Half a century of gold price fluctuations | Will the next 50 years of gold continue the bullish trend?

The Long-Term Logic of Gold Investment

Gold has played an important role in the economy since ancient times. Its high density, excellent ductility, and durability make it not only a currency function but also widely used in jewelry and industrial fields. Looking back over the past 50 years, gold prices have experienced fluctuations but overall trend upward, reaching new highs in 2025. So, can this upward cycle spanning over half a century continue into the next 50 years? Is gold more suitable for long-term holding or swing trading? These questions deserve in-depth exploration.

The Evolution of Gold Prices After the Collapse of the Bretton Woods System

To understand the modern trend of gold prices, we must start from 1971. After World War II, the United States established the Bretton Woods system, which fixed the exchange rate at 35 USD per ounce of gold, effectively making the dollar a certificate of gold exchange. However, as international trade developed, gold mining could not keep up with demand, and the US faced significant gold outflows. President Nixon ultimately decided to detach the dollar from gold, a decision that completely changed the global financial landscape.

In the more than half-century since the detachment, international gold prices have risen from 35 USD per ounce to 4,300 USD in October 2025, an increase of over 120 times. Especially from 2024 onward, amid turbulent global political and economic situations, central banks increased holdings, and investors flocked in, causing gold prices to surge over 104% in 2024 alone, reaching new highs in 2025.

Interpretation of the Four Waves of Gold Upward Cycles

First Wave (early 1970s): Confidence Crisis After Detachment

After the dollar was decoupled from gold, public confidence in the dollar collapsed, and people preferred holding gold over dollars. Gold prices soared from 35 USD to 183 USD, an increase of over 400%. Later, due to the first oil crisis, the US increased money supply, pushing oil prices higher, leading to a second wave of gold price rise. However, as the crisis eased and people re-recognized the convenience of the dollar, gold prices fell back to around 100 USD.

Second Wave (1976-1980): Dual Drivers of Geopolitics and Inflation

The second Middle East oil crisis and geopolitical turmoil (Iran hostage crisis, Soviet invasion of Afghanistan) triggered a global recession and high inflation. Gold jumped from 104 USD to 850 USD, an increase of over 700%. After the crisis eased and the Soviet Union disintegrated, gold prices fell sharply, and for the next 20 years, traded in a range of 200-300 USD.

Third Wave (2001-2011): A Decade of Bullish Market

The 9/11 attacks ignited a global anti-terrorism war. To fund the large military expenses, the US cut interest rates and issued debt, which pushed up housing prices, but then raised interest rates, triggering the 2008 financial crisis. During the crisis, the US restarted QE policies, leading to a decade-long bull market for gold, soaring from 260 USD to 1,921 USD, an increase of over 700%. After the European debt crisis peaked, gold gradually stabilized around 1,000 USD.

Fourth Wave (post-2015): Multi-Factor Catalysts

Factors such as negative interest rate policies in Japan and Europe, the global de-dollarization trend, new US QE in 2020, Russia-Ukraine conflict in 2022, the Israel-Palestine war, and the Red Sea crisis in 2023, have kept gold prices around 2,000 USD. Starting in 2024, gold entered a strong upward phase, briefly surpassing 2,800 USD in October. The escalation of Middle East tensions, changes in Russia-Ukraine situation, US trade policy uncertainties, global stock market volatility, and weakening US dollar index continue to push gold to new highs.

Objective Evaluation of Gold Investment Returns

Since 1971, gold has increased 120 times, while the Dow Jones Industrial Average rose from 900 points to about 46,000 points, an increase of approximately 51 times. Over a 50-year span, gold investment returns are comparable to or even better than stocks. From early 2025 to mid-October, gold rose from 2,690 USD to 4,200 USD, an increase of over 56%.

However, the problem is that gold prices are not rising steadily. Between 1980 and 2000, gold hovered around 200-300 USD for 20 years, during which investing in gold yielded no returns. How many 50-year periods can one wait for? Therefore, gold is an excellent investment tool, but more suitable for swing trading during market trends rather than pure long-term holding.

Since gold is a natural resource, extraction costs and difficulty increase over time. Even after a bull market ends, prices tend to pull back, but the lows gradually rise. This means that in the long run, gold will not become worthless; investors must understand this pattern to avoid unnecessary operations.

Comparison of Five Gold Investment Channels

1. Physical Gold: Direct purchase of gold bars or other physical forms. Advantages include asset concealment and jewelry use; disadvantages are inconvenient trading.

2. Gold Certificates: Similar to gold custody certificates, convenient to carry but banks do not pay interest. Wide bid-ask spreads make it suitable only for long-term investment.

3. Gold ETFs: More liquid than gold certificates, easy to trade, but management fees are charged by issuers. When gold prices are stable long-term, their value may gradually decline.

4. Gold Futures and CFD Trading: Most popular among retail investors. CFD trading is especially flexible, with high capital efficiency and no time restrictions. Suitable for short-term swing traders. These are margin-based trading, with low transaction costs, small account opening requirements, and typically leverage of 1:100, with minimum trading units of 0.01 lots, and an initial deposit as low as 50 USD. Can be traded bidirectional at any time.

5. Gold Funds: Indirectly hold gold, with good liquidity, suitable for medium- to long-term investment.

Different Investment Logic of Gold, Stocks, and Bonds

The sources of returns for these three asset classes are entirely different:

• Gold: Gains come from price differences, no interest, key is timing of entry and exit
• Bonds: Gains come from interest payments, require increasing holdings and judgment of central bank policies
• Stocks: Gains come from corporate growth, emphasizing stock selection ability and long-term holding

In terms of difficulty: Bonds are the simplest, gold is next, stocks are the most difficult.

In terms of returns: Over the past 50 years, gold performed the best, but in the last 30 years, stocks outperformed, followed by gold, with bonds last.

To profit from gold investment, one must grasp trend cycles—usually a pattern of a long bull market → sharp decline → stabilization and consolidation → re-initiation of a bull market. Being able to buy during bull markets or short during sharp declines will yield returns surpassing bonds and stocks.

Multi-Asset Allocation Strategy

Basic principle of selection: “Allocate stocks during economic growth, allocate gold during recession.”

When the economy is good, corporate profits are strong, and stocks tend to rise; correspondingly, the attractiveness of fixed-income bonds and interest-free gold diminishes.

During economic downturns, corporate profits decline, stocks lose favor; instead, gold’s value-preserving feature and bonds’ fixed income become safe havens.

The most prudent approach is to set appropriate proportions of stocks, bonds, and gold based on individual risk preferences and investment goals. Facing unpredictable black swan events like the Russia-Ukraine war, inflation, and interest rate hikes, holding a diversified asset portfolio can reduce volatility risk and make investments more stable.

In summary, gold as an investment tool has unique value, but successful application requires grasping market rhythm, understanding economic cycles, and hedging logic, to remain resilient in a rapidly changing market.