2024 Gold Investment Complete Guide: Gold Bar Buying and Selling and In-Depth Comparison of the Five Main Channels

Why Does Gold Investment Remain Popular? Market Outlook Analysis

In recent years, international gold prices have continued to hit new highs. In 2024, driven by expectations of US interest rate cuts, escalating geopolitical risks, and record-breaking central bank gold purchases worldwide, gold prices have broken through historical highs. Data shows that global central banks’ net gold purchases in 2024 reached 1,045 tons, exceeding 1,000 tons for three consecutive years, directly supporting the gold price from $2,700 to $3,700 per ounce. Market forecasts suggest that by mid-2026, the gold price could reach $4,000 per ounce.

Against the backdrop of persistent inflation and ongoing geopolitical conflicts, gold’s role as a traditional safe-haven asset is increasingly emphasized. Both institutional investors and retail investors are incorporating gold into their portfolios. It is generally recommended that gold allocation accounts for at least 10% of total investment to hedge against market uncertainties and financial risks.

However, it should be noted that short-term gold price movements are difficult to predict, influenced by multiple factors such as geopolitical developments, exchange rates, and Federal Reserve policies. The core strategy for investing in gold is to find suitable entry points rather than blindly following trends.

Comprehensive Comparison of Gold Buying and Selling Methods

Based on investment goals and risk tolerance, there are five main channels for gold investment:

Physical Gold and Gold Bars Trading

Physical gold includes gold bars, gold ingots, jewelry, and commemorative coins, mainly purchased at banks and jewelry stores. It is recommended to buy gold bars directly, avoiding jewelry and commemorative coins, as the latter include processing fees and incur handling and wear-and-tear costs when selling.

The advantages of physical gold are low risk, simple transactions, and collectible value. However, drawbacks are also evident: high unit price, need for dedicated storage, poor liquidity, and the phenomenon of “easy to buy, hard to sell.” Since physical gold is not an income-generating asset, additional costs such as storage and insurance fees are involved, making it more suitable for long-term preservation and hedging.

Gold Bar Buying and Taxation Recommendations

According to tax regulations, transactions involving physical gold exceeding NT$50,000 must be reported as personal occasional trade income. When selling gold bars, gains are calculated with a 6% net profit rate and included in the following year’s personal comprehensive income tax declaration.

In Taiwan, Taiwan Bank is a reliable choice, offering gold bars starting from 100 grams, with options for 250g, 500g, and 1kg. Quality is assured, and handling fees are relatively low. When purchasing gold bars, focus on purity, as they are priced by weight when sold. For small quantities, jewelry stores or pawnshops can be considered, but prices should be compared to avoid overpaying.

Gold Passbook: Convenience of Paper Gold

Gold passbooks (paper gold) allow investors to avoid holding physical gold, with banks acting as custodians. Buying and selling are conducted via bank passbooks. Major Taiwanese banks such as Bank of Taiwan, CTBC Bank, First Commercial Bank, and Hua Nan Bank offer this service.

Currently, there are three trading methods for gold passbooks: NT dollar purchase, foreign currency purchase, and dual-currency gold passbook. Trading in NT dollars involves exchange rate risk, as international gold prices are quoted in USD; foreign currency trading entails currency conversion costs. Overall, transaction fees are moderate, but frequent trading can accumulate higher costs. A low-frequency trading strategy is recommended.

Profits from gold passbook transactions are considered property transaction income and must be included in the following year’s personal comprehensive income tax declaration. Losses can be deducted from property transaction income, with any remaining unclaimed losses deductible over the next three years.

Gold passbooks are suitable for low-cost long-term investments or low-frequency trading. Advantages include lower risk, support for small transactions, and the ability to exchange for physical gold. Disadvantages include limited trading hours, only buying low and selling high, and difficulty in controlling currency exchange costs.

Gold ETF: Fund-Based Investment Option

Gold ETFs (Gold Index Funds) provide a convenient way to invest in gold. Taiwanese investors can choose between Taiwan stock gold ETFs or US stock gold ETFs, such as 00635U, GLD, IAU, etc.

