If you're talking about the original DOS version, then yes, you have to install the game from floppies.
HOWEVER...
You might as well not even bother, since Pirates! Gold for DOS has certain issues that make it impossible to play on your system. PG was a huge experiment by MicroProse in coding and design, and because of that, it's a unique animal.
Like you, I love this game. In fact, I loved it so much, I bought a Pentium 133 MHz computer and a KVM switch running MS-DOS v6.2 just to be able to play it. I was really pissed off when the game still wouldn't run even though I was using Mo'Slo at 25% (...on a 133 MHz CPU yet!).
What I finally discovered was, PG uses some kind of weird DMA function that gets freaked out by anything above 16 MB of total RAM. Allocating the majority of the system's 64 MB with a RAMDisk didn't help either. What worked though, was using the High Memory Managers from MS-DOS v5.0, with their 16 MB limitation. Now the game runs fine, although I do have some occasional screen re-draw glitches I can't get rid of, but they don't affect gameplay.
If you want to play Pirates! Gold, you have one of two choices:
1. Get the Windows 9x version, rare but available if you really hunt for it. There's usually a copy or two on eBay. It installs from a CD-ROM, and should run on any Windows platform.
2. Get on eBay and pick yourself up a Pentium 90 or 120 system and a KVM switch (to save your having to buy/use a second keyboard, monitor, and mouse) and run MS-DOS on it. The advantage of this, is you get to run all the other oldskool games on it too.
I hope this helps. Also, vitsit this site:
http://www.oldskool.org/pc/help/oldonne ... able.shtml
P.S. Never, ever, save your game in an inland town in the DOS version of Pirates! Gold. Trust me on this.