How to buy gold investments with the lowest cost? Analysis of five channels' advantages and disadvantages, and a selection guide

In recent years, frequent geopolitical conflicts and rising inflation expectations have brought renewed attention to gold as a traditional safe-haven asset. However, for many investors, the question of how to buy gold and which investment method to choose can be overwhelming. In fact, gold investment is far more diverse than just purchasing physical gold. Depending on investment goals and risk tolerance, investors can choose from a variety of channels. This article will analyze in depth the costs, risks, and return characteristics of five mainstream gold investment methods to help you find the most suitable gold trading strategy.

How to judge the timing of buying gold now?

Gold price fluctuations are influenced by multiple factors. Understanding the current market situation can help make better decisions.

Review of recent gold price trends

• During 2022-2023, gold experienced significant volatility, falling from a high of $2000 to below $1700, mainly affected by geopolitical conflicts and Federal Reserve rate hikes.
• In 2024, due to expectations of US rate cuts and record-breaking central bank gold purchases worldwide, gold prices broke new highs. The net gold purchase by global central banks in 2024 reached 1,045 tons, exceeding 1,000 tons for three consecutive years, directly pushing the gold price above $2,700.
• By 2025, international gold prices have surpassed $3,700, with investment banks forecasting that by mid-2026, it could reach $4,000 per ounce.

Two strategies for purchasing gold

Since short-term gold price movements are difficult to predict, investors should choose strategies based on their own goals:

Long-term preservation strategy: Suitable for investors seeking to buffer against asset depreciation risks. The focus is on finding reasonable entry points and avoiding chasing high prices after a surge. Consider low-leverage tools such as physical gold, gold savings accounts, or gold ETFs, emphasizing steady holding.

Short-term trading strategy: Suitable for investors with trading skills willing to bear market risks. Requires mastery of technical analysis and price trend judgment, aiming to profit from long or short positions. Gold futures and gold CFDs(CFD) are more appropriate tools.

Cost and return comparison of five major gold investment methods

Physical Gold: Traditional physical safe-haven choice

Purchasing physical gold includes bars, ingots, jewelry, and commemorative coins, usually bought at banks or silver shops.

Purchase recommendations

Prioritize buying gold bars over jewelry or commemorative coins, as the latter include processing fees and may incur wear and handling fees upon resale, making them less cost-effective. For large grams, buy directly from banks for safety and security, though storage fees apply; for smaller grams, silver shops are suitable, with the key being to confirm gold purity.

Features of physical gold

• Advantages: Low risk, simple purchase process, suitable for long-term holding
• Disadvantages: High unit price, requires dedicated storage, additional costs, poor liquidity, difficult to buy and sell quickly

Physical gold is not an income-generating asset and involves storage costs (like insurance). Overall investment efficiency is lower. However, as a long-term preservation and collection item, it still holds value.

Tax considerations

Transactions exceeding NTD 50,000 must be declared as personal one-time trade income, taxed at a 6% profit rate, included in the following year’s comprehensive income tax declaration.

Suitable for: Investors seeking minimal risk, valuing physical possession, and engaging in long-term collection.

Gold Savings Account: Low-cost paper gold solution

A gold savings account (paper gold) refers to investors purchasing gold with the bank holding it on their behalf, without holding physical gold. Buying and selling are conducted through the account.

Purchase methods and costs

Currently, banks typically offer three types of gold savings accounts:

• TWD purchase: No exchange rate risk but no exchange rate gains
• Foreign currency purchase: Exchange costs incurred at the outset
• Dual-currency gold savings account: Includes both TWD and foreign currency exchange rate and gold price fluctuation gains (new product launched in 2023)

Regardless of the method, costs are similar, within a moderate friction range. Each transaction incurs fees; frequent trading can accumulate higher costs, so low-frequency trading is recommended.

Features of gold savings accounts

• Advantages: Lower risk, small transactions possible, can exchange for physical gold
• Disadvantages: Limited trading times, only buy low and sell high, exchange costs are hard to control

Gold savings accounts can also be exchanged for physical gold. Major banks such as Bank of Taiwan, E.SUN Bank, and Yuanta Bank offer this service.

Tax considerations

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 in the current year; if not fully deducted, they can be carried forward for up to three years.

Suitable for: Investors seeking low-cost, long-term investment, low-frequency trading, and avoiding the hassle of physical storage.

Gold ETF: Convenient for small investments

Gold ETFs are gold index funds, allowing investors to buy domestic or overseas gold ETFs, such as Taiwan Gold ETF(00635U), US Gold ETF(GLD), and US Gold ETF(IAU).

Cost structure

Different ETFs have varying fee structures:

• Taiwan Gold ETF: Management fee(1.15%/year) + handling fee(0.15%) + trading tax(0.1%)
• US Gold ETF (GLD): Management fee(0.4%/year) + handling fee(0~0.1%) + currency exchange(0.32%)
• US Gold ETF (IAU): Management fee(0.25%/year) + handling fee(0~0.1%) + currency exchange(0.32%)

Features of gold ETFs

• Advantages: Easy to buy and sell, low investment threshold, good liquidity
• Disadvantages: Need to pay attention to management fees, trading hours are limited, only long positions

Gold ETFs are traded directly with brokers, with low investment thresholds and better liquidity than physical gold, making them suitable for beginners and retail investors, especially for long-term strategies.

