Recently, I saw that the gold price in Hong Kong hit a new high again, with the $5,100 figure truly stimulating, which made me want to review the gold trend over the past 50 years and notice some interesting patterns.

Speaking of which, the moment Nixon announced the dollar leaving the gold standard in 1971, gold truly began to be freely priced. From $35 an ounce at that time to now surpassing $5,100, the increase is over 145 times. It sounds exaggerated, but if you really understand the logic behind it, you'll find that it's no coincidence.

I divide the history of gold into three major bull markets. The first wave is from 1971 to 1980, rising from $35 to $850, a 24-fold increase. This was mainly due to a trust crisis in the dollar and rampant inflation. Then in the 1980s, the Fed aggressively raised interest rates by over 20%, causing gold to crash by 80%. The next 20 years, gold hovered between $200 and $300, which was a real torment for investors.

The second wave is from 2001 to 2011, rising from $250 to $1921, an increase of over 700%. This was triggered by the 9/11 attacks, with the U.S. continuously lowering interest rates and issuing debt to fight the war on terror, eventually sparking the 2008 financial crisis, followed by another round of QE. Gold then surged for 10 years. After the European debt crisis in 2011, the Fed ended QE, and gold entered an 8-year bear market.

Now, this wave started from $1,200 in 2019 and is projected to break through $5,000 by 2026, an over 300% increase. The driving factors are clear: de-dollarization worldwide, central banks feverishly buying gold, the Russia-Ukraine war, escalation of Middle East tensions, U.S. tariff policies, and a weakening dollar index. Especially in the past two years, the gold price in Hong Kong has repeatedly hit record highs, rising from just over $2,000 at the start of 2024 to now, with a cumulative increase of over 150%.

After reviewing these three waves, I found a pattern in the causes of bull markets: it’s always a credit crisis combined with loose monetary policy. The early stage of a bull market is slow grinding, the middle accelerates due to crises, and the late stage sees speculative overheat. Each of these bull markets lasts on average 8 to 10 years, with gains ranging from 7 to 24 times.

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 to end the bull market. So I believe that a true signal of its end might require waiting for a completely new, more credible global monetary and credit system to emerge. Until then, gold prices are more likely to fluctuate wildly in high ranges for several years.

So, is gold suitable for investment? My view is that gold is a very good investment tool, but it’s better suited for swing trading rather than purely long-term holding. From 1971 to 2025, gold increased 120 times, while the Dow Jones rose 51 times. It seems gold is stronger. But the problem is, from 1980 to 2000, gold was sideways for 20 years. If you entered during that period, you’d have no gains and still bear opportunity costs. How many 20-year periods does one have in life to wait?

Gold’s returns come from price differences, not interest, so timing entries and exits is crucial. My advice is to invest in stocks during economic growth periods and allocate gold during recessions. A more stable approach is to set investment ratios for stocks, bonds, and gold based on your risk profile. When the economy is sluggish, gold’s hedging feature will shine.

Currently, gold in Hong Kong is fluctuating near historical highs. If you want to swing trade, consider gold futures or CFDs, which can be started with small capital and allow for two-way trading. But most importantly, don’t get fooled by high levels; understand gold’s cyclical patterns and seize the right opportunities to make big profits.