Recently, I noticed an interesting phenomenon: more and more people around me are discussing gold investment. After taking a close look at the historical gold price chart, I found that over the past 55 years, gold prices have risen from $35 to over $5,100, an increase of more than 145 times. This number is indeed astonishing, but even more noteworthy is that this surge was not a steady upward trend.

Looking back over this half-century, gold has experienced three clear bull markets. The first was from 1971 to 1980, rising from $35 to $850, a 24-fold increase, mainly because the dollar abandoned the gold standard, causing people to lose confidence in paper money. The second began in 2001, with the low point at $250, rising to $1,921 in 2011—a ten-year increase of 7.6 times—driven by the financial crisis and a low-interest-rate era. Now, this third wave started in 2019 at $1,200 and has already surpassed $5,100 this year, with an increase of over 300%.

After understanding the patterns of these three bull markets, I found a common point: each major surge in gold started with a credit crisis combined with loose monetary policy. The end of the gold standard in 1971, the low-interest-rate rescue in 2001, and the global central bank gold-buying wave beginning in 2019 all follow this logic. The bull markets build gradually in the early stages, accelerate during crises in the middle, and become overheated when speculation enters at the end. On average, each bull market lasts 8 to 10 years, with gains ranging from 7 to 24 times.

But this time is a bit different. According to past patterns, tightening and raising interest rates should end the bull market, just like the Fed's aggressive rate hikes in 1980 ended the first wave, and the end of QE in 2011 ended the second. However, now global government debt levels are alarmingly high, and central banks simply cannot raise rates significantly as they did before. The more likely scenario is that gold prices will fluctuate at high levels for several years, forming a "high-level consolidation phase."

Regarding gold investment, I believe it is indeed a good investment tool, but it depends on the situation. Over the past 50 years, gold has increased by 120 times, while the Dow Jones Index has risen 51 times, making gold seem stronger. But the problem is that between 1980 and 2000, gold traded sideways between $200 and $300 for 20 years. If you bought during that period, you basically had no returns and also missed opportunity costs. How many 20-year periods do we have in life to wait? Therefore, gold is suitable for capturing short-term swings during market cycles, rather than just holding long-term.

In the past two years, gold surged from over $2,000 to over $5,000, an increase of more than 150%, far surpassing stocks and bonds. This is the result of correctly timing the cycle. Gold bull markets are often accompanied by macro crises, while bear markets tend to be long and sluggish. The key is to identify these cycles. Also, since gold is a natural resource, its mining costs increase over time, so even after a bull run ends and prices decline, the lows will gradually rise, and there's no need to worry about it becoming worthless.

There are many ways to invest in gold. The most direct is buying physical gold bars, which offers privacy and easy asset concealment but is less convenient for trading. Gold certificates are suitable for long-term holding but have large bid-ask spreads. Gold ETFs offer better liquidity. For short-term swings, gold futures or CFDs (Contracts for Difference) are more flexible, allowing two-way trading and leverage to amplify gains.

On asset allocation, my advice is not to focus solely on gold. During economic growth periods, stocks are preferable; during recessions, allocate more to gold—that's the basic logic. A good approach is to hold a proportion of stocks, bonds, and gold according to your risk profile. This way, when unexpected events occur—such as wars, inflation, or rate hikes—you can offset some volatility, greatly enhancing your portfolio's resilience.

The market changes rapidly. Events like the Russia-Ukraine conflict, Middle East tensions, and trade frictions are constantly rewriting gold prices. To truly profit from gold investment, the key is to grasp these big trends—going long during bull markets and short during sharp declines. Doing it right can lead to big gains, but misjudging the trend might leave you flat for years.