The Complete Guide to Gold Investment: Comparing the Pros and Cons of 5 Ways to Buy Gold and How to Choose the Most Cost-Effective Method

Geopolitical risks intensify, and inflation expectations rise, prompting renewed attention to gold as a safe-haven asset. But there’s more than one way to buy gold. This article compares five gold investment methods in detail, from physical gold to derivatives trading, helping you find the channel that best suits your investment style.

Is it still worth entering the gold market now?

Gold prices have experienced significant fluctuations in recent years. Here are some key data points you need to know:

● From 2022 to 2023, gold prices saw sharp volatility, dropping from a high of $2000 to below $1700, mainly influenced by geopolitical conflicts and U.S. Federal Reserve rate hikes.

● In 2024, the gold price trend reversed, reaching new highs. Expectations of rate cuts in the U.S., worsening geopolitical tensions, and record-breaking central bank gold purchases drove the rebound. Data shows that global central banks net purchased 1,045 tons of gold in 2024, exceeding a thousand tons for three consecutive years, directly supporting gold prices breaking through $2700.

● Entering 2025, gold briefly surged to $4200, then retreated as the market digested overbought sentiment and policy uncertainties.

Key Tip: Many factors influence gold prices, and the short-term trend is difficult to predict accurately. If your goal is long-term appreciation, the key is to find the right entry point rather than waiting for prices to rise before buying. For long-term investment, options include physical gold, gold savings certificates, or gold ETFs. If you can tolerate market volatility and aim to profit from short-term trading, consider gold futures and gold CFDs, analyzing price trends to earn spreads.

Comprehensive comparison of 5 gold investment methods

Detailed explanations of each gold investment method

Method 1: Buying and selling physical gold

Physical gold includes bars, ingots, jewelry, and commemorative coins, available at banks or gold shops. It’s recommended to prioritize gold bars for investment, as jewelry and coins often have high manufacturing premiums, and selling may incur fees and wear-and-tear costs, making them less cost-effective.

Why isn’t physical gold an ideal investment?

Physical gold does not generate cash flow; it’s a non-interest-bearing asset. It also requires dedicated storage facilities (like safes), increasing costs. Liquidity is relatively poor, often leading to “easy to buy but hard to sell” situations. Nonetheless, because you can hold tangible, visible assets, many investors value its hedging role. Therefore, physical gold is more suitable for long-term preservation and collection rather than high-frequency trading.

Suitable for: Value preservation and hedging, long-term holding

Advantages: Low risk, simple transaction process, tangible possession

Disadvantages: High purchase price, storage needs, multiple transaction costs, poor liquidity

Tax tip: Tax requirements vary by country. For example, in Malaysia, transactions exceeding 50,000 MYR must be reported to authorities.

Method 2: Buying gold savings certificates

Gold savings certificates (also called paper gold) are bank-managed gold investments where investors hold a certificate rather than physical gold. Buying and selling are done entirely through bank accounts, eliminating storage concerns and offering much greater convenience than gold bars. Many large banks provide this service.

In most markets, gold savings certificates have three trading options: local currency purchase, foreign currency purchase, and dual-currency certificates. Fees vary significantly among these options. Buying in local currency exposes you to exchange rate risk (since international gold prices are dollar-denominated), while foreign currency purchases involve upfront currency exchange costs. Overall, the friction costs of both methods are comparable, at a medium level.

Important advice: Each transaction incurs fees; frequent trading can accumulate high costs. Gold savings certificates are suitable for low-frequency operations and not recommended for intraday short-term trading.

Suitable for: Investors seeking stable returns, low-frequency traders

Advantages: Controlled risk, supports small transactions, can be exchanged for physical gold, easy to operate

Disadvantages: Limited trading hours, only long positions supported, exchange rate risk exists

Method 3: Investing in gold ETFs

Gold ETFs are essentially gold index funds tracking spot gold prices. You can choose local gold ETFs or overseas gold ETFs, such as local gold ETFs, US-listed gold ETFs(GLD), and US-listed gold ETFs(IAU).

Cost structure comparison:

Local gold ETFs typically have annual management fees (~1%), transaction fees (0.1%~0.5%), and currency conversion fees (0.3%~1%).

US gold ETF(GLD) has annual management fee (~0.4%), transaction fees (0~0.1%), and currency conversion fees (~0.32%).

US gold ETF(IAU) has annual management fee (~0.25%), transaction fees (0~0.1%), and currency conversion fees (~0.32%).

Gold ETFs are traded via brokers, with low entry barriers and high liquidity, but only support long positions—no short selling. Suitable for beginners and retail investors aiming for long-term holdings.

Suitable for: Investors seeking low-cost, long-term holdings

Advantages: Easy trading, low entry barrier, high liquidity, transparent fees

Disadvantages: Need to monitor fund management fees, limited trading hours, no shorting

Method 4: Gold futures trading

Gold futures are contracts based on international gold prices, allowing investors to profit from price differences. Futures support two-way trading (long or short) and require only a margin deposit, leveraging capital. Especially suitable for professional traders and short-term investors.

