I've been analyzing the 20-year trend of gold recently and discovered some quite interesting patterns. Over the past half-century, gold has risen from $35 in 1971 to surpass $5,000 today, a 145-fold increase, behind which lies deep market logic.

I've summarized that gold has roughly experienced three major bull markets. The first wave was from 1971 to 1980, starting when the gold standard ended, with gold prices jumping from $35 directly to $850, a 24-fold increase. At that time, everyone distrusted the dollar and preferred to hoard gold. Later, due to the oil crisis, geopolitical turmoil, and the Federal Reserve's aggressive interest rate hikes exceeding 20%, gold plummeted 80%, then entered a long sideways trend lasting 20 years.

The second bull run was from 2001 to 2011, with gold rising from $250 to $1921, an increase of over 700%. The driving forces during this period included the 9/11 attacks, the US anti-terrorism wars, the 2008 financial crisis, and the subsequent QE. But after the European debt crisis erupted in 2011, the Fed ended QE, and gold entered an 8-year bear market.

What's most interesting is the third wave, from $1,200 in 2019 to over $5,000 now, with nearly 150% growth in the past two years. The catalysts include global de-dollarization, renewed US QE, the Russia-Ukraine war, Middle East tensions, US tariffs, and dollar weakening. Looking at the 20-year evolution of gold, you'll notice each bull market is triggered by common factors.

Careful observation of these three bull markets reveals a pattern: they always start with a credit crisis combined with loose monetary policy. The end of the gold standard in 1971, low-interest-rate rescue in 2001, and the dovish turn plus pandemic QE in 2018 all follow this logic. The rise usually occurs in three stages: a slow bottoming phase early on, a mid-phase accelerated by a crisis, and a late speculative overheat as investors rush in.

Signals indicating the end of a bull market are also clear: tightening measures to control inflation. The rate hikes in 1980 and the end of QE in 2011 are examples. But this time is different; global government debt levels are sky-high, and central banks can't raise interest rates significantly as before. So I believe this gold bull market may not end cleanly but instead oscillate at high levels for several years, forming a "high-level consolidation phase." The true signal of ending will only come when a new, more credible global monetary system emerges.

Is investing in gold worthwhile? It depends on what you compare it to. Over the past 50 years, gold has increased 120 times, while the Dow Jones has risen 51 times—seemingly more impressive for gold. But the problem is, gold's gains are not stable. Between 1980 and 2000, gold hovered between $200 and $300 for 20 years. If you invested during that period, you’d have essentially no returns and would have borne opportunity costs. How many 20-year periods does one have in life?

Therefore, I believe gold is a very good investment tool, but it’s more suitable for trading in cycles rather than pure long-term holding. Bull markets are often accompanied by macro crises, while bear markets tend to be prolonged and sluggish. Catching the right cycle can lead to big gains; missing it might mean lying flat for years. Also, since gold is a natural resource, mining costs increase over time, so even after a bull run ends and prices fall, the lows will gradually rise. This pattern is crucial—trading wisely means understanding that a dip doesn’t mean gold will become worthless.

Regarding investment methods, physical gold is convenient for hiding but less liquid; gold certificates and ETFs offer better liquidity but come with higher fees; futures and CFDs are most suitable for short-term trading. The advantage of CFDs is flexible trading hours, small account sizes, and friendly access for retail investors. Leverage can amplify gains, and both long and short positions are possible. Some platforms provide good execution speed and real-time chart analysis tools, very helpful for swing trading.

Comparing gold, stocks, and bonds, their profit logic is entirely different. Gold profits come from price differences, stocks from corporate growth, and bonds from interest payments. In terms of difficulty, bonds are the simplest, gold is next, and stocks are the hardest. But looking at returns over the past 50 years, gold performed the best, while in the last 30 years, stocks have outperformed.

My recommended allocation is to favor stocks during economic growth periods and allocate more to gold during recessions. A more prudent approach is to set proportions based on your risk profile and investment goals—stocks tend to rise when the economy is good, while gold and bonds are more attractive during downturns.

Ultimately, markets are constantly changing, and major political and economic events can happen at any time. The Russia-Ukraine war, inflation, and rate hikes are all examples. Holding a diversified portfolio of stocks, bonds, and gold can offset some volatility risks, making your investments more stable. The role of gold in asset allocation is essentially that of insurance.