Recently took stock of gold's performance over the past 50 years and found a pretty interesting pattern.

Since the moment the US dollar detached from the gold standard in 1971, gold prices have risen from $35 an ounce to over $5,000 today, an increase of more than 145 times. This is not just small fluctuations but real historical events. I looked at the trend over these 50 years and roughly divided it into three major bull waves, each corresponding to different crises.

The first wave (1971-1980) from the trust crisis in currency to hyperinflation, with gold prices rising 24 times. At that time, the dollar had just decoupled from gold, and people lost confidence in paper money, preferring to hoard gold rather than trust the dollar. The second wave (2001-2011) from the internet bubble to the financial crisis, with a 700% increase. The third wave started in 2019 and continues to now, surging from $1,200 to over $5,000, up more than 300%. Each time, it’s no coincidence; behind it are credit crises combined with loose monetary policies.

Interestingly, these three bull markets share a common feature: they all originated from a collapse in dollar trust or systemic pressure. The early stages involve slow accumulation at the bottom, crises catalyze rapid rises in the middle, and in the final stage, speculation leads to overheating. On average, each bull lasts 8-10 years, with gains ranging from 7 to 24 times. The signals signaling the end of a bull market are also similar: central banks begin aggressive tightening to suppress inflation.

But this cycle is a bit different. Global major economies' debt levels are already sky-high, and central banks can't raise interest rates sharply like in 1980. So this time, gold prices might not crash cleanly but instead fluctuate at high levels for several years, pulling back and forth. The real signal of ending will require a more credible global monetary system to emerge.

Talking about investment value, gold’s performance over these 50 years isn’t bad. From 1971 to now, it’s risen 120 times, while the Dow Jones has increased 51 times, so gold still has a slight edge. Especially in the past two years, from over $2,000 to over $5,000, with a cumulative increase of over 150%, far surpassing most assets. But there’s a trap: between 1980 and 2000, gold hovered between $200 and $300 for 20 years. If you bought during that period, waiting was essentially pointless.

So my view is that gold is a very good investment tool, but it’s more suitable for trading waves rather than just holding long-term passively. Bull markets are often accompanied by macro crises (inflation, geopolitics, easing policies), while bear markets tend to be long and sluggish. Catching the right cycle can lead to big gains, but missing it means lying flat for many years. Another point worth noting is that, as a natural resource, the cost of mining gold increases year by year, so even after a bull run ends and prices fall, the low points will gradually rise. This means gold can’t become worthless, and traders should grasp this pattern when operating.

There are many ways to invest in gold. Physical gold is convenient for hiding but not easy to trade. Gold certificates are like early US dollars—convenient but banks don’t pay interest, and buy-sell spreads are large. Gold ETFs offer better liquidity but can be eroded over time by management fees if prices stay stable. For short-term traders, futures or CFDs are more flexible, allowing two-way trading and leverage to amplify gains.

Comparing gold, stocks, and bonds, their profit logic is completely different. Gold relies on price differences, bonds on interest payments, stocks on corporate growth. In terms of difficulty, bonds are the simplest, gold is next, and stocks are the hardest. Looking at returns, gold has been the best over the past 50 years, but in the last 30 years, stocks have delivered better returns.

My investment logic is to allocate stocks during economic growth periods and gold during recessions. A more stable approach is to mix stocks, bonds, and gold according to your risk profile and goals. When the economy is good, corporate profits are strong, stocks rise, and gold is less popular. When the economy is weak, stocks underperform, and gold’s value-preserving features along with bonds’ fixed yields become more attractive. Markets are constantly changing, and major political and economic events can happen at any time—examples include the Russia-Ukraine war, inflation, and rate hikes. Holding a certain proportion of stocks, bonds, and gold can offset some volatility risks and make your investments more stable.