Want to buy gold? Analyzing the pros and cons of the 5 major investment channels, teaching you how to buy the smartest way

Why are so many people buying gold now?

Geopolitical tensions, rising prices, and inflation have once again made gold a safe haven for investors. But did you know? Investing in gold is far more diverse than just physical gold.

From 2022 to 2024, international gold prices experienced intense volatility—peaking over $2000, dropping below $1700, then soaring past $2700 in 2024, and entering 2025 with a surge to over $3700. The driving forces behind this trend include expectations of Fed rate hikes, record-breaking central bank gold purchases worldwide, and escalating geopolitical risks. Goldman Sachs even predicts that by mid-2026, gold prices could reach $4000.

However, it’s important to note that short-term gold price movements are difficult to predict. If you plan to buy gold as a long-term asset preservation, the key is to find the right entry point. If you want to profit from price swings through trading, solid market analysis skills and suitable investment tools are essential.

Before buying gold, understand these 5 investment methods

Long-term preservation and short-term trading are completely different choices. Let’s start from your investment goals to see which method suits you best.

Comparison of investment methods

First: Physical Gold—Traditional but Low Efficiency

Physical gold such as bars, coins, and jewelry remains a top choice for many investors, purchased at banks, jewelry stores, and pawnshops.

Advantages include minimal risk, simple operation, and physical security. But the drawbacks are equally clear—holding costs are high (insurance and storage needed), liquidity is poor (frequent “hard to buy, hard to sell” issues), and transaction fees are complicated.

Physical gold is not an income-generating asset; buying it only waits for appreciation, unlike stocks that pay dividends. Also, be aware of tax issues: in Taiwan, transactions exceeding NT$50,000 must be reported as personal trade income, taxed at a 6% profit rate.

When should you buy physical gold? When your main goal is long-term collection and asset hedging rather than frequent trading. Taiwan banks are the best option for purchasing large gold bars (safe, reliable, lower fees), while smaller units can consider jewelry stores (pay attention to purity and price comparisons).

Second: Gold Passbook—Convenient Paper Gold

Gold passbook (also called “paper gold”) is stored by banks on your behalf. You only need to hold the passbook to buy and sell, without physical contact with gold. Many large banks like Bank of Taiwan, CTBC Bank, and First Bank offer this service.

Purchase methods include buying in TWD, foreign currencies, or the newly launched dual-currency gold passbook. Buying in TWD involves exchange rate risk; foreign currency purchases incur currency conversion costs. Overall, gold passbook has moderate friction costs, but frequent trading can accumulate significant fees.

Tax-wise, profits from gold passbook are considered property transaction income and included in the following year’s comprehensive income tax. Losses can be deducted within the same year; any remaining can be carried forward for three years.

Suitable for low-frequency traders, those seeking convenience, and investors with a certain capital. Gold passbook can even be exchanged for physical gold, offering more flexibility.

Third: Gold ETF—Accessible with Small Capital

Gold ETFs (Gold Index Funds) allow retail investors to enter the gold market with very low thresholds. You can choose Taiwan stock gold ETFs or US stock gold ETFs, trading as easily as buying stocks.

Different ETFs have slightly different cost structures: Taiwan gold ETFs include management fees (around 1.15% annually), transaction fees, and taxes; US gold ETFs have lower management fees (0.25~0.4% annually), but involve currency exchange costs.

Advantages are high liquidity, low entry barriers, and easy trading. Disadvantages include only long positions (no short selling), making them suitable for those optimistic about long-term gold prospects rather than short-term swings.

Want to buy gold with limited funds? Gold ETFs are an excellent entry point for beginners.

Fourth: Gold Futures—For Professionals

Gold futures are contracts based on international gold prices, where profits depend on the difference between entry and exit prices. The key features are two-way trading, 24-hour market, and low holding costs.

By paying margin, traders can leverage to control a much larger position than their initial capital, greatly increasing capital efficiency. But this also amplifies potential losses. Futures have an expiration date, requiring delivery or rollover, which incurs additional costs.

Tax-wise, gold futures trading income is currently exempt from tax, with only a very low futures transaction tax (0.0000025).

Overseas futures brokers offer nearly 24-hour trading and better liquidity, while Taiwan’s local futures exchange has shorter trading hours. Suitable for traders with experience in capital management and risk tolerance, especially short-term or swing traders.

Fifth: Gold CFD—Lowest Barrier Leverage Trading

Contracts for Difference (CFD) track the spot gold price, with profits from the price difference between buy and sell. Compared to futures, CFDs have three main advantages:

• No minimum contract size, requiring very low margin
• No expiration date, can hold indefinitely
• No trading tax, costs mainly from spreads and overnight fees

Choosing CFD to buy gold allows trading with minimal capital, with flexible leverage. Analyzing gold price trends is much simpler than stock picking, and T+0 trading offers maximum flexibility.

But note that if overseas CFD trading income exceeds NT$1 million annually, it must be included in personal basic income calculations, subject to minimum tax rates.

CFD vs futures: Futures require larger capital and have fixed contract sizes and delivery obligations, while CFDs are more flexible.

How to choose among these 5 methods? Depends on your investment goals

If you want long-term preservation against inflation: physical gold, gold passbook, or gold ETFs are good options. Focus on good entry points and avoid chasing high prices.

If you aim to profit from short-term swings: gold futures and gold CFDs are your main tools. Both track international gold prices; mastering analysis allows you to go long or short for profit. CFDs, with flexible leverage and low entry barriers, are especially friendly for investors with limited funds.

When buying gold, don’t overlook these factors:

• Cost awareness: each transaction incurs fees; frequent trading eats into profits
• Liquidity needs: how quickly can you cash out when needed?
• Risk tolerance: leverage can magnify gains and losses
• Time commitment: short-term trading requires monitoring, long-term investing is more hands-off

Why do institutional investors allocate to gold?

Although gold’s volatility is less than stocks, it offers a unique sense of security. Allocating at least 10% of a portfolio to gold has become standard among professional investors.

Whenever inflation heats up, markets fluctuate, or geopolitical tensions escalate, gold becomes a focal point for buying and selling. After the Russia-Ukraine conflict, gold prices surged to $2069, and recently hit a new high above $3700. Because international gold trading is large-scale and market depth is sufficient, gold prices often react quickly to systemic risks, leading to rapid surges and drops.

This makes gold suitable for both long-term hedging and short-term trading. Regardless of your investor type, understanding these 5 ways to buy gold enables you to make smarter, tailored decisions.