2025 Gold Asset Allocation Complete Guide: A Comprehensive Analysis from Preservation to Trading

Why Are Investors Continuing to Buy as Gold Prices Keep Rising?

As of October 2025, international gold prices have surpassed $4,300 per ounce, reaching a historic high. Amid increasing global economic uncertainties and loose monetary policies worldwide, gold has once again become a focal point of asset allocation. Whether conservative investors or advanced traders, everyone is re-evaluating gold’s role in their portfolios.

When prices keep rising but wage growth lags behind, the purchasing power of cash continuously diminishes. After the COVID-19 pandemic outbreak in 2020, many countries issued大量貨幣 to stimulate their economies, causing gold prices to soar from about $1,500 to over $4,000 in November 2025, an increase of over 150%. This is no coincidence—gold is fundamentally a hedge against currency devaluation.

Why Is Gold Worth Including in Your Portfolio?

Long-term value preservation and inflation resistance

As a tangible asset and globally recognized precious metal, gold does not depreciate due to policy changes or banking risks like fiat currencies. Historical data shows that over the past fifty years, gold has experienced two major bull markets, remaining stable at other times, while stock markets have faced multiple crashes. The stability of gold is precisely what makes it attractive.

Essential Asset for Diversifying Investment Risks

If your portfolio consists solely of stocks or cryptocurrencies, market volatility can significantly reduce your assets. After the outbreak of the Russia-Ukraine war in 2022, gold prices surged sharply in a short period; recently, due to increased uncertainty in tariff policies, gold hit new highs again. Many investment strategies recommend allocating 5%–15% of assets in gold, which can hedge systemic risks without dragging down overall returns.

Sufficient Market Liquidity

In 2024, the average daily trading volume of gold reached $227 billion, second only to the S&P 500 index. This means investors don’t need to worry about the dilemma of “buying in but unable to sell out.”

Psychological Stability Value

Holding gold or gold-related assets can provide psychological security in environments of high financial uncertainty and stock market volatility. This psychological effect should not be overlooked.

Overview of Gold Investment Methods

1. Physical Gold: The Traditional Choice

Directly purchasing gold bars, coins, and other physical gold is the oldest method. Investors can buy from banks, gold shops, or pawnshops, and holding long-term can serve as a store of value. However, the drawbacks are obvious: higher prices, poor liquidity, storage risks, and high safekeeping costs.

Buying Tips: Prioritize gold bars and coins. When purchasing, check the brand, weight (99.99% purity), quality, and certificates, and confirm the credibility of the seller. Avoid gold jewelry and commemorative coins, as their resale value often involves significant discounts.

2. Gold Passbook: Paper Gold at Banks

Gold passbook, also known as paper gold, replaces physical gold with a paper record, with prices linked to spot gold prices. After purchasing at a bank, investors can choose to exchange the passbook for physical gold. Many banks in Taiwan offer this service; after paying account opening fees, you can buy and sell gold through the bank without worrying about safekeeping.

Note: Gold passbook does not generate interest; profit is only from buying low and selling high. Transaction costs are relatively high, making it less suitable for frequent short-term trading.

3. Gold ETFs: Modern Solution for Small Investors

Gold ETFs are open-ended funds listed on stock exchanges, with most funds invested in gold assets. The most well-known is the US SPDR Gold ETF (GLD.US), and in Taiwan, Yuanta S&P Gold Inverse 1 ETF (00674R.TW). Traders can buy and sell in real-time like stocks, with flexible subscription and redemption, and low trading fees.

4. Gold Stocks: Indirect Investment in Mining Companies

How to buy gold stocks? Investors can choose gold mining stocks such as Barrick Gold (ABX.US), Newmont Mining (NEM.US), Goldcorp (GG.US), all traded on the US stock market, accessible through regular brokerage accounts.

Note that gold mining stocks are influenced by company operations, shareholder structure, and other factors, often deviating from gold prices. Sometimes, gold prices rise, but mining stocks may fall due to rising production costs.

