I have been analyzing the historical trend charts of gold recently and found that the market over the past 20 years is truly interesting. Over the past 55 years, gold has risen from $35 to over $5,100, an increase of more than 145 times. This number looks astonishing, but the underlying logic is actually quite clear.

I noticed that gold's rise is not steady but divided into three distinct bull markets. The first wave began in 1971 when Nixon announced the dollar would detach from the gold standard, causing gold to surge from $35 to $850, a 24-fold increase. At that time, people lost confidence in the dollar and preferred holding gold over paper currency, compounded by geopolitical events like the oil crisis and the Iranian Revolution. Later, the Fed aggressively raised interest rates in 1980, exceeding 20%, causing gold to crash by 80%, and then it traded sideways between $200 and $300 for nearly 20 years.

The second bull market was from 2001 to 2011, with gold rising from $250 to $1,921, an increase of over 700%. This wave was triggered by the 9/11 attacks. To combat terrorism and rescue the markets after the 2008 financial crisis, the U.S. continuously cut interest rates and implemented QE, leading gold to run for more than a decade. By 2011, during the European debt crisis, prices hit a peak, then entered a long bear market lasting eight years, dropping over 45%.

We are now in the third bull market. Starting in 2019 at $1,200, it has already surpassed $5,100 by May this year, an increase of over 300%. Many factors drive this rise: de-dollarization worldwide, aggressive U.S. QE, the Russia-Ukraine war, escalating Middle Eastern tensions, and central banks worldwide continuously increasing gold reserves. These factors stack up, pushing gold prices to new highs.

Looking at the 20-year gold trend chart, I found a pattern: each bull market begins with a credit crisis and loose monetary policy. The early stage is a slow bottoming process, the middle accelerates due to crisis catalysts, and the late stage becomes overheated with speculative entry. On average, each bull market lasts 8-10 years, with gains ranging from 7 to 24 times.

But this time is different. Global government debt has become astronomical, and central banks cannot raise interest rates sharply to control inflation as they did in the past. So, the traditional clean tightening cycle may not occur. More likely, gold prices will fluctuate violently within a high range for several years, creating what is called a "high-level consolidation period." The real signal of ending may only come when global monetary and credit systems regain trust.

Regarding investing in gold, I believe it is indeed a good investment tool, but the approach matters. Over the past 50 years, gold has increased by 120 times, while the Dow Jones Index rose 51 times. From a purely return perspective, gold isn't bad. Especially in the last two years, from over $2,000 to over $5,000, a rise of more than 150%, far surpassing most assets. But the problem is that gold prices are volatile. If you had invested in gold from 1980 to 2000, you wouldn't have gained much and would have borne opportunity costs.

Therefore, I think gold is suitable for swing trading rather than simple long-term holding. Catching the right cycles can lead to big gains, while missing them might mean lying flat for several years. Also, since gold is a natural resource, mining costs increase over time. Even after a bull run ends, prices may retrace, but the lows tend to gradually rise. This is an important point to grasp in trading.

There are several ways to invest in gold: physical gold is convenient for hiding assets but not easy to trade; gold certificates have poor liquidity; gold ETFs are easy to trade but charge management fees; gold futures and CFDs are the most flexible, allowing two-way trading and leverage. For short-term swing trading, futures or CFDs are indeed more suitable.

Finally, I want to say that gold, stocks, and bonds each have their characteristics. Gold profits come from price differences, stocks from corporate growth, and bonds from interest payments. The basic rule is to choose stocks during economic growth and allocate to gold during recessions. The most prudent approach is to find a balance among stocks, bonds, and gold based on your risk profile and investment goals. Markets are unpredictable and can change suddenly, so holding a diversified portfolio can better offset volatility risks.