Physical gold trading and the five major investment channels comparison: how to enter the market to get the best deal?

Geopolitical tensions and inflation pressures continue to escalate, highlighting the appeal of gold as a traditional safe-haven asset once again. Besides direct physical gold purchases, there are various more flexible investment channels available. This article will compare different gold trading methods in depth to help investors find the most suitable trading strategy for themselves.

Is it wise to invest in gold now?

A review of international gold price trends:

Over the past three years, the international gold market has experienced significant volatility. During 2022-2023, gold prices fluctuated between $1700 and $2000, mainly pressured by geopolitical conflicts and U.S. Federal Reserve rate hikes. Entering 2024, the situation reversed, with expectations of rate cuts in the U.S. and record-breaking central bank gold purchases (net gold purchases in 2024 reached 1,045 tons, exceeding 1,000 tons for the third consecutive year), directly pushing gold prices above $2,700. As of September 2025, international gold prices have surged to $3,700, with market institutions generally optimistic about the medium-term outlook.

Core considerations for investing in gold:

Gold prices are influenced by multiple factors, making short-term predictions difficult. For long-term investors, finding the right entry point is crucial—do not chase highs. If the goal is long-term appreciation and asset preservation, consider physical gold, gold savings accounts, or gold ETFs. For higher returns and willingness to bear market risks, short-term trading to profit from price differences—using gold futures and gold CFDs—is more effective.

Comparison table of five major gold investment methods

Itemized analysis of gold trading methods

1. Physical Gold Trading—The Most Traditional Safe-Haven Method

Physical gold investments mainly include gold bars, gold ingots, and commemorative coins, usually purchased at banks or jewelry stores. It is recommended to prioritize buying gold bars because jewelry and commemorative coins include processing fees, and selling them involves handling fees and wear-and-tear costs, making them less economical.

Characteristics of physical gold investment:

Physical gold is a non-interest-bearing asset; holding it incurs storage and insurance costs. Liquidity is relatively weak, with the issue of “easy to buy but hard to sell.” However, because investors can physically hold the gold, many are willing to pay higher costs for it as a long-term preservation and hedging tool.

Purchase locations and costs:

Taiwanese banks are the preferred choice for buying gold bars, offering guaranteed quality and relatively low processing fees, with a minimum purchase of 100 grams. For smaller amounts, jewelry stores can be approached, but it’s essential to confirm the purity of gold. Regardless of where you buy, purity determines the resale value. Also, consider safety and storage costs.

Tax considerations:

If physical gold transactions exceed NT$50,000, individuals must report as temporary trade income, calculated at a 6% profit rate, and include it in the following year’s comprehensive income tax.

Advantages: Low risk, simple transactions, tangible assets
Disadvantages: High unit price, requires proper storage, additional costs

2. Gold Savings Account—The Convenient Paper Gold Option

Gold savings accounts (also called “paper gold”) allow investors to hold gold without physical possession, with banks acting as custodians. Transactions are conducted entirely through bank accounts, making it much more convenient than buying physical gold. Major banks such as Bank of Taiwan, CTBC Bank, E.SUN Bank, and Hua Nan Bank offer this service, supporting transactions in TWD or foreign currencies.

Cost analysis:

Whether buying in TWD or foreign currencies, the handling fee for gold savings accounts is generally comparable, falling into a moderate friction cost category. TWD transactions face exchange rate risk, while foreign currency transactions incur currency conversion costs. Since each buy/sell incurs fees, frequent trading is not recommended to avoid rapid cost accumulation.

Tax treatment:

Profits from gold savings account transactions are considered property transaction income, to be declared in the following year’s comprehensive income tax. Losses can be deducted from other income within the same year, and any remaining losses can be carried forward for three years.

Advantages: Lower risk, small transactions possible, can exchange for physical gold
Disadvantages: Trading hours limited, only long positions supported, exchange costs

Recommended banks: Bank of Taiwan, E.SUN Bank, E.SUN Bank, and Hua Nan Bank are well-regarded for gold savings accounts.

3. Gold ETF—Low-Cost Index Fund Approach

Gold ETFs (gold index funds) provide a relatively low barrier to gold exposure. Investors can choose Taiwan-listed gold ETFs (e.g., 00635U) or U.S.-listed gold ETFs (e.g., GLD, IAU).

Cost structure comparison:

• Taiwan gold ETF: management fee 1.15%/year + brokerage fee 0.15% + transaction tax 0.1%
• U.S. ETF (GLD): management fee 0.4%/year + brokerage 0~0.1% + currency conversion 0.32%
• U.S. ETF (IAU): management fee 0.25%/year + brokerage 0~0.1% + currency conversion 0.32%

Trading features:

Gold ETFs have low investment thresholds and good liquidity but only support long positions; short selling is not available. They are especially suitable for beginners and retail investors for long-term investment, making them the first choice for investors with moderate risk tolerance.