5. Gold Futures: Advanced Leverage Trading

Gold futures are contracts bought and sold on exchanges (CBOT, CME, NYMEX), opened via exchange or futures broker accounts. Traditional futures have high thresholds, but micro gold futures lower the entry barrier, with minimums of a few hundred USD.

Key limitation: contracts have expiration dates, requiring closing or rolling over before expiry, involving complex operations. Attractive for short-term traders, but leverage is a double-edged sword, amplifying both gains and losses.

6. Gold CFDs: The Most Flexible Digital Trading Method

Contracts for Difference (CFD) are agreements that track the spot asset price. Gold CFDs follow spot gold prices (XAUUSD), usually opened on forex platforms. Compared to futures, CFDs have these advantages:

• Simple contract rules: no complex delivery or rollover operations
• Low trading threshold: minimum 0.01 lot, starting at just $10
• T+0 two-way trading: no time limit
• Flexible leverage: set by the broker, wide options
• One-stop trading: trade gold, forex, stocks, indices, and more with one account

The biggest advantage is low cost and ease of operation, suitable for swing trading. But beware of leverage risks; use stop-loss, take-profit, and trailing stops.

How to Choose Between Gold Futures and Gold CFDs?

Criteria for Choosing a Gold Trading Platform

When selecting a trading platform, gold prices are generally similar, but differences include:

• Fee structure: low commissions, tight spreads preferred
• Trading rules: clear, fair execution mechanisms
• Platform security: regulated by proper financial licenses
• User experience: intuitive interface, comprehensive tools
• Product diversity: ability to trade gold, forex, stocks, and other assets

Professional online CFD platforms typically feature zero commissions, low spreads, user-friendly interfaces, and competitive conditions, enabling one-stop trading with a single account.

How Beginners Can Start Trading Gold?

Step 1: Choose the Right Trading Method

Based on capital, risk tolerance, and trading frequency:

• Conservative: physical gold, gold passbook, gold ETFs
• Advanced: gold stocks, gold futures, gold CFDs

Step 2: Analyze the Gold Market

While short-term predictions are difficult, you can gain insights through various indicators:

• Fundamentals: inflation rate, central bank policies, economic trends
• Market sentiment: risk aversion demand, USD strength
• Technical indicators: gold sector indices, gold-silver ratio, gold-oil ratio

Step 3: Place Orders

On professional trading platforms, you can place various orders (market, limit). For example, with XAUUSD, choose long or short positions, with leverage options from 1X to 100X.

Initial margin will fluctuate with price movements. It’s recommended to start with small funds and low leverage to practice and gradually build experience.

The Long-term Logic of Gold Investment

If you watch gold prices daily, you may be scared by short-term fluctuations. But historically, gold has a clear “rhythm”:

• Bull market cycle: approximately 10 years
• Correction periods: several years of adjustment

These cycles are closely related to economic conditions, USD strength, interest rate trends, and global risk sentiment:

• When stock markets fluctuate, inflation rises, or economic outlook is uncertain → gold is sought after, and prices rise
• During stable economies and booming stock markets → gold may temporarily cool off

There’s also the concept of a longer “super cycle”: structural changes in the global economy (such as rapid growth in emerging markets and increased resource demand) can drive continuous gold bull markets lasting over a decade.

Beginners don’t need to monitor gold prices daily. Watching USD, interest rates, and risk sentiment can give a good sense of whether gold is entering the next upward phase.

Practical Tips for Gold Investment

1. Practice with demo accounts: risk-free experience of 24-hour two-way trading, capturing opportunities

2. Start small: whether physical gold, passbook, or CFD trading, begin with small amounts and scale up gradually

3. Use leverage cautiously: leverage amplifies both gains and losses. Beginners should choose conservative leverage ratios

4. Utilize risk tools: stop-loss, take-profit, trailing stops are key to controlling risks

5. Diversify: don’t allocate all funds to one method. Combine physical gold for preservation, ETFs for stability, and CFDs for swing trading

6. Keep learning: stay informed about economic data, central bank policies, geopolitical events, and other factors driving gold prices

Gold investment is not a get-rich-quick scheme but an important part of a stable asset allocation. Regardless of market fluctuations, gold’s long-term value preservation and hedging properties remain essential.