Half a Century of Golden Rise Cycle | Gold Prices Continue to Hit New Highs, Will the Next 50 Years Still Rise?

Since ancient times, gold has occupied an important position in the economic system due to its unique physical properties—high density, strong ductility, corrosion resistance, and durability. In addition to its monetary functions, it also serves in jewelry, industrial applications, and other fields. Looking back at the gold price trends over the past half-century, although there have been multiple fluctuations, the overall trend clearly points upward, especially since 2025, when new all-time highs have been repeatedly set. So, does this 50-year bull market still have potential for continuation? How should one strategically allocate investments in gold?

Starting from the Collapse of the Bretton Woods System: The 50-Year Evolution of Gold

Before 1971, the international monetary system operated under the Bretton Woods framework—US dollar linked to gold, with a fixed rate of 1 ounce of gold to 35 USD. However, with the rapid development of post-war trade, gold mining could not keep pace with demand growth, and US gold reserves faced significant outflows. On August 15, 1971, the Nixon administration officially announced the suspension of the dollar-gold convertibility, a decision that completely redefined the international financial order and ushered in a new era of the modern gold market.

From 1971 to 2025, gold prices soared from $35 per ounce to recent levels of $4,300, an increase of over 120 times. The gold price levels around the late 1980s seem insignificant compared to today. Over these 50+ years, gold prices have experienced four distinct upward cycles, each associated with major geopolitical or economic events.

Four Waves: Four Key Stages in the Evolution of Gold Prices

First Wave: Early 1970s Trust Crisis (1970-1975)

After the dollar-gold disconnect, international gold prices jumped from $35 to $183, an increase of over 400%. The driving forces included: first, public skepticism about the dollar’s credibility—since it was no longer convertible to gold, people preferred holding physical gold to protect assets; second, the oil crisis led to increased US money issuance, further pushing up gold prices. But as the crisis eased and confidence in the dollar’s convenience was restored, gold prices fell back to the hundred-dollar range.

Second Wave: Geopolitical Turmoil and Inflation Spiral (1976-1980)

Gold prices again surged from $104 to $850, a rise of 700%. Events such as the second Middle East oil crisis, the Iran hostage crisis, and the Soviet invasion of Afghanistan followed one after another. The global economy sank into recession, and inflation soared in Western countries. During this uncertainty, gold became the best safe-haven asset. However, prices were driven too high; once the crisis subsided, gold prices quickly retreated, consolidating in the $200-$300 range for the next 20 years.

Third Wave: The 2001-2011 Bull Market Triggered by 9/11 (2001-2011)

International gold prices climbed from $260 to $1921, an increase of over 700%. Factors driving this period included: US-led anti-terror wars, government spending surges leading to rate cuts and subsequent hikes, the housing bubble, and the 2008 financial crisis. Post-crisis, the US launched a new round of quantitative easing, making gold the preferred asset for risk-averse investors. At the peak of the European debt crisis in 2011, gold hit its then-highest level.

Fourth Wave: Central Bank Accumulation and New Geopolitical Cycles (2015-present)

The decade from 2015 onward marks a new era for gold. Prices gradually broke through $2,000 from an initial $1,060, driven by negative interest rate policies in Japan and Europe, the trend of de-dollarization, the US’s new QE rounds in 2020, the Russia-Ukraine war in 2022, and conflicts in the Middle East in 2023.

2024–2025 have been especially extraordinary. In early 2024, gold prices entered a strong rally, reaching over $2,800 in October, setting a record high. At the start of 2025, tensions in the Middle East, new variables in the Russia-Ukraine conflict, US trade policy risks, global stock market volatility, and a weakening dollar have all resonated, pushing gold to repeatedly hit new highs, currently reaching $4,300 per ounce. Major institutions worldwide have raised their target prices for this year.

Gold vs. Stocks vs. Bonds: The Real Comparison of Investment Returns

How have investment returns been distributed over the past 50 years?

• Gold: up 120 times since 1971
• Stocks: Dow Jones index rose from around 900 points to about 46,000 points, approximately 51 times
• Bonds: mainly rely on periodic interest payments, with the lowest overall returns

At first glance, gold’s 50-year return outperforms others, but if we look at only the last 30 years, stocks have performed better. What is the logic behind this?

The return models of these three asset classes are fundamentally different:

• Gold gains come from price differences, not interest, earning from buying low and selling high
• Bonds generate interest income, requiring periodic compounding
• Stocks derive returns from corporate growth, closely tied to economic expansion

The Cyclical Pattern of Gold Investment: When to Allocate?

The challenge with gold investment is its price movement exhibits clear cyclical characteristics: a long bullish phase, followed by a sharp correction, then a period of consolidation, and finally a new bullish cycle. If one can accurately grasp the early stage of a bull or the bottom of a sharp decline, returns can far surpass those of bonds and stocks.

The key rule is: invest in stocks during economic growth periods, and allocate to gold during recessions.

When the economy is strong, corporate profits rise, stocks perform well, and gold—being a non-yielding asset—loses favor; conversely, during downturns, stock risks increase, and gold’s hedging and safe-haven functions become prominent, often making it the most favored asset.

What Are the Investment Methods for Gold?

Investors can choose suitable allocation methods based on their circumstances:

1. Physical Gold

Buying gold bars or jewelry directly. Advantages include privacy and usability; disadvantages are inconvenience in trading and difficulty in quick liquidation.

2. Gold Certificates

Similar to gold custody receipts, allowing withdrawal of physical gold or deposit. Advantages are portability; disadvantages include large bid-ask spreads and no interest income, suitable for long-term holding only.

3. Gold ETFs

Track gold prices via stock-like instruments. They offer much higher liquidity than certificates, are easy to trade, but management fees are charged, and during long consolidation periods, net asset value may slowly erode.

4. Gold Futures and Contracts for Difference (CFD)

The most flexible options. Futures and CFDs use margin trading, with low transaction costs, supporting leverage and both long and short positions. CFDs, in particular, have more flexible trading hours, higher capital efficiency, and are suitable for retail traders to perform short-term swings.

Long-term Investment or Swing Trading in Gold?

Many are confused about whether gold is suitable for long-term holding or short-term trading. The answer depends on the time horizon:

Over an ultra-long period like 50 years, gold is indeed a good asset allocation, but the problem is that gold price increases are non-linear. Between 1980 and 2000, gold fluctuated in the $200-$300 range; buying then and holding long-term would have yielded almost no return over the next 20 years. How many people have 50 years to wait?

Therefore, gold is more suitable for swing trading—going long during bull phases and short during sharp declines—rather than simply holding to death.

It’s also worth noting that, as a natural resource, the cost and difficulty of mining increase over time. Even if a bull cycle ends with a correction, each cycle’s bottom is gradually rising. This means that even if gold prices fall, they won’t drop to worthless levels; swing traders should remember this rule.

The Wisdom of Asset Allocation: The Golden Combination of Stocks, Bonds, and Gold

In the face of ever-changing markets, betting on a single asset class is too risky. A more prudent approach is to dynamically adjust the proportions of stocks, bonds, and gold based on individual risk tolerance and investment goals.

Events like the Russia-Ukraine war, inflation hikes, trade frictions… keep reminding us that black swan events can occur at any time. Holding a balanced portfolio of stocks, bonds, and gold can effectively hedge against volatility in any single asset, making the investment portfolio more resilient.

When economic uncertainty rises, consider increasing gold allocation; when the outlook improves, increase stock exposure. This dynamic balancing approach is the best strategy to protect wealth in complex markets.