Recently, gold prices have hit new highs again. I am pondering a question: over the past 55 years, gold has risen from $35 to over $5,100. Can this bullish trend continue?

To start with the conclusion, the long-term trend of gold indeed warrants attention, especially its performance over the past 20 years. Since 2006, you will notice that whenever there is a global credit crisis or geopolitical risk, gold tends to become the preferred safe haven. But this bull market is somewhat different from previous ones.

Looking back over the past 55 years, gold has experienced three major bull markets. The first was after the United States stopped converting dollars to gold in 1971, when the price soared from $35 to $850, a 24-fold increase. At that time, confidence in the dollar waned, and people preferred hoarding gold over paper currency. The second bull run occurred from 2001 to 2011, with prices rising from $250 to $1,921, a gain of over 7 times, mainly driven by the 9/11 attacks, the Iraq War, and the subsequent 2008 financial crisis. The third is now, starting from a low of $1,200 in 2019, and surpassing $5,000 this year, an increase of over 300%.

Over the past 20 years, gold’s performance has been particularly interesting. The period from 2006 to 2011 was a frenzy of rising prices, but after 2011, it fell 45%, then traded sideways for eight years. Many people got caught during that period. Then, starting in 2019, a new wave of gains began, especially since 2024, with global central banks疯狂 buying gold, geopolitical tensions, and a weakening dollar, pushing gold prices to new highs. From just over $2,000 at the beginning of 2024 to over $5,100 now, it has risen more than 150% in the past two years.

Why is this happening? My observation is that every gold bull market starts for the same reasons—crisis of confidence in the dollar combined with loose monetary policy. But this time is different because global government debt has become unsustainable, and central banks cannot raise interest rates significantly to end the bull run as they did in the past. So, the most likely scenario is that gold prices will oscillate at a high level for several years, without a clean and sharp decline.

Is gold suitable for investment? I think it depends on your investment style. Looking at the past 50 years, gold has increased 145 times, while the Dow Jones Industrial Average rose 51 times, so the returns are actually quite good. But the problem is, gold’s price movements are not stable. From 1980 to 2000, for 20 years, gold hovered between $200 and $300, with no real gains. How many 20-year periods can one wait for? Therefore, my advice is that gold is very suitable for swing trading—buying during bull runs or short-term dips—where the returns can be quite impressive. But don’t expect to just hold long-term and make money effortlessly.

There are many ways to invest in gold. The simplest is buying physical gold bars, but trading is inconvenient. Gold certificates have poor liquidity and large bid-ask spreads. Gold ETFs are more convenient, but if prices stagnate long-term, management fees will gradually eat into your returns. If you want to do short-term swing trading, using gold futures or CFDs (contracts for difference) offers more flexibility, allowing two-way trading, leverage to amplify gains, and some platforms even allow opening accounts with as little as $50.

Finally, asset allocation is a key suggestion. During good economic times, allocate to stocks; during recessions, shift to gold and bonds. Currently, with global instability, holding a mix of stocks, bonds, and gold can offset some volatility risks. The past 20 years of gold’s performance have already proven its value, but the key is to grasp the rhythm rather than blindly holding long-term.