The cost structure of various ETFs differs:

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

Gold ETFs feature low investment thresholds, high liquidity, and easy trading, but they can only be bought long and not short, making them suitable for beginners and retail investors for long-term investment. Taiwanese brokers facilitate ETF purchases; for US ETFs, an overseas brokerage account and currency exchange are required. US gold ETFs have lower costs and smaller tracking errors but require opening a US account and currency conversion.

Gold Futures: Dual-Sided Trading with Leverage

Gold futures are contracts based on international gold prices, with profits depending on the price difference between entry and exit points. The main advantages include dual-sided trading, long trading hours, low holding costs, and 24-hour international price linkage, making manipulation difficult.

Futures trading uses leverage, requiring only a margin deposit to operate, suitable for short-term trading and professional investors. However, futures have expiration dates, with costs for rolling over contracts, and positions held at expiration may be forcibly closed if not settled. Leverage amplifies both gains and losses, so capital management is essential.

Tax-wise, gold futures are exempt from income tax on trading gains, with only a futures transaction tax of 0.0000025 (25 millionths), very low.

In Taiwan, futures are traded through the Taiwan Futures Exchange, with shorter trading hours. Overseas futures brokers offer nearly 24-hour trading, allowing continuous long/short operations with better liquidity.

Gold CFDs: Flexible and Efficient Derivative Tools

CFDs (Contracts for Difference) track spot gold prices, offering dual-sided trading, no physical holding, and no expiration date. The biggest advantage of CFDs is the extremely low entry barrier, flexible leverage options, and easier trading.

Investors profit from the price difference between buy and sell contracts, with fees mainly from spreads and overnight financing costs. Compared to stock picking, trading gold CFDs is simpler, requiring only judgment of gold price trends.

Profits from international gold CFDs are considered overseas income. If annual income exceeds NT$1 million, it must be included in the personal basic income and taxed under the minimum tax system.

Core differences between futures and CFDs:

• Futures have fixed minimum contract sizes; CFDs do not, with lower margin requirements
• Futures have expiration dates requiring rollover; CFDs do not
• Futures involve trading fees and transaction taxes; CFDs do not
• Futures require higher capital amounts than CFDs

CFDs are suitable for short-term trading, swing investing, and small capital operations. Advantages include low trading thresholds, dual-sided trading, 24-hour availability, and simple account opening. Disadvantages include high leverage risk and the need for trading skills.

Major international platforms offer gold CFD services, but it is important to verify whether the broker is regulated by reputable financial authorities to avoid scams.

Optimal Strategies for Gold Investment

The primary consideration in gold investment is clarifying your investment goal. If preservation and inflation hedging are the main objectives, physical gold or gold passbooks are suitable, adopting a long-term holding strategy focused on good entry points.

If the goal is to profit from price differences and you can bear market risks, short-term and swing trading are appropriate, analyzing gold price trends to realize gains. Both gold futures and CFDs track international gold prices; understanding price trends allows for profit through long or short positions.

Specific recommendations are as follows:

Hedging investors: Suitable for physical gold bars, gold passbooks, or gold ETFs, with low trading frequency and focus on long-term gains.

Short-term traders: Suitable for gold futures or gold CFDs, requiring risk management and technical analysis skills, leveraging 24-hour trading advantages.

Balanced investors: Can hold gold ETFs as core holdings, while using a small portion of funds for futures or CFD swing trading to diversify risk.

Why Is Gold Worth Investing In?

Gold is highly regarded mainly because of:

Store of value: Gold is a long-standing store of wealth, capable of protecting purchasing power even during inflation.

Global liquidity: Gold has a worldwide investment market, with large trading volumes and a long history, enabling rapid reflection of major events.

Safe-haven asset: During turbulent times, gold is viewed as a “safe harbor,” with institutional investors often allocating “smart money” into gold.

Hedging systemic risks: When inflation heats up, markets are volatile, geopolitical conflicts or war threats emerge, gold prices tend to surge significantly.

Historical data confirms this. After the Russia-Ukraine conflict erupted in February 2022, gold prices continued to rise to $2,069. Recently, international gold prices again broke through $3,700, reflecting current global risk asset uncertainties.

Due to its large market capacity and quick response, gold has become a tool for short-term arbitrage and an essential component for portfolio hedging. Whether for long-term preservation or short-term trading, gold offers diversified investment opportunities.