Analysis of Taiwan's Gold Price Historical Peak | Viewing the Gold Cycle and Long-term Investment Opportunities from the 50-Year Bull Market

Gold has been an important medium of exchange and a store of value since ancient times. Due to its high density, excellent ductility, and extreme durability, it is not only used as currency but also widely applied in jewelry, industrial manufacturing, and other fields. Over the past half-century, gold prices have experienced ups and downs, but the overall trend has undoubtedly been upward, especially with multiple new highs in 2025. So, can this long-term bull market spanning 50 years continue into the next half-century? What is the logic behind the judgment of gold prices? Is it more suitable for swing trading or long-term holding? The following will analyze these questions one by one.

From $35 to $4300: The Half-Century Transformation of Gold Prices

Since August 15, 1971, when U.S. President Nixon announced the detachment of the dollar from gold and ended the Bretton Woods system, international gold prices have undergone profound changes. On the eve of the detachment, gold was explicitly priced at $35 per ounce. Over the next 50 years, the historical high price of gold in Taiwan has risen to $4300 per ounce, an increase of over 120 times.

Reviewing this process, especially since 2024, the performance has been particularly remarkable. Turbulent global situations, continuous central bank gold reserve accumulation, weakening of the US dollar index, and other factors have jointly driven the price up, with an increase of over 104%. Entering 2025, escalating tensions in the Middle East, new developments in the Russia-Ukraine conflict, uncertainties in US trade policies, and increased volatility in global stock markets have once again fueled the upward momentum of gold prices.

The Four Major Upward Cycles of Gold and Market Driving Factors

Breaking down the gold price trend over the past 50 years reveals four main upward phases, each corresponding to specific economic and political backgrounds.

First Wave (1970-1975): Detachment Shock and Oil Crisis

After the dollar’s independence, gold prices rose from $35 to $183 per ounce, an increase of over 400%. The initial surge was driven by concerns over dollar credibility—since gold could no longer be exchanged, investors wondered if the dollar would depreciate, leading them to hold gold as a hedge. Later, the oil crisis erupted, with the US printing more currency to purchase crude oil, further pushing up gold prices. After the crisis eased, investors regained confidence in the convenience of the dollar, and gold prices retreated to around $100.

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

Gold prices surged again, from $104 to $850 per ounce, an increase of over 700%. Major conflicts such as the Iran hostage crisis and the Soviet invasion of Afghanistan intensified global economic depression, with inflation rates soaring in Western countries, making gold a favored anti-inflation asset. However, this speculative frenzy was excessive. After the oil crisis eased and the Soviet Union disintegrated in 1991, gold prices quickly fell back, fluctuating mostly between $200 and $300 over the next 20 years.

Third Wave (2001-2011): Anti-terrorism Military Spending and Financial Crisis

Following 9/11, the US launched a decade-long anti-terror war, with massive military spending forcing the federal government to cut interest rates and issue bonds, which pushed up housing prices. To control the overheated housing market, the US raised interest rates, ultimately triggering the 2008 financial crisis. To rescue the market, the Federal Reserve implemented quantitative easing, causing international gold prices to jump from $260 to $1921 per ounce, an increase of over 700%. The European debt crisis further drove prices to new highs, then stabilized around $1000 amid policy interventions.

Fourth Wave (2015-present): Negative Interest Rates, De-dollarization, and Geopolitical Conflicts

In the past decade, gold prices have resumed an upward trajectory. Policies such as negative interest rates in Japan and Europe, accelerated de-dollarization globally, the US re-implementing QE in 2020, the Russia-Ukraine war in 2022, the Israel-Palestine conflict, and the Red Sea crisis in 2023 have collectively pushed gold prices around $2000. The epic rally in 2024-2025 saw prices soar from $2690 per ounce at the start of the year to over $4200 in October, with Taiwan’s historical gold price record continuously being broken.

Gold Investment Returns: Comparing with Stocks and Bonds

Is gold worth investing in? The answer depends on the benchmark and time horizon.

Long-term returns comparison

Over the 50 years since 1971, gold has increased by 120 times, while the Dow Jones Industrial Average has risen from about 900 points to 46,000 points, a roughly 51-fold increase. Superficially, gold seems more advantageous, but if we narrow the view to the last 30 years, stocks’ annualized return actually leads, followed by gold, with bonds at the bottom. Up to 2025, gold has already gained over 56%, once again demonstrating its strong performance under certain conditions.

The fundamental difference in sources of returns

• Gold gains mainly from price differences; it does not generate interest, so timing of entry and exit is crucial.
• Bonds generate income from interest payments; optimizing entry and exit involves increasing holdings and tracking risk-free interest rate changes.
• Stocks generate returns from corporate growth; emphasis is on company quality and long-term holding.

In terms of investment difficulty, bonds are the simplest, gold is next, and stocks are the most challenging.

Cyclical Characteristics of Gold and Long-term Investment Insights

Although gold prices perform outstandingly during certain periods, their trend is not strictly linear. Between 1980 and 2000, gold prices hovered between $200 and $300, meaning investing in gold during this period would have faced a 20-year zero-return phase. This reminds investors that gold is more suitable for swing trading rather than pure long-term holding.

However, as a natural resource, the cost and difficulty of extraction increase over time. Even after a bull market ends and prices retreat, the lows tend to gradually rise. This implies that during gold bear markets, prices will not fall to worthless levels. Investors should understand this pattern to avoid ineffective operations.

Five Major Gold Investment Methods Compared

There are various ways to invest in gold, each with pros and cons:

1. Physical Gold

Direct purchase of gold bars or other physical gold. Advantages include asset concealment and jewelry value; disadvantages are inconvenience in trading and poor liquidity.

2. Gold Certificates

Similar to gold custody receipts, which can be exchanged for physical gold or transferred. Advantages are portability; disadvantages include no interest from banks and large bid-ask spreads, making it more suitable for long-term investors.

3. Gold ETFs

More liquid than certificates, with more flexible trading. Investors hold shares corresponding to a certain number of ounces, but must bear management fees. Over long periods of stagnation, the value may slowly decline due to fees.

4. Gold Futures and CFDs

Popular among retail investors, these leverage tools can amplify gains and allow both long and short positions. Futures and CFDs are margin-based, with low transaction costs. CFDs offer higher flexibility and capital efficiency, especially suitable for swing trading, with relatively low minimum entry capital. Short-term investors should prioritize these derivatives.

5. Mining Stocks and Gold Funds

Indirect participation in the growth of the gold industry, sharing corporate appreciation, but with higher risks than direct gold investment.

Asset Allocation Wisdom: Seeking Stability Amid Uncertainty

Gold, stocks, and bonds represent three different asset characteristics and risk profiles. During economic growth, corporate profits are promising, and stocks perform well, while safe-haven assets like gold are relatively neglected; during recessions, the opposite occurs, with gold and bonds favored for stability and preservation.

The most prudent strategy is to set reasonable allocation ratios among stocks, bonds, and gold based on individual risk tolerance and investment goals. Repeated geopolitical conflicts, inflation, and interest rate hikes remind us that holding diversified assets can effectively hedge against volatility of any single asset, making investments more resilient.

In the current rapidly changing market, with geopolitical risks and policy uncertainties coexisting, gold remains an indispensable part of asset allocation for investors seeking preservation and risk balance. The key is to understand its cyclical nature, seize swing opportunities, and avoid blindly chasing highs or panicking into sales.