Advantages: Easy to buy, low entry barrier, good liquidity
Disadvantages: Watch out for management fees, trading hours limited

Purchase channels: Besides domestic brokerages offering Taiwan ETFs, investors with overseas brokerage accounts can directly trade U.S. gold ETFs, which feature lower costs and tracking errors but require opening a U.S. account and currency exchange.

4. Gold Futures—Professional Short-Term Trading Tools

Gold futures are contracts based on international gold, with profits or losses depending on the price difference between entry and exit. Futures feature two-way trading, long trading hours, and low holding costs, typically requiring only margin deposits to leverage trading.

Advantages and risks:

Gold futures are linked to global markets with 24-hour trading, making prices difficult to manipulate, suitable for short-term and professional investors. However, futures have expiration dates; holding positions into expiration involves rollover and delivery costs. If positions are not closed before expiry, forced liquidation occurs. Leverage amplifies both gains and losses, requiring strict capital management.

Tax benefits:

Trading gains from gold futures are exempt from income tax; only a futures transaction tax (0.0000025, about 25 parts per million) applies, which is relatively low.

Trading venues:

In Taiwan, futures are traded via the Taiwan Futures Exchange with shorter trading hours. Overseas futures brokers offer nearly 24-hour trading, supporting round-the-clock long and short positions with higher liquidity. Many overseas brokers provide Chinese-language interfaces and customer service, greatly improving usability.

Advantages: T+0 trading 24/7, two-way trading, leverage enhances capital efficiency
Disadvantages: High leverage risk, requires rollover and delivery management, higher capital requirements

5. Gold CFD—The Most Flexible Derivative Product

Contracts for Difference (CFD) track the spot gold price, featuring two-way trading, no physical holding, and no expiration date, making them more flexible than futures.

Unique advantages of CFDs:

Profits come from bid-ask spreads; entry barriers are very low, with more leverage options. Fees mainly consist of spreads and overnight financing costs. Trading gold CFDs is simpler than stock picking—just analyze gold price trends without selecting individual stocks.

Core differences between futures and CFDs:

Tax considerations:

Profits from international gold trading are considered overseas income; if exceeding NT$1 million annually, they must be included in the personal basic income for minimum tax calculation.

Advantages: Low minimum trading amount, flexible two-way trading, T+0 24/7 trading
Disadvantages: High leverage risk, requires trading skills, complex regulation environment

Platform selection tips:

The global CFD market is large but varies in quality. When choosing a broker, ensure it is regulated by reputable international authorities (e.g., ASIC, FCA, CIMA) to avoid scams. Prioritize large, reputable, regulated firms.

Cost and return considerations for gold investment methods

“Where is the most cost-effective way to buy gold” depends on individual goals.

If aiming for preservation and collection: physical gold is the most direct choice, but requires sufficient funds and secure storage. Large amounts are best bought at banks; smaller amounts can be purchased at jewelry stores.

If aiming for low-cost long-term investment: gold savings accounts and ETFs are good options, with moderate transaction costs suitable for infrequent trading and minimal active management.

If aiming for short-term profits: futures and CFDs are more effective tools. Long-term returns of gold are generally lower than stocks, so short-term trading to profit from price differences is advisable. Both have their merits: futures offer higher liquidity but require more capital, while CFDs have lower thresholds but demand careful risk management.

Why does gold investment continue to attract attention?

Fundamental investment value of gold:

◆ Gold is a traditional store of value with a long history
◆ The global gold market is large and liquid
◆ During turbulent times, it is regarded as a “safe harbor” asset
◆ Historically used as a hedge against dollar depreciation and inflation

While these points are often repeated clichés, they are the core reasons why “smart money” continues to allocate to gold. Institutional investors generally recommend maintaining gold exposure in portfolios, with at least 10% of total investments allocated to gold.

Gold’s performance across different economic cycles:

Although volatile, gold differs from fixed deposits with fixed returns or stocks with unlimited growth potential. Its true value lies in providing security and confidence, helping investors cope with market uncertainties and financial crises.

Whenever inflation heats up or markets become volatile, investor attention to gold surges. Historical data shows that gold often experiences significant fluctuations during major macroeconomic events, geopolitical conflicts, or wars. For example, after the outbreak of the Russia-Ukraine conflict in 2022, gold prices soared to $2,069. Recently, international gold prices have again hit new highs, surpassing $3,700.

Formation mechanism of investment opportunities:

Because the international gold market is large and historically deep, it can quickly reflect major systemic events, often resulting in rapid surges or drops. This is why investors see gold both as a portfolio hedge and as a short-term “profit-taking” trading target.

Risks to consider when investing in gold

Regardless of the chosen gold trading method, keep in mind the following points:

1. Timing is critical—chasing highs often leads to losses; patience is key to waiting for the right entry point
2. Leverage is a double-edged sword—it amplifies gains but also losses; beginners should use it cautiously
3. Cost and tax planning—hidden costs and tax burdens vary across methods; should be calculated in advance
4. Assess your risk tolerance—choose investment methods aligned with your capital and psychological capacity; avoid blindly following trends