What's the most cost-effective way to buy gold? A comparison and analysis of 5 investment methods

Geopolitical risks are rising, and inflation pressures persist, causing gold to once again attract investors seeking safe assets. But how to buy gold, and how can you profit from investing? Besides traditional physical gold purchases, there are now many efficient ways to invest in gold. This article compares different gold investment channels in detail to help you choose the best option based on your trading style.

How to buy gold now to make money? Investment value analysis

Gold prices have experienced significant fluctuations over the past few years. Between 2022 and 2023, gold prices oscillated between $2,000 and $1,700, mainly influenced by geopolitical conflicts and Federal Reserve interest rate hikes. But starting in 2024, the investment value of gold has clearly increased.

In 2024, gold prices broke through historic highs, driven mainly by rising expectations of U.S. rate cuts, escalating geopolitical risks, and ongoing central bank gold purchases worldwide. Data shows that in 2024, global central banks net bought 1,045 tons of gold, exceeding 1,000 tons for three consecutive years, directly supporting gold prices to surpass $2,700. By 2025, gold investment returns are even more remarkable, with an annual increase of 64.72%, setting a new record high.

However, it’s important to note that gold prices are driven by multiple factors, making short-term trends difficult to predict. How to buy gold depends on your investment goals:

Long-term preservation strategy: Focus on finding the right entry point rather than waiting for prices to rise before buying. Suitable for physical gold, gold certificates, or gold ETFs, aiming to appreciate over time.

Short-term profit strategy: If you can bear risks and have market analysis skills, consider gold futures or gold CFDs to profit from price fluctuations. Both track international gold prices; mastering analysis allows you to profit from long or short positions.

How to buy gold: a comprehensive comparison of 5 methods

How to buy gold most cost-effectively? The key is: Is your goal preservation or profit from price differences? Is your investment long-term or short-term?

Method 1: Physical Gold — The most traditional preservation choice

Includes gold bars, ingots, jewelry, and commemorative coins, purchasable at banks or gold shops.

Advantages: Low risk, simple purchase, tangible gold

Disadvantages: High unit price, storage needed, extra fees, liquidity is moderate

If safety is your priority, physical gold is worth considering. Beware of pitfalls: coins and jewelry include processing fees, and selling involves commissions and wear-and-tear costs, making overall costs higher. It’s recommended to buy large grams of gold bars from reputable banks or LBMA-certified channels for maximum security.

Physical gold is suitable for long-term holding and hedging, especially in extreme economic conditions, serving as the ultimate hard currency. But if quick profits are your goal, physical gold isn’t ideal since it doesn’t generate income and requires professional storage.

Where to buy? Major banks in Malaysia like Maybank, CIMB, Public Bank offer reliable gold services. In the U.S., JPMorgan Chase, Bank of America, etc., provide options. In Hong Kong, HSBC, Hang Seng Bank are good choices.

Method 2: Gold Certificate — The convenience of paper gold

Also called “paper gold,” it means you buy gold but the bank keeps it for you. Transactions are done via the certificate, much more convenient than physical gold.

Advantages: Lower risk, small transactions possible, can exchange for physical gold, easy to operate

Disadvantages: Only buy low and sell high, currency exchange costs exist, limited trading hours

Many large banks offer gold certificates, such as Maybank, Public Bank, HSBC, RHB Bank. To save costs:

• Buying with Malaysian Ringgit (MYR) involves exchange rate risk (gold priced in USD internationally).
• Buying with foreign currency incurs exchange costs.
• Costs are moderate overall. Frequent trading accumulates higher fees, so gold certificates suit low-frequency investors. Not recommended for frequent trading.

Tax-wise, if your trading is deemed commercial (frequent transactions), you must declare as business income and pay personal income tax.

Method 3: Gold ETF — Low-threshold index investment

Gold ETFs are gold index funds. As funds, they charge management fees. Examples include Malaysian ETF (0828EA), U.S. ETFs (GLD, IAU).

Cost structure:

• Malaysian ETF (0828EA): management fee (~1%/year), brokerage (0.1%-0.5%), currency exchange (0.3%-1%)
• U.S. ETFs (GLD): management fee (~0.4%/year), brokerage (0-0.1%), exchange (0.32%)
• IAU: management fee (~0.25%/year), brokerage (0-0.1%), exchange (0.32%)

Advantages: Easy to buy/sell, low investment threshold, high liquidity

Disadvantages: Management fees, only long positions, trading hours limited

For beginners, gold ETFs are ideal. Low entry barrier—just open a broker account—suitable for long-term retail investors. Be aware that each trade incurs fees, and holding long-term involves annual management costs.

Where to buy? In Malaysia, via local brokers; abroad, through international brokers to access U.S. ETFs like GLD and IAU, which are the most liquid. In Hong Kong, options include Hang Seng Gold ETF (7800), Huaxia Gold ETF.

Method 4: Gold Futures — For professional investors

Gold futures are contracts based on the future price of gold, allowing both long and short positions with leverage.

Advantages: T+0 trading, 24/7 flexibility, dual-direction trading, leverage enhances capital efficiency

Disadvantages: High leverage risk, physical delivery possible, need to rollover contracts

To profit short-term, gold futures are effective but require expertise. Leverage amplifies gains and losses; risk management is essential. Futures have expiry dates, requiring rollover, which incurs costs.

Trading venues: Bursa Malaysia Derivatives offers gold futures but with limited hours. Overseas, most futures are nearly 24/7, with CME’s COMEX gold futures (GC) being the most popular, offering high liquidity and tight spreads. HKEX also offers gold futures with trading hours from 09:15-12:00, 13:00-16:30, and 17:15-23:30.

Method 5: Gold CFDs — Flexible short-term tool

CFDs track spot gold prices, allowing long and short trading without owning physical gold.

Advantages: Low minimum trading size, flexible long/short positions, T+0 trading, easy account opening

Disadvantages: High leverage risk, requires trading skills, overnight fees

How to buy gold quickly? Gold CFDs are the most efficient way. Compared to futures, CFDs have advantages:

• Contract flexibility: Futures have fixed sizes and high capital requirements; CFDs allow opening positions from 0.01 lots with lower margin.
• Position flexibility: Futures expire; CFDs do not.
• Cost structure: Futures charge commissions and taxes; CFDs mainly have spreads and overnight fees.

Ideal for experienced traders wanting quick market access. Minimum deposit around $50, high capital efficiency. Remember: leverage magnifies both gains and losses; beginners should start with low leverage or demo trading.

Platforms: Major regulated CFD providers include IG Markets, Plus500, eToro, with licenses from reputable financial authorities. In the U.S., CFD trading is limited due to SEC and CFTC regulations. Hong Kong has a more open environment, with platforms like Dukascopy, Saxo Capital Markets, Futu Securities.

How to buy gold: choose the best method for yourself

For preservation-focused investors: Prioritize physical gold or gold certificates for maximum safety, suitable for long-term holding, but expect limited short-term gains.

For low-risk investors: Gold ETFs are ideal—low entry, high liquidity, suitable for regular investments.

For high-risk tolerance investors: Gold futures or CFDs can be considered. Both offer leverage and dual-direction trading but require market analysis skills and risk management. CFDs are more flexible and accessible for small investors.

Once you select your preferred gold investment method, remember: clarify your investment horizon and risk appetite. Long-term investors should find good entry points rather than chasing high prices blindly. Short-term traders must learn to cut losses and control leverage. Although gold is a safe haven asset, each purchase method carries different risks; choosing the right one is key to truly benefiting from gold investment.