How to invest in gold most cost-effectively? A comprehensive analysis of the five major channels' cost efficiency

Looking to invest in gold but unsure where to start? Faced with inflation risks and geopolitical uncertainties, gold as a traditional safe-haven asset is regaining attention. By 2025, gold prices have already broken through $3,700, with Goldman Sachs forecasting it reaching $4,000 by mid-2026. However, there are many ways to invest in gold—physical bars, savings accounts, ETFs, futures, CFDs—each with different costs and returns. This article compares various gold investment channels in depth to help you find the most suitable method for yourself.

Overview of the Five Major Gold Investment Channels: Cost and Return Comparison

The lowest cost is CFD contracts (0.04%), but they require trading experience; conservative investors are more suitable for ETFs or savings accounts.

Is Now the Right Time to Enter the Gold Market?

Gold price trends are influenced by multiple factors: experiencing intense volatility in 2022-2023, falling from a high of $2,000 to below $1,700; in 2024, driven by USD depreciation and increased global central bank gold purchases, gold prices continue to hit new highs. In 2024, global central banks net purchased 1,045 tons of gold, exceeding 1,000 tons for three consecutive years, which is a key factor supporting gold prices.

For long-term investors, the key is to find the right entry point rather than waiting for prices to surge before buying. Short-term traders aiming to profit from price differences need basic technical analysis skills; gold futures and CFDs are more suitable tools.

Option 1: Buying Physical Gold Bars—Traditional Hedge, Higher Cost

Purchasing physical gold (bars, coins, jewelry) is the most traditional method, with the lowest risk, but not necessarily the best investment tool.

Drawbacks of physical gold:

• No interest income; storage fees apply
• Lower liquidity; “hard to buy, hard to sell” phenomenon
• Complex tax obligations: transactions over NT$50,000 require declaration of personal trade income

Where to buy gold bars most cost-effectively?

Taiwan banks are reliable choices—the only banks in Taiwan that deal in physical gold, with bars from Swiss bank (UBS AG), quality assured, starting from 100 grams. For smaller bars, jewelry stores or pawnshops are options, but purity must be checked. Regardless of where you buy, purity is key, as sales are based on weight; beware of being misled by appearance or brand.

Suitable for: Conservative investors seeking physical assets and long-term value preservation

Option 2: Gold Savings Account—Convenient Paper Gold

“Paper gold” allows you to hold gold without physical possession, with the bank acting as custodian. Major banks like Taiwan Bank, CTBC Bank, and First Bank offer this service, with options to buy in TWD, foreign currencies, or the latest dual-currency gold savings accounts.

Cost structure: Moderate friction costs, about 1% per transaction, but buying in TWD involves exchange rate risk; foreign currency purchases also incur conversion costs. Frequent trading can accumulate higher fees. It’s recommended to use gold savings accounts for low-frequency operations.

Tax considerations: Profits from buying and selling are considered property transaction income and included in personal income tax; losses can be deducted within three years.

Recommended banks: Taiwan Bank, E.SUN Bank, E.SUN Bank all offer good gold savings products.

Suitable for: Investors wanting small transactions and avoiding the hassle of physical storage

Option 3: Gold ETF—Lowest Cost Index Investment

Gold ETFs are index funds that invest in gold, such as Taiwan Stock Exchange Gold ETF(00635U) or US gold ETFs(GLD), IAU(.

Cost comparison:

• Taiwan ETF: annual management fee 1.15% + brokerage fee 0.15% + transaction tax 0.1%
• US ETF)GLD@: annual management fee 0.4% + brokerage fee 0~0.1% + currency conversion 0.32%
• US ETF(IAU@: annual management fee 0.25% + brokerage fee 0~0.1% + currency conversion 0.32%

Features: Low entry barrier, high liquidity, but only long positions (no short selling), suitable for long-term investment and novice retail investors.

Where to trade? Taiwan ETFs can be purchased through domestic brokers; US ETFs require opening an overseas brokerage account, with lower costs and tracking errors.

Suitable for: Investors seeking low-cost, long-term investment, and those who prefer not to trade frequently

Option 4: Gold Futures—Professional Short-term Trading Tool

Gold futures are based on international gold prices, with profits from entry and exit price differences. Futures allow two-way trading and 24-hour operation, especially with overseas brokers whose liquidity and trading volume far surpass Taiwan Futures Exchange.

Advantages:

• Extended trading hours (almost 24/7 overseas)
• Two-way operation (long and short)
• Leverage amplifies capital efficiency
• Lower tax burden (futures trading tax only 0.0000025)

Risks:

• Must roll over before delivery month, incurring additional costs
• Leverage is a double-edged sword—magnifies both gains and losses
• Forced liquidation risk at expiration

Suitable for: Experienced traders willing to bear leverage risks

Option 5: Gold CFD)CFD(—Low Barrier, Quick Entry

CFDs track spot gold prices, offering two-way trading and no expiration date, providing flexible features. The biggest advantage is the extremely low entry barrier—compared to fixed-size futures contracts, CFDs can be traded in 0.01 lots, significantly reducing margin requirements.

Differences between CFD and futures:

Tax considerations: CFD gains are considered overseas income; if annual income exceeds NT$1 million, it must be included in basic income calculations.

Safe choice: Since overseas markets are diverse, choose regulated brokers (e.g., IG Markets, Plus500, eToro) with licenses from ASIC, FSC, etc.

Suitable for: Traders with derivatives experience seeking small, rapid trades

How to Choose the Most Suitable Investment Method?

What are your investment goals?

Preservation and hedging → Physical gold bars or gold savings accounts

• Low risk, prioritize capital protection
• Long-term holding, minimal trading

Steady growth → Gold ETF

• Want to participate in gold price appreciation without complex operations
• Willing to accept moderate risk

Active trading → Gold futures or CFD

• Skilled in technical analysis, seeking profit from price differences
• Willing to learn risk management

Gold as part of a diversified portfolio, traditionally recommended to occupy at least 10%, to hedge systemic risks of stocks and bonds. When inflation heats up or geopolitical crises escalate, gold prices often fluctuate significantly, presenting opportunities for profit from trading. Remember, short-term trading requires knowledge and psychological readiness—choose channels aligned with your risk tolerance for long-term profitability.