Recently, I've seen quite a few friends in Hong Kong discussing gold, and indeed, this wave of market movement has been quite intense. From early last year to now, gold prices have surged from over $2,000 to more than $5,000, an increase of over 150%. Honestly, such performance is not common in the 10-year history of Hong Kong gold price trends.

I’ve also reviewed the gold price movements over the past 50+ years and found an interesting pattern. Starting from the collapse of the Bretton Woods system in 1971, gold has basically experienced three major bull markets. The first was in the 1970s, rising from $35 to $850, driven by a crisis of confidence in the dollar and an oil crisis; the second was from 2001 to 2011, climbing from $250 to over $1,900, triggered by the global anti-terrorism efforts after 9/11 and the 2008 financial crisis; now, this wave started in 2019 at $1,200 and has already surpassed $5,000, driven by central banks buying gold, geopolitical risks, and monetary easing.

It seems each bull market story is quite similar—doubts about dollar trust, combined with governments printing money, and then gold starts to rise. But what’s different this time is that global government debt has become unsustainably high, and central banks can’t raise interest rates aggressively to end the bull run like before. So I think this cycle might not end as cleanly as the previous two, but rather fluctuate at high levels for several years.

Regarding investing in gold, I believe it’s indeed a good asset, but the key is to time it right. Over the past 50 years, gold has increased by 145 times, which yields a return comparable to stocks. But the problem is, there was a 20-year sideways period in the middle. If you bought during that time, you were basically gambling. So gold isn’t very suitable for purely long-term holding; it’s better for trading in clear trending phases.

My own strategy is to allocate gold when the economy looks like it’s about to have problems, add to positions during clear upward trends, and reduce holdings when signs of a top appear. This approach yields much higher returns than just holding on blindly. Recently, I’ve also been using CFD tools to do some short-term trading, because leverage and flexibility can help small investors quickly build positions.

If you’re considering gold investment, I suggest first clarifying whether you want long-term preservation or short-term trading, then decide on your allocation based on the current macro environment. When the economy is strong, you can hold more stocks; during a recession, increase your holdings in gold and bonds. This way, you can better protect your assets amid market volatility.