Risk characteristics: Leverage amplifies both gains and losses. Futures have expiration dates, requiring periodic rollover, which incurs additional costs. Tax-wise, gains are subject to capital gains tax, GST, etc.

Trading hours vary greatly across markets. Some local futures exchanges operate only during daytime on weekdays, while overseas futures brokers generally offer 24-hour trading, providing better liquidity and flexibility.

Suitable for: Experienced traders capable of handling high risk

Advantages: 24-hour trading, two-way positions, leverage enhances capital efficiency, good liquidity

Disadvantages: High leverage risk, need for regular rollover, multiple transaction costs, high risk management requirements

Method 5: Gold CFDs

Gold CFDs are derivative contracts tracking spot gold prices, supporting two-way trading without expiration limits, offering more flexibility than futures. Profit comes from the price difference between buy and sell contracts. The biggest advantage is very low entry thresholds and flexible leverage.

Key differences between CFDs and futures:

Futures have fixed minimum contract sizes; CFDs can be adjusted freely, resulting in lower margin requirements. Futures have fixed expiration dates and settlement, while CFDs can be held indefinitely. Futures incur trading fees and taxes; CFDs do not. Overall, CFDs require less capital, making them especially suitable for small traders.

Trading gold CFDs is simpler than stocks—no need to select stocks, just analyze gold price trends. Both analysis and operation are more intuitive.

Suitable for: Investors seeking small-scale entry and short-term swing trading

Advantages: Small account opening, two-way trading, 24-hour trading, simple operation

Disadvantages: High leverage risk, requires trading skills, platform selection must be cautious

Comparison of gold investment channels across regions

Physical gold and gold savings certificates: where to buy most safely?

Malaysia: Maybank, CIMB, Public Bank, RHB Bank, and other mainstream banks are the best choices for purchasing physical gold and gold savings certificates. These banks offer standardized bars (1g, 5g, 10g, 1 oz, etc.), with guaranteed quality, relatively low fees, and buyback support. For small quantities, reputable gold shops can be considered.

USA: JPMorgan Chase, Bank of America, Wells Fargo, and other large banks provide gold investment services with comprehensive products and strict risk controls.

Hong Kong: HSBC, Hang Seng Bank, and others offer complete gold investment products with convenient trading.

Key tip: Regardless of where you buy, purity is the most critical factor, as resale is based on weight. Don’t be fooled by flashy bars, colorful designs, or brand premiums. Also, consider storage costs and risks of physical gold.

Gold ETFs: domestic and international market options

Local gold ETFs and overseas gold ETFs each have their characteristics. For local investment, procedures are simple but management fees are higher (~1%/year). If you have an overseas broker account, you can buy US-listed gold ETFs, with lower fees (~0.25%~0.4%/year) and high liquidity, but you must bear exchange rate risk. Hong Kong’s gold ETFs (like Hang Seng Gold ETF) strike a balance, offering moderate liquidity and costs.

Gold futures: international market comparison

Major international markets:

The Chicago Mercantile Exchange (CME) is the world’s largest futures market, with COMEX gold futures (ticker GC) offering the highest liquidity and narrowest spreads, supporting nearly 24-hour trading.

Hong Kong Exchange (HKEX) offers dollar-denominated gold futures with relatively good liquidity. Trading hours are 09:15-12:00, 13:00-16:30, and night session 17:15-23:30.

Local futures exchanges generally have limited trading hours, usually only daytime on weekdays, with less liquidity than overseas markets.

Advice: Overseas futures brokers provide more flexible trading hours and better liquidity, more suitable for active traders.

Gold CFDs: platform selection must be cautious

CFD markets are highly globalized, with varying regulatory attitudes across countries.

Malaysia: There is no dedicated CFD exchange; investors must trade through regulated overseas brokers. Ensure the platform holds recognized international financial licenses.

USA: Due to strict SEC and CFTC regulation, most US brokers do not offer CFDs, mainly for risk control and investor protection reasons.

Hong Kong: More accepting of CFDs, with many local and international platforms available.

Important warning: CFD markets vary widely; some unlicensed or clone platforms exist. Always verify that your broker holds licenses from reputable international financial authorities to avoid scams.

Summary: How to choose the right gold investment method for you?

Long-term preservation: Choose physical gold or gold ETFs. Physical gold is the most stable but costly; gold ETFs have lower fees and higher liquidity.

Conservative investors: Both gold savings certificates and gold ETFs are worth considering—risk is controllable, costs are reasonable.

Active traders: Gold futures and gold CFDs offer more opportunities but require market familiarity and risk management. CFDs have a lower entry barrier, especially suitable for small funds testing waters.

Final advice: Start small, accumulate trading experience gradually, and increase participation over time. Leverage tools can offer attractive returns but also amplify losses—always prioritize capital safety.