Purchase channels

Can be bought through domestic brokers for Taiwan ETFs or by opening a US stock account for US ETFs. The latter offers lower costs and tracking errors but requires account opening and currency exchange procedures.

Suitable for: Investors seeking low-cost, convenient trading for long-term investment; beginners.

Gold Futures: Leverage trading for professionals

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

Core advantages of futures

• Dual-direction trading: long or short
• Long trading hours: overseas futures brokers trade nearly 24/7
• Low holding costs: margin trading with leverage
• Fair pricing: 24-hour international linkage, difficult to manipulate

Risks and limitations

Futures have expiration dates, involving rollover costs. Holding positions beyond expiration can lead to forced liquidation. Due to leverage, profits are amplified, but so are losses; risk management is essential.

Trading features

Trading in Taiwan is through the Taiwan Futures Exchange, with shorter trading hours. Overseas brokers offer higher liquidity and often provide Chinese customer service, making operations more convenient.

Tax considerations

Futures trading profits are taxed at a very low rate of 0.0000025‰, as futures transaction income tax is suspended.

Suitable for: Traders with short-term trading skills, willing to accept leverage risks, with larger capital.

Gold CFD(CFD): The lowest threshold derivative

A CFD is a contract tracking the spot gold price, with profits derived from the price difference between buy and sell.

Advantages of CFDs

• Dual-direction trading: long or short
• No physical delivery: no need to take delivery
• No expiration date: more flexible than futures
• Very low entry barrier: no fixed minimum contract size
• Flexible leverage: adjustable according to risk preference

Compared to futures, CFDs have no fixed contract size limits, lower margin requirements, suitable for investors with less capital to quickly enter the market.

Costs and fees

Main costs come from spreads and overnight financing fees. Trading gold CFDs does not involve futures fees or transaction taxes, making the cost structure simpler.

Risk warning

CFD involves high leverage, requiring trading skills to judge gold price trends. Income earned from international gold trading is considered overseas income; if exceeding NTD 1 million annually, it must be included in the basic income tax calculation, subject to the minimum tax.

Suitable for: Investors experienced in derivatives, willing for short-term operations, with smaller capital.

Futures vs CFD: How to choose?

Both tools are suitable for short-term trading, but differ in:

How to choose the most suitable gold investment method?

Clarify investment goals

First, ask yourself: Do you want to preserve value against inflation, or profit from price differences?

• Preservation goal: Prioritize physical gold, gold savings accounts, or gold ETFs; these tools have relatively low risk and are suitable for long-term holding.
• Price difference goal: Consider gold futures or gold CFDs; these tools offer leverage and dual-direction trading, suitable for short-term operations.

Choose based on capital size

• Large capital investors: Physical gold or gold futures
• Medium capital investors: Gold savings accounts or gold ETFs
• Small capital investors: Gold ETFs or gold CFDs

Choose based on trading frequency

• Low-frequency trading: Gold savings accounts, gold ETFs (to avoid high costs from frequent trading)
• Medium-high frequency trading: Gold futures, gold CFDs (lower transaction costs)

Choose based on risk tolerance

• Low risk preference: Physical gold, gold savings accounts
• Medium risk: Gold ETFs
• High risk tolerance: Gold futures, gold CFDs

Why does gold investment remain popular?

Core attractions of gold

◆ Preservation asset: Long history, tested across economic cycles ◆ Global market: High liquidity worldwide, accessible anytime ◆ Safe haven: Considered a “safe harbor” during turbulence ◆ Inflation hedge: Traditionally used to hedge against US dollar depreciation and rising inflation

Institutional investors’ allocation logic

As a traditional hedge, gold is often included in investment portfolios by “smart money” institutional investors. Although gold is more volatile than deposits and does not offer fixed returns like bonds, nor unlimited growth like stocks, it provides a sense of security and confidence in uncertain markets.

Most institutional advice recommends allocating at least 10% of the portfolio to gold.

Performance during market turbulence

Whenever inflation or market turmoil occurs, demand for gold increases. Historically, during systemic risks such as geopolitical conflicts or wars, gold prices tend to fluctuate significantly.

After the Russia-Ukraine conflict erupted in 2022, gold prices continued to rise, reaching a peak of 2069 USD. Recently, international gold again broke new highs, surpassing 3700 USD, reflecting increased geopolitical risks and ongoing central bank gold purchases worldwide.

Trading opportunities and investment strategies

Because the international gold market is large and highly liquid, it quickly reflects major systemic events, leading to rapid surges or drops. Investors often see gold as twofold: a short-term trading opportunity for “buy low, sell high,” and a portfolio hedge.

Regardless of the chosen method, understanding the costs, risks, and return characteristics of each, and aligning with personal conditions and goals, is the key to successful gold investment.