Gold Investment Options

Option 1: Physical Gold Investment—A Traditional Hedge

Physical gold includes bars, ingots, coins, and jewelry, obtainable through banks or jewelry stores. When buying gold bars, it is recommended to choose large denominations directly from banks for safety, but reserve storage fees; smaller units can be purchased at jewelry stores, with emphasis on confirming purity.

Why is buying jewelry or commemorative coins less recommended? Because both include processing fees, and selling involves paying handling and wear-and-tear costs, resulting in relatively low actual returns.

The core characteristic of physical gold is lack of growth drivers—it does not generate interest or dividends, and profits depend solely on price appreciation. Additional costs include storage and insurance, and liquidity is relatively poor, with a “hard to sell” dilemma. However, many investors are willing to pay for tangible gold mainly for long-term preservation and collection.

Tax Reminder: Transactions exceeding TWD 50,000 require declaration of personal occasional trade income. Profits are calculated at a 6% net profit rate and included in the following year’s comprehensive income tax.

Suitable for: Conservative investors valuing collection and risk avoidance.

Advantages: Lowest risk, simple transactions
Disadvantages: High unit price, requires dedicated storage, additional costs

Option 2: Gold Savings Account—The Convenience of “Paper Gold”

Gold savings accounts are electronic gold records held by banks, allowing investors to buy and sell without holding physical gold, just through the account. Many institutions such as Bank of Taiwan, CTBC Bank, and E.SUN Bank offer this service, even supporting exchange into physical gold.

In 2023, Bank of Taiwan launched the “Dual Currency Gold Savings Account,” enabling investors to benefit from both TWD/foreign currency exchange rates and gold price fluctuations.

Cost Analysis: Whether buying in TWD or foreign currency, handling fees are moderate friction costs. TWD purchases involve exchange rate risk; foreign currency purchases incur initial currency exchange costs. Since each transaction incurs fees and exchange costs are hard to control, low-frequency trading is recommended to avoid accumulating costs from frequent trades.

Tax Reminder: Profits from buying and selling gold savings accounts are considered property transaction income, included in the following year’s comprehensive income tax. Losses can be deducted, and unclaimed losses can be carried forward for 3 years.

Suitable for: Medium-risk investors seeking low-cost, long-term investment without physical holding.

Advantages: Lower risk, small transactions supported, physical exchange available
Disadvantages: Limited trading hours, only long positions allowed, currency risk

Recommended Banks: Bank of Taiwan, E.SUN Bank, E.SUN Bank

Option 3: Gold ETF—Democratizing Index Fund Investment

Gold ETFs are essentially “gold index funds,” allowing investment in Taiwan gold ETFs (code 00635U) or US gold ETFs (GLD, IAU, etc.).

Cost Comparison:

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

Advantages include low investment threshold, good liquidity, but only long positions are possible. Compared to futures and CFDs, ETFs are more suitable for beginners and retail investors for long-term allocation.

Suitable for: Investors seeking low-cost, no high-frequency trading, long-term investment

Advantages: Easy trading, low entry barrier, ample liquidity
Disadvantages: Management fees, limited trading hours

Option 4: Gold Futures—A Short-term Tool for Professional Investors

Gold futures are contracts based on international gold, with profits or losses depending on the price difference between entry and exit. Futures allow two-way trading, 24-hour operation (overseas markets), low holding costs, and leverage to amplify capital efficiency, making them suitable for short-term and swing trading.

Risk and Cost Considerations: Futures have fixed expiration dates, involving rollover costs; positions held beyond expiry are forcibly closed; leverage amplifies both gains and losses.

Tax Benefits: Gold futures are exempt from capital gains tax; only a small futures transaction tax (0.0000025) applies, making the tax burden relatively light.

Trading Venues: Taiwan Futures Exchange has shorter trading hours, but overseas brokers (e.g., CME) operate nearly 24/7 with higher volume and liquidity.

Suitable for: Experienced traders capable of handling high risk, seeking short-term gains

Advantages: Two-way trading, 24/7 operation, leverage, low taxes
Disadvantages: High leverage risk, need for delivery, trading skills required

Option 5: Gold CFD—The Most Flexible Derivative

CFD (Contract for Difference) tracking spot gold prices allows two-way long/short trading, no physical holding, no expiry date, making it more flexible than futures. Profits come solely from buy-sell spreads.

Costs and Entry Barriers: CFDs have the lowest entry threshold (international platforms can open positions with as little as $18–$50), with flexible leverage. Main costs are spreads and overnight financing fees. No trading commissions or futures taxes, making the cost structure simpler.

Tax Reminder: Income from international CFD trading is considered overseas income. If annual income exceeds TWD 1 million, it must be included in the personal basic income, subject to minimum tax.

Key Differences Between CFD and Futures:

• Contract size: Futures have fixed sizes; CFDs have no minimum
• Expiry: Futures have expiry dates; CFDs are indefinite
• Fees: Futures involve commissions and taxes; CFDs do not
• Capital requirement: CFD margin is much lower than futures

Suitable for: Experienced traders, small-scale investors, high leverage risk takers

Advantages: Small trades, two-way operation, 24/7 market, easy account opening
Disadvantages: Very high leverage risk, requires trading skills

Choosing a Broker: The global CFD market is mixed; ensure the broker holds international financial licenses (e.g., ASIC, FSC) to avoid scams.

Guide to Choosing a Gold Investment Method

Which one should I choose? It depends on your investment goals and risk tolerance:

For preservation and asset allocation: Physical gold or gold savings accounts are most stable, with annual costs below 1%, and manageable risks. Investment experts recommend allocating at least 10% of your portfolio to gold.

For long-term appreciation: Gold ETFs offer liquidity, transparent fees, and trading convenience, with annual management fees between 0.25% and 1.15%, suitable for dollar-cost averaging.

For short-term gains: Gold futures and CFDs are the options. Both allow two-way trading and leverage, but CFDs have lower entry barriers and more flexible rules, making them especially suitable for traders with limited capital.

The Long-term Logic of Gold Investment

Why does gold repeatedly surge in value? The core reasons are:

1. Preservation attribute: Gold is globally recognized as a store of value, immune to inflation depreciation.

2. International market: Gold has a large, active global market with transparent rules.

3. Safe haven role: During inflation or market turmoil (e.g., after the Russia-Ukraine conflict erupted in February 2022, gold prices soared to $2,069), demand for gold surges.

4. Risk hedging: Institutional investors commonly allocate gold in portfolios to hedge systemic risks and financial crises.

Gold is called the “smart money” choice not because it offers super-high returns, but because it provides stability and confidence amid market uncertainties. The long history and large scale of the international gold market allow prices to quickly reflect major events, leading to rapid rises and falls—this characteristic enables investors to use gold both as a short-term trading tool for profit and as a portfolio hedge.

Conclusion: Gold prices have broken through $3,700 to record highs, but not all investment methods are suitable for everyone. Based on your investment horizon, risk appetite, and capital, choosing the appropriate channel is the wisest decision.