Recently, while reviewing 20 years of gold price charts, I made a very interesting discovery. Over the past half-century, gold prices have almost always been on an upward trend, rising from $35 in 1971 to over $5,100 today. This continuous upward trend is truly rare.

But this bull market is definitely not a straight line upward. Carefully examining the 20-year history of the gold price chart, you'll find it has experienced three obvious major bull markets, interspersed with long bear markets and consolidation periods.

The first was from 1971 to the 1980s, starting when the dollar moved off the gold standard. Gold skyrocketed from $35 to $850, a 24-fold increase. At that time, confidence in the dollar was lost; people preferred holding gold over paper money. Coupled with the oil crisis and geopolitical risks, gold prices surged wildly. But by the mid-1980s, the Federal Reserve aggressively raised interest rates by over 20%, causing gold to crash by 80% instantly. After that, it traded sideways between $200 and $300 for a full 20 years.

The second bull market was from 2001 to 2011, triggered after the dot-com bubble burst. Gold rose from $250 to $1921, a 7.6-fold increase. This wave was driven by the 9/11 terrorist attacks sparking global anti-terror efforts, the U.S. lowering interest rates and issuing debt to fund large military expenses, culminating in the 2008 financial crisis. The Fed launched QE again, and gold prices kept climbing.

Now, we are experiencing the third bull market. From a low of $1,200 in 2019 to over $5,100 earlier this year, an increase of more than 300%. The driving forces are complex: de-dollarization worldwide, central banks疯狂 buying gold, geopolitical risks, inflation issues—all stacking up, pushing gold to new record highs.

After observing these three bull markets, I found a pattern. The causes of each bull market are almost always the same: a crisis of trust in the dollar combined with loose monetary policy. In the early stages, the market slowly bottoms out; in the middle, a crisis catalyst accelerates the rise; in the late stage, speculators rush in, often leading to overheating. Bull markets usually last 8 to 10 years, with gains ranging from 7 to 24 times.

The signals that indicate a bull market is ending are also very consistent: central banks begin aggressive tightening to control inflation. But this time is different. The debt levels of major economies worldwide are already sky-high, and central banks can't raise interest rates significantly like in the past. So, a traditional tightening cycle may not occur. A more likely scenario is that gold prices will fluctuate at high levels for several years, forming a "high-level consolidation period." The true end will only come when the global monetary system re-establishes credibility.

So, is gold suitable for investment? That depends on how you compare. From 1971 to now, gold has increased 120 times, while the Dow Jones Index has risen 51 times. It seems gold is more explosive. But over these 50 years, gold's gains have been very unstable. From 1980 to 2000, it was sideways for 20 years. If you invested during that period, you almost had no returns and only bore opportunity costs. How many 20-year periods can life afford to wait?

Therefore, I believe gold is a very good investment tool, but it’s better suited for swing trading during market trends rather than purely holding long-term. Bull markets are usually accompanied by macro crises, while bear markets tend to be long and boring. Catching the right cycle can let you profit from big swings; missing it might mean lying flat for many years.

There are many ways to invest in gold. Physical gold is the most direct but not very convenient to trade. Gold certificates and gold ETFs offer better liquidity and are suitable for long-term investment. But if you want to do short-term swing trading, gold futures or CFDs are the mainstream options because they leverage your capital, allow both long and short positions, and have low trading costs. Small investors can choose CFDs due to low minimum deposits, high capital efficiency, and T+0 mechanisms that let you enter and exit anytime.

Finally, I want to say that gold, stocks, and bonds each have their own logic. Gold profits come from price differences, stocks from corporate growth, and bonds from interest payments. During economic growth periods, allocate to stocks; during recessions, add more gold. This combination is the most stable. Facing a rapidly changing market, holding all three asset classes—stocks, bonds, and gold—can offset some risks and make your investments more resilient.