Golden Investment 50-Year Review | From $35 to $4,300, Will This Bull Market Continue?

Half-Century Evolution of Gold Prices

Gold, as a natural currency, has played an important role in the global economy since ancient times. Its characteristics—high density, easy to malleate, and durable—make it suitable both as a medium of exchange and for manufacturing jewelry or industrial products.

Over the past 50 years, the historical trend of gold has not been a straight upward line but has experienced multiple major cycles of rise and fall. However, the overall direction is clear: continuous ascent. Especially after entering 2024, gold prices have performed exceptionally strongly, even breaking through $4,300 per ounce in October, creating a new all-time high.

Will this rally continue? What is the logic behind gold prices? Is it more suitable for long-term holding or swing trading? These are core questions investors need to consider.

From the Bretton Woods System to Free Float: Turning Points in Gold Prices

On August 15, 1971, U.S. President Nixon announced the detachment of the dollar from gold, marking the end of the Bretton Woods system. Prior to this, the dollar was a convertible voucher for gold—1 ounce of gold was fixed at $35.

After the detachment, the international gold market truly entered the era of free floating. Over these 50+ years, the trajectory of gold prices can be clearly divided into four major upward phases.

First Wave: 1970-1975, from $35 to $183

Following the detachment of the dollar from gold, market confidence in the dollar was weak. People worried about dollar devaluation and preferred holding gold. The first wave of increase exceeded 400%, but as the oil crisis eased and people gradually recognized the convenience of the dollar, gold prices fell back to around $100.

Second Wave: 1976-1980, from $104 to $850

The second Middle East oil crisis, the Iran hostage crisis, the Soviet invasion of Afghanistan, and geopolitical turmoil, coupled with global recession and high inflation, drove gold prices up over 700%. However, this surge was overextended; after the crisis subsided, prices quickly retreated. Over the next 20 years, gold fluctuated between $200 and $300, with almost no gains.

Third Wave: 2001-2011, from $260 to $1,921

The 9/11 attacks triggered a global anti-terror war, and the U.S. cut interest rates and issued debt to cover large military expenses, eventually leading to the 2008 financial crisis. Central banks worldwide implemented quantitative easing (QE) to rescue the economy, fueling a decade-long bull market in gold. During the European debt crisis in 2011, gold reached a peak of $1,921 per ounce, with gains over 700%.

Fourth Wave: 2015-present, driven by multiple factors

Japan and Europe implemented negative interest rates, a global de-dollarization trend, the U.S. re-initiated QE in 2020, the Russia-Ukraine war in 2022, and conflicts in the Middle East and Red Sea crises in 2023—all contributed to keeping gold above $2,000.

2024-2025 has witnessed epic movements. In the first half of 2024, gold reached $3,700, and in October, broke through $4,300. Core factors driving this rally include: U.S. economic policy risks, global central banks increasing gold reserves, worsening geopolitical tensions, a weakening dollar index, and increased volatility in global stock markets.

The astonishing historical increase: from $35 in 1971 to $4,300 today, gold has risen over 120 times. The increase from 2024 alone has exceeded 104%.

Gold vs Stocks: Who Wins Over 50 Years?

Since 1971, gold has increased 120 times, while the Dow Jones Index has risen from around 900 points to about 46,000 points, an increase of approximately 51 times. It seems gold outperforms.

However, the issue is that gold prices do not rise evenly. During the 20 years from 1980 to 2000, gold hovered around $200-$300, providing no returns for investors. How many 50-year periods are there in a lifetime to wait?

Therefore, gold is a high-quality investment tool but more suitable for swing trading rather than pure long-term holding. The key is to seize bull markets to go long or to short during sharp declines, which yields much higher returns than bonds or stocks.

Another observation is that, as a natural resource, the cost and difficulty of mining increase over time. Even after a bull run ends and prices retreat, historical lows tend to gradually rise. Therefore, investors need not worry that gold prices will fall to worthless levels—by understanding the pattern of “low prices rising,” they can avoid unprofitable operations.

Five Ways to Invest in Gold

1. Physical Gold

Direct purchase of gold bars or jewelry. Advantages include asset concealment and dual functions of investment and decoration. Disadvantages are inconvenient trading and difficulty in liquidation.

2. Gold Savings Account

Similar to early dollar savings accounts, it is a certificate of custody for gold. When purchasing, the account records the holdings, and you can withdraw physical gold at any time or deposit physical gold into the account. Advantages include portability; disadvantages are that banks do not pay interest, and buy-sell spreads are large, making it more suitable for long-term holding.

3. Gold ETFs

Offer better liquidity than gold savings accounts and easier trading. After purchase, you hold corresponding stocks, which represent the actual ounces of gold held. Disadvantages include management fees charged by the issuing company; if gold prices remain stagnant long-term, the ETF’s value will slowly decline.

4. Gold Futures and Contracts for Difference (CFD)

These are the most commonly used financial instruments for retail investors. Both use margin trading with very low transaction costs. CFDs are flexible in trading hours, have high capital efficiency, and are especially suitable for small investors and short-term swing traders. CFDs can offer leverage up to 1:100, with minimum trading units as low as 0.01 lots, and a minimum deposit as low as $50, allowing small capital to participate in gold trading.

When investors expect gold prices to rise, they can buy long; when expecting a decline, they can sell short. The T+0 trading mechanism allows traders to enter and exit at any time.

5. Spot Gold Trading

Direct trading of international spot gold (XAUUSD), the most straightforward method. Transaction costs and complexity are relatively low.

Investment Logic of Gold, Stocks, and Bonds

The three asset classes have different sources of returns:

• Gold: Mainly from price differences, with no interest. Therefore, the key to investing in gold is timing the entry and exit.
• Bonds: Mainly from coupon payments. Investors need to increase holdings continuously to boost income and judge entry/exit points based on central bank policies.
• Stocks: Mainly from corporate value appreciation. Usually, selecting quality companies and holding long-term.

From the perspective of investment difficulty: bonds are the easiest, followed by gold, and stocks are the most difficult.

From the perspective of returns: over the past 50 years, gold performed the best, but in the last 30 years, stocks have yielded higher returns, followed by gold, and then bonds.

Economic Cycles Determine Asset Allocation Strategies

Market practice shows that the rule for asset allocation is: During economic growth, choose stocks; during recession, allocate to gold.

When the economy is doing well, corporate profits are optimistic, stocks rise, and capital flows in. At this time, gold as a safe haven is less valued.

During economic downturns, corporate profits decline, stocks lose appeal, and gold’s value-preserving features along with bonds’ fixed yields become safe havens for capital.

The Best Long-Term Investment: Asset Allocation

Markets are constantly changing, and major political and economic events can happen at any time. Cases like the Russia-Ukraine war, inflation hikes, and geopolitical conflicts clearly show that relying on a single asset class is difficult to cope with sudden risks.

The most prudent strategy is to set reasonable proportions of stocks, bonds, and gold based on individual risk tolerance and investment goals. When holding a mix of stocks, bonds, and gold, they can offset each other’s volatility, making investments more stable.

As the historical trend of gold continues to reach new highs, more investors realize that gold is not only a store of value but also a necessary risk hedge asset. In today’s market with ongoing uncertainties, re-evaluating the gold proportion in one’s asset allocation has become a common choice for rational investors.