Gold ETF Investment Complete Guide: Selected Recommendations for the Taiwan and US Markets

Gold, as a traditional safe-haven asset, can both hedge against inflation risks and serve as a diversification tool in an investment portfolio. If you want to participate in the gold market but prefer not to hold physical gold directly, gold ETFs are a flexible and low-cost option. This article will analyze in detail the investment logic, product types, and how to select suitable targets in the Taiwan and US stock markets.

What is a Gold ETF? Understand the Three Main Types in One Go

A gold ETF is a fund listed on an exchange, tracking gold-related assets, with relatively low volatility. Depending on the underlying assets tracked, gold ETFs can be divided into three main categories:

Physical Gold ETF directly holds physical gold managed by professional institutions, with investors indirectly owning the corresponding gold shares. Typical representatives include GLD (SPDR Gold Shares).

Derivative Gold ETF invests in financial derivatives such as gold futures contracts or contracts for difference (CFDs), trading based on market price fluctuations. For example, ProShares Ultra Gold (UGL) offers leverage multiples.

Gold Mining Stock ETF focuses on the gold mining industry, investing in a basket of listed companies involved in gold production, exploration, and mining, such as VanEck Gold Miners ETF (GDX). Its volatility is usually higher than physical gold ETFs.

Why Choose Gold ETFs? Five Core Advantages

Unparalleled Trading Convenience. Gold ETFs are traded on stock exchanges, allowing investors to buy and sell anytime like stocks, without worrying about physical delivery or storage issues. Just open an app to trade.

More Competitive Cost Structure. Physical gold involves handling fees of 5%-10% plus storage costs; futures investments require margin deposits. In contrast, management fees for gold ETFs are usually only 0.2%-0.5%, significantly reducing trading costs.

Accessible Investment Threshold. Buying gold bars often costs tens of thousands of dollars, while gold ETFs can be purchased with just a few hundred yuan or less, greatly lowering entry barriers and enabling ordinary investors to easily allocate gold assets.

Ideal Asset Allocation Partner. Gold has low correlation with stocks and bonds. Including 5%-10% gold assets in a portfolio has been proven to improve risk-adjusted returns. When the stock market declines, gold often performs countercyclically due to its safe-haven nature.

High Transparency. Physical gold ETFs regularly disclose gold reserves, and other types also publish their portfolios and strategies, giving investors clear insight into fund movements.

Market institutions are generally optimistic about future gold prices, mainly supported by continuous increases in central bank gold reserves and growing economic uncertainties. In 2023-2024, gold has reached new highs with room for further growth.

Risks of Gold ETFs: Volatility and Liquidity Analysis

The volatility of gold ETFs depends on their tracking assets. Prices of physical gold ETFs are closely linked to spot gold prices, but can also experience significant fluctuations during economic uncertainties, monetary policy adjustments, or geopolitical events.

Historical data shows that gold volatility has a long-term downward trend. Between 2017-2022, its historical volatility was significantly lower than that of oil, copper, government bonds, and the S&P 500 index, only rising sharply during extreme market conditions like the COVID-19 pandemic.

However, gold ETFs based on mining company stocks behave differently—they are affected not only by gold prices but also by stock market trends, individual company performance, and industry risks (such as mining costs and management changes), making their volatility relatively higher.

Gold ETF vs Gold CFDs: Choosing Between Two Investment Tools

Long-term investors may prefer gold ETFs for stable market performance, while traders seeking flexibility and quick profits from gold price movements might find CFDs more attractive due to leverage and diverse trading mechanisms.

Three Practical Gold ETF Investment Strategies

Build a Risk-Weighted Portfolio

Design your gold ETF allocation based on risk appetite:

Aggressive Investors: 50% stock index ETFs, 25% gold ETFs, 20% bond funds, 5% others

Balanced Investors: 42% bond funds, 30% stock index ETFs, 25% gold ETFs, 3% others

Conservative Investors: 40% cash/deposits, 30% bond funds, 15% stock index ETFs, 15% gold ETFs

Regular Investment Method

Invest a fixed amount in gold ETFs on a fixed date each month (e.g., payday) to achieve automatic “buy low, buy high” balancing, averaging out cost fluctuations. Suitable for working professionals, with results visible after 3-5 years. Avoid frequent trading.

Timing Entry and Exit Strategies

Compared to passive fixed investments, active strategies like “buy more at lows, buy less at highs” require the ability to analyze gold ETF prices. Adjust buy/sell timing flexibly based on volatility patterns. Set profit targets of 30%-50%, and realize profits or reduce risk when targets are reached. Suitable for advanced investors.

Taiwan vs US Gold ETFs: Product Comparison and Selection

Taiwan Market Gold ETFs

Yuanta S&P Gold ETF — Assets: $2.5534 billion, tracks S&P Goldman Sachs Gold Excess Return Index, 5-year cumulative return 34.17%, management fee 1.15%, highest liquidity, largest gold ETF in Taiwan, friendly for beginners.

Yuanta S&P Gold Bull 2 ETF — Assets: $2.7694 billion, 2x leverage, 5-year return 70.40%, higher risk due to leverage, not recommended for beginners.

Yuanta S&P Gold Inverse 1 ETF — Assets: $1.378 billion, inverse 1x index, management fee 1.15%, suitable for bearish gold outlook.

US Market Gold ETFs

GLD (SPDR Gold Shares) — Largest global gold ETF, assets: $56.075 billion, tracks international spot gold prices, 5-year return 62.50%, management fee 0.40%, best liquidity, top choice for US gold investment.

IAU (iShares Gold Trust) — Assets: $26.683 billion, also tracks international gold prices, 5-year return 63.69%, lowest management fee at 0.25%, slightly less known but cost-effective, suitable for cost-sensitive investors.

SGOL (Invesco Gold Trust) — Assets: $2.83 billion, 5-year return 64.36%, fee 0.39%, offers physical gold exchange options, relatively lower risk of loss, but liquidity is moderate.

Overall, US gold ETFs outperform Taiwan products in assets, liquidity, cumulative returns, and risk-adjusted performance, making them more recommended for allocation.

Key Points for Selecting Gold ETFs

When choosing gold ETFs, focus on:

Issuer Quality and Asset Size — Prefer products from reputable institutions; larger size means higher liquidity and easier trading.

Tracking Index and Historical Performance — Review 3-year returns, maximum drawdowns, and risk indicators. Avoid ETFs with consistently poor performance unless you believe they are severely undervalued with strong reversal potential. Poor liquidity can hinder exit strategies.

Cost Structure — Buy during favorable market conditions, minimize frequent trading to reduce management and transaction fees, allowing long-term compound growth.

Conclusion

Gold ETFs combine the stability of traditional gold investment with the flexibility of modern funds, providing investors with an economical and efficient asset allocation tool. Considering market performance, cost structure, and liquidity, US gold ETFs (especially GLD and IAU) are more recommended.

As a beginner investor, assess your risk tolerance first, choose a portfolio that matches your profile, and maintain a long-term investment mindset. The key to successful gold ETF investing is persistence; continuous allocation over 3-5 years allows compound growth to maximize, ultimately helping you achieve wealth appreciation.