Recently, many people have been using the trend of gold in 1979 to speculate on today's market, and I have to say, this logic is actually quite dangerous.

On the surface, it does seem somewhat similar: tensions in the Middle East, rising oil prices, inflation expectations heating up, gold initially rising then falling. Comparing the two sets of candlestick charts seems like it could predict the future. But if you really look deeper, you'll find that the entire game has completely changed.

Let's first review what happened in 1979. The key points that year were two things. First, after Fed Chairman Volcker took office, he played hardball, pushing interest rates close to 20%. At such high rates, holding cash became the best investment, and assets like gold, which have no yield, naturally were abandoned. Second, global capital began to believe that the U.S. could restore stability to the world order; the Cold War was easing, and the dollar's credibility was unprecedentedly strong. So, the decline in gold was fundamentally because the dollar system became stronger.

What about the current situation? I think we are actually standing in a completely opposite position.

U.S. debt has already ballooned to the limit, fiscal deficits are out of control year after year, and the financial system is extremely sensitive to interest rates. The Fed no longer has the maneuvering space that Volcker had back then. But a deeper problem is that the underlying structure supporting dollar credibility is beginning to loosen.

The nature of the Middle East conflict is entirely different. This is not a localized issue that can be resolved through negotiations, but a self-reinforcing system. Energy is being hit, shipping disrupted, costs pushed higher, fiscal burdens increased—all locking everyone into this structure. Most critically, this conflict directly threatens the core of the dollar system—the energy pricing power.

If U.S. control in the Middle East continues to decline, if oil is no longer priced in dollars, and if relevant countries start settling in other ways, then the issue is no longer just oil prices. The cycle of petrodollars itself will be destabilized. Once this narrative cracks, the foundation of dollar credibility will no longer be solid. And gold’s role as a safe haven is fundamentally a hedge against this kind of credit system.

So, the comparison becomes very interesting. Over forty years ago, gold fell because that system was stronger. Now, the decline is happening amid a system that is being challenged and overturned. Back then, capital was flowing back to the U.S.; now, capital is searching for a new anchor.

My understanding is that today’s gold adjustment is more about phased profit-taking. The big rally has already priced in conflict and inflation expectations sufficiently; short-term funds are starting to realize gains, and the market is entering a rebalancing phase.

What’s truly worth pondering is not the similarity in candlestick patterns, but the variables behind the changes. In 1979, the dollar was the answer; in 2026, the dollar is being re-priced. How conflict transmits through energy to inflation, how inflation influences interest rates, and how interest rates change asset pricing—all of this logic is already different.

Today’s world has become more complex and absurd; it’s no longer the era where a single extreme rate hike can restore order. As conflicts spill over, energy prices hover at high levels, and the U.S. no longer has the capacity to curb inflation through rate hikes. By then, the entire credit system may need to be re-priced, and gold will have a new positioning.