Gold ETF Investment Complete Guide: How to Choose Between Taiwan and US Commodities? Help You Seize Opportunities in the Gold Market

Gold, as a traditional safe-haven asset, offers the dual advantages of combating inflation and reducing portfolio volatility. Compared to the cumbersome procedures and high costs of physical gold, Gold ETFs provide a more flexible and cost-effective way to participate through direct trading on exchanges. This article will start from the core features of gold ETFs to help you understand different product types, master practical skills, and find the most suitable Taiwan-US gold ETF targets for yourself.

What is a Gold ETF? Why is it worth investing?

A gold ETF is a fund listed and traded on an exchange that directly tracks gold price fluctuations. Compared to holding physical gold or participating in futures contracts, gold ETFs offer three core advantages:

High trading efficiency: No need to queue at banks, no worries about storage issues. Just open your broker app, and within seconds, you can complete a trade—just like buying stocks—making it easy for beginners to get started.

Significantly lower costs: Physical gold often involves handling fees of 5%-10%, plus additional storage costs. Gold ETFs typically have management fees of only 0.2%-0.5%, saving you a substantial amount of expenses.

Better risk balancing: Gold has low correlation with stocks and bonds. Allocating 5%-10% of your portfolio to gold assets can effectively diversify risk and improve return quality. Many institutional studies confirm the effectiveness of this allocation.

Full transparency: Spot gold ETFs regularly disclose their physical gold reserves, allowing investors to see the true value behind the assets clearly.

Very low entry barrier: You can start investing with just a few hundred yuan, far less than the cost of buying gold bars costing tens of thousands, giving ordinary investors the opportunity to share in gold’s appreciation.

In recent years, gold prices have continued to hit new highs, mainly due to global central banks increasing their gold reserves and ongoing international economic uncertainties, further highlighting gold’s safe-haven properties. Many market institutions expect gold prices to continue rising in the future.

The three main types of gold ETFs and their differences

Depending on the underlying assets tracked, gold ETFs can be divided into three main categories:

Physical gold ETFs: Hold actual physical gold directly, with professional institutions safekeeping. Investors indirectly own the corresponding gold shares proportionally. Representative products include GLD and IAU. They are most closely linked to gold prices and carry the lowest risk.

Derivative gold ETFs: Invest through futures contracts, gold swap agreements, and other derivatives. These products can offer leverage multiples, with higher volatility and returns, suitable for experienced traders.

Gold mining ETFs: Hold a portfolio of stocks of gold mining companies, tracking gold mining industry indices. Due to influences from stock market trends, company performance, mining costs, and other factors, their volatility is often higher than the first two types.

Volatility and liquidity analysis of gold ETFs

Although gold is regarded as a safe-haven asset, its price is not entirely stable. When economic uncertainties rise, central bank policy adjustments occur, or geopolitical risks surge, gold prices can experience significant fluctuations.

Historical data shows that gold’s volatility has a long-term downward trend, rising only during major crises (such as pandemics). Compared to oil, copper, 10-year government bonds, or even the S&P 500, gold’s volatility remains relatively low, providing a more stable investment environment.

Conversely, gold mining ETFs tend to be much more volatile because they are affected not only by gold prices but also by overall stock market risks, company performance, and industry-specific risks. Therefore, different types of gold ETFs are suitable for different investors.

Choosing between gold ETFs and gold CFDs

Gold ETFs are suitable for: Investors who want to hold gold steadily, pursue market-average returns, and are willing to hold long-term.

Gold CFDs are suitable for: Investors who want to capitalize on price fluctuations for quick trades, need leverage to amplify returns, or engage in intraday trading.

The leverage trading offered by gold CFDs allows investors to magnify gains with a small amount of capital but also increases the risk of losses. It requires higher market awareness and risk management skills.

Three practical tips for investing in gold ETFs

Tip 1: Portfolio allocation tailored to your profile

Build an investment portfolio based on your risk tolerance:

• Aggressive: Stock index ETF 50% + Gold ETF 25% + Bond funds 20% + Gold CFD 5%
• Balanced: Bond funds 42% + Stock index ETF 30% + Gold ETF 25% + Gold CFD 3%
• Conservative: Bank deposits 40% + Bond funds 30% + Stock index ETF 15% + Gold ETF 15%

Tip 2: Regular fixed investments to smooth costs

Invest a fixed amount at regular intervals (e.g., paydays). This automates the “buy low, buy high” effect, averaging purchase costs over time. Especially suitable for working professionals and beginners, this strategy can show results after 3-5 years, but avoid frequent trading.

Tip 3: Opportunistic adding

Increase investments when gold ETF prices decline; reduce when prices rise. This requires some analysis of gold price trends and is suitable for advanced investors. Set reasonable profit targets (usually 30%-50%), and sell promptly once targets are reached to lock in gains.

Taiwan vs. US gold ETF practical comparison

Taiwan Gold ETF Recommendations

US Gold ETF Recommendations

Key insight: US gold ETFs outperform Taiwan products in asset size, liquidity, and return performance, making them more suitable for investors with international investment experience.

How to choose the most suitable gold ETF?

Step 1: Evaluate the issuer

Prioritize large, reputable issuers with good reputation and strong background. Larger asset sizes generally mean higher liquidity, easier trading, and lower risk.

Step 2: Review historical performance

Check 3-year and 5-year return data and maximum drawdowns to assess whether the ETF matches your risk appetite. Avoid products with poor long-term performance unless you believe they are severely undervalued and have clear investment logic.

Step 3: Calculate true costs

Look beyond management fees; consider trading costs, tax impacts, and all other expenses. Buying when gold prices are relatively low can further reduce overall costs.

Step 4: Confirm sufficient liquidity

Poor liquidity can lead to large bid-ask spreads, increasing hidden costs. Choose ETFs with higher average daily trading volume to ensure you can buy or sell at low cost anytime.

Summary

Gold ETFs provide a convenient way to access the gold market. Based on empirical data, US gold ETFs (especially GLD and IAU) clearly outperform Taiwan products in stability and returns.

Regardless of which gold ETF you choose, the key is to select products aligned with your risk preferences, adopt regular fixed investments or opportunistic adding, and give your investments enough time for compound growth. Gold ETFs are not a get-rich-quick tool but an important part of long-term asset allocation.