I've been paying close attention to gold as an asset recently and have discovered some quite interesting patterns.

The 55-year growth of gold is truly astonishing—rising from $35 in 1971 to over $5,100 today, a 145-fold increase. Just in the past two years, from early 2024's $2,000+ surge to now, the cumulative increase has exceeded 150%, outperforming most asset classes. Especially between 2024 and 2025, it’s nearly setting new all-time highs every month, with many banks even predicting it could challenge $5,500 to $6,000 by year’s end.

Looking back at these 55 years, there are actually three clear major bull market cycles. The first was from 1971 to 1980, when gold began freely priced after leaving the gold standard, rising 24 times in just 9 years—from $35 to $850. At that time, people just realized the dollar was no longer on the gold standard and started frantic gold buying. Later, due to oil crises and geopolitical risks, gold prices soared to the sky, but in 1980, the Fed aggressively raised interest rates (over 20%), causing gold to crash 80%. The following 20 years saw a long sideways trend, hovering between $200 and $300.

The second bull market was from 2001 to 2011, rising 7.6 times from a low of $250 to a peak of $1,921. This rally was triggered by the 9/11 attacks; the US started cutting rates and issuing debt to fund its huge military expenses, which pushed up housing prices and eventually triggered the 2008 financial crisis. The Fed responded with quantitative easing (QE), leading to a full decade of a major bull run for gold. It wasn’t until the European debt crisis in 2011, when the Fed ended QE, that gold entered an 8-year bear market, dropping over 45%.

The third bull market started in 2019 and is still ongoing. Gold began from a low of $1,200, with this wave gaining over 300%. Many factors drove this—global de-dollarization, the US’s frantic QE in 2020, the Russia-Ukraine war in 2022, the Israel-Palestine conflict, and the Red Sea crisis in 2023. From 2024 to 2025, we are witnessing an epic surge. Central banks worldwide continue to increase gold reserves, US economic policy remains highly uncertain, tensions in the Middle East escalate, and the dollar index weakens—all continuously pushing gold prices higher.

Careful analysis of these three bull markets reveals a very clear pattern: bull markets always start with a credit crisis combined with loose monetary policy. The end of the gold standard in 1971, low interest rates in 2001 to rescue the economy, the dovish turn and pandemic QE in 2018—all follow this pattern. The rally also shows distinct phases—initial slow accumulation at the bottom, accelerated rise driven by crises in the middle, and speculative overheat in the final stage. Each of these bull markets lasts about 8 to 10 years on average, with gains ranging from 7 to 24 times.

But this time is different. Usually, bull markets end with aggressive tightening—like the sharp rate hikes in 1980 or the end of QE in 2011. However, the problem now is that government debt levels in major economies are already sky-high, and central banks simply cannot raise interest rates significantly as they did before. So, a clean, aggressive tightening cycle may be unlikely. A more probable scenario is that gold prices will fluctuate wildly within a high range for several years—that’s what we call a “high-level consolidation phase.” The true signal of an end might only come when a new, more credible global monetary and credit system emerges.

Regarding investing in gold, my view is this: gold is indeed a good investment tool, but it’s more suitable for swing trading rather than long-term holding. Why? Because gold’s gains are not smooth. From 1980 to 2000, gold hovered around $200–$300 for nearly 20 years. If you invested during that period, you’d almost have no returns and would bear opportunity costs. How many 20-year periods do we have in life?

Looking at the past 50 years, gold increased 120 times, while the Dow Jones rose 51 times, so it seems gold outperformed. But if you only consider the last 30 years, stocks actually delivered better returns. So, to profit from gold, the key is to catch the trend. Usually, there’s a long bull phase, then a sharp decline, followed by a period of stability, and then another bull restart. Being able to identify and trade the bull runs or sharp dips can yield higher returns than bonds or stocks.

My basic rule for choosing between gold and stocks is: “Invest in stocks during economic growth periods, allocate to gold during recessions.” A more prudent approach is to determine your asset allocation—stocks, bonds, gold—based on your risk profile and investment goals. When the economy is strong and corporate profits are good, stocks tend to rise, and gold as a store of value may be less favored. Conversely, during economic downturns, gold’s value-preserving qualities come into play.

There are many ways to invest in gold. Physical gold is convenient for hiding assets but not very liquid for trading; gold certificates have moderate liquidity; gold ETFs are more flexible but charge management fees. I personally believe that if you want to do short-term swing trading, gold futures or CFDs are more suitable. CFDs offer flexible trading hours, high capital efficiency, low entry barriers—especially good for small investors. Plus, they support two-way trading—going long when bullish, short when bearish—allowing you to find opportunities in various market conditions.

In summary: gold is a highly cyclical asset, with clear bull and bear phases. If you can time your entry during bull markets or accurately short during bear markets, the returns can be quite impressive. But the key is understanding its规律, not blindly holding long-term. Of course, the most stable approach is to allocate assets among stocks, bonds, and gold based on economic cycles and your risk tolerance, helping to offset some volatility in a rapidly changing market.