How to buy gold wisely? An analysis of the advantages and disadvantages of five major investment channels to find the approach that suits you.

Facing global economic instability and inflation pressures, more and more people are including gold in their investment portfolios. However, there are many ways to invest in gold, from physical gold bars to futures contracts, with significant differences in costs, risks, and returns across channels. This article provides an in-depth analysis of how to buy gold most cost-effectively, helping investors clarify the characteristics of various gold investment tools and find the entry path that suits their style.

Is there still an opportunity to invest in gold now?

Gold price fluctuations reflect changes in the global economic environment. Between 2022 and 2023, gold prices fluctuated dramatically between $1,700 and $2,000; in 2024, due to a weakening dollar and continued central bank purchases, prices soared to $2,700 and broke through the $3,700 mark in September 2025. International investment bank Goldman Sachs predicts it will reach $4,000 per ounce by mid-2026.

Global central banks have been net buyers of gold for three consecutive years, reaching record levels. These institutional-level purchases highlight the importance of gold as an asset allocation. However, it’s worth noting that short-term gold price trends are difficult to predict, and successful gold investment hinges on grasping the right entry timing, rather than trying to chase highs.

If the goal is long-term preservation and appreciation, physical gold, gold savings accounts, or gold ETFs are viable options. But if you aim to achieve higher returns through swing trading and can tolerate market volatility, gold futures and CFD(CFD) offer more flexible leverage mechanisms, suitable for investors with trading experience.

Comprehensive comparison of gold investment methods

Detailed analysis of five ways to buy gold

1. Physical Gold: Traditional hedge

Physical gold includes gold bars, ingots, commemorative coins, etc., usually purchased at banks or jewelry stores. For large quantities, it’s recommended to buy directly from banks for security, though storage fees apply; for smaller amounts, consider jewelry stores, comparing prices and purity. Avoid buying gold jewelry and commemorative coins, as processing fees and wear and tear upon resale can significantly eat into profits.

Characteristics of physical gold investment:

• Advantages: Lower risk, simple and transparent purchase process, collectible value
• Disadvantages: No interest income, additional storage and insurance costs, poor liquidity (hard to buy/sell quickly), larger single investments required

Tax reminder: Transactions exceeding NT$50,000 must be reported as personal one-time trade income, with a 6% profit rate applied for next year’s comprehensive income tax.

Suitable for: Asset preservation seekers, low risk tolerance, those preferring physical possession

2. Gold Savings Account: Convenience of paper trading

Gold savings accounts (paper gold) allow investors to avoid physical storage worries, with banks holding the gold and issuing account statements. Many banks in Taiwan, including Bank of Taiwan, E.SUN, and Yuanta, offer this service, supporting TWD, foreign currency, or dual-currency trading.

When buying gold via savings accounts, note:

• TWD transactions involve exchange rate risk; foreign currency transactions face currency conversion costs
• Overall friction costs are moderate, but frequent trading can accumulate significant fees
• Can be exchanged for physical gold, increasing flexibility

Tax-wise, profits from buying and selling are considered property transaction income and must be reported in the following year’s comprehensive income tax. Losses can be deducted within three years.

Advantages: Lower risk, small transaction amounts possible, exchangeable for physical gold
Disadvantages: Limited trading hours, one-way operation (buy low, sell high only), exchange rate costs hard to control

Suitable for: Long-term low-cost investment, avoiding storage burdens, low-frequency traders

3. Gold ETF: Flexible index fund allocation

Gold ETFs track gold prices and can invest in Taiwan or US stocks. Taiwan’s gold ETF(00635U) incurs management fees of 1.15% annually, transaction fees of 0.15%, and a 0.1% trading tax; US gold ETFs like GLD and IAU have lower management fees (0.25~0.4% annually) but involve currency conversion costs of about 0.32%.

Core features of ETF investment:

• Low entry barrier, high liquidity, easy to buy and sell
• Only long positions; cannot short
• Annual management fees, long-term costs should be considered
• Suitable for lazy investors and beginners

Advantages: Quick and convenient trading, low entry barrier, excellent liquidity
Disadvantages: Need to watch out for annual management fees, limited trading hours

Suitable for: First-time gold investors, seeking low-cost long-term allocation, inexperienced traders

4. Gold Futures: Leverage tool for professional investors

Gold futures are based on international gold prices, with profits or losses depending on entry and exit price differences. The main features include support for two-way trading (long and short), 24-hour trading, and leverage, with transaction costs as low as 0.0000025 (25 millionths of futures transaction tax).

However, futures carry unique risks:

• Contracts have expiration dates; rollover operations incur additional costs
• If positions are not closed before delivery month, forced liquidation occurs
• Leverage amplifies gains and losses proportionally, requiring strict capital management

Taiwan’s futures trading hours are shorter, but overseas futures brokers offer nearly 24-hour trading, providing better liquidity.

Advantages: T+0 trading all day, flexible long/short positions, leverage enhances capital efficiency
Disadvantages: High leverage risk, need to rollover contracts, requires professional knowledge

Suitable for: Short-term and swing traders, experienced futures traders, sufficient capital

5. Gold CFD(CFD): Lowest threshold leverage option

CFD tracking spot gold prices allows investors to trade without holding physical gold, with no expiration date. Compared to futures, CFDs have lower entry barriers, more flexible leverage options (usually 1X to 100X), and no futures transaction tax.

Advantages and risks of CFD trading:

• Very low margin requirements, suitable for small capital testing
• Flexible trading specifications, can set stop-loss and take-profit orders
• No physical delivery pressure, no contract expiration worries
• But leverage risks are significant; caution is needed

Reputable international CFD brokers with proper regulation provide safeguards. Always verify regulatory status to avoid scams.

Tax-wise, income from international gold trading is considered overseas income; amounts exceeding NT$1 million annually must be included in the basic income calculation, subject to minimum tax.

Advantages: Low minimum trading amount, flexible two-way trading, T+0 operation
Disadvantages: High leverage risk, requires trading skills, complex overseas regulation environment

Suitable for: Short-term and swing traders, smaller capital, experienced derivatives traders

Core questions to consider when buying gold

What is your investment goal?

If preservation and inflation hedge are primary, physical gold, gold savings accounts, or ETFs are suitable; focus on finding good entry points. For larger single investments, buy gold bars directly; for small allocations, consider savings accounts or ETFs.

If you aim to profit from price fluctuations, futures and CFDs are more attractive. Both offer two-way trading and leverage, with futures having fixed contract sizes and expiration dates, while CFDs are more flexible and have lower thresholds.

What percentage of your portfolio should gold occupy?

Mainstream advice suggests allocating about 10% of your investment portfolio to gold. Although gold has no fixed income, it provides safety and risk hedging. During inflation, geopolitical crises, or financial turmoil, gold often rises countercyclically. The outbreak of the Russia-Ukraine war pushed gold to $2,069 and recently broke through NT$3,700, validating its hedging value.

Keys to successful gold investing

Timing over choice

Rather than obsessing over “how to buy gold,” focus on timing your entry. Frequent repositioning and overtrading can accumulate costs and erode returns.

Understand risks and costs

Short-term trading can yield high returns, but leverage amplifies risks. Physical gold preserves value but has limited liquidity. Each investment method has its cost structure; choose based on your capital size and risk tolerance.

The market is deep and opportunities are everywhere

The international gold market is large and historically rich, capable of quickly reflecting systemic risk events. Whether for long-term allocation or short-term trading, the market offers ample liquidity and trading opportunities. The key is choosing the right tools and developing a clear trading plan.