I've been analyzing the long-term trend of gold recently, and the more I look, the more interesting it becomes. Over the past 55 years, the ups and downs that gold has experienced really reveal a lot, especially when you understand it within the context of the entire economic cycle.

I’ve noticed a very interesting phenomenon: gold bull markets always start with a credit crisis. The moment the US dollar abandoned the gold standard in 1971, gold took off from $35 an ounce and has now risen over 145 times. This is not a coincidence but systemic. Whenever confidence in the dollar falters or central banks start flooding the market with liquidity, gold begins to tell its story.

Looking back over these 50+ years, gold has gone through three major bull markets. The first was from 1971 to 1980, rising from $35 to $850, a 24-fold increase. At that time, people just realized the dollar could no longer be exchanged for gold, which caused panic, so they preferred holding gold over paper money. Later, geopolitical events like the oil crisis, the Iranian Revolution, and the Soviet invasion of Afghanistan further pushed up gold prices. But in 1980, the Fed aggressively raised interest rates by over 20%, curbing inflation, and gold plummeted 80%. After that, it traded between $200 and $300 for a full 20 years.

The second bull market started in 2001, right after the dot-com bubble burst, with gold beginning at a low of $250 and soaring to $1921 in 2011, a gain of over 700% in ten years. The story behind this wave includes the 9/11 attacks, America’s global anti-terror efforts, QE policies, the housing bubble, and the 2008 financial crisis. Every macro event pushed gold higher. But after the European debt crisis erupted in 2011, the Fed ended QE, and gold entered an eight-year bear market, dropping over 45%.

Now, we are in the third wave of the bull market. Starting from $1,200 in 2019, it has already broken through $5,000 this year, an increase of over 300%. The driving forces are clear: de-dollarization worldwide, central banks frantically buying gold, the Russia-Ukraine war, Middle East tensions, sticky inflation, and a weakening dollar. Especially from 2024 onward, gold’s rally has been truly epic. Compared to the $300 level around 2000, gold is now more than ten times that amount.

But here’s a key question: when will this current bull market end? Historically, bull markets tend to end with aggressive tightening and inflation control. But now, global government debt levels are astronomical, and central banks can’t raise interest rates significantly like before. So I believe a clean, decisive tightening cycle may not happen. More likely, gold will oscillate within a high price range for several years—what we call a high-level consolidation phase.

Regarding investing in gold, I think it’s a good tool but not suitable for purely long-term holding. Why? Because gold’s returns come entirely from price differences; it doesn’t generate interest. If you had invested in gold during 1980–2000, you’d basically have made little profit and faced opportunity costs. Over the past 50 years, gold has surged impressively, but in the last 30 years, stock market returns have actually been better.

Therefore, I suggest that gold is best suited for swing trading—capitalizing on bullish trends for long positions or shorting during sharp declines. You need a trend to make money; without one, just stay flat. A basic investment principle is to buy stocks during economic growth and allocate to gold during recessions.

As for how to invest in gold, there are many options. Physical gold is convenient for hiding assets but not very liquid. Gold certificates and ETFs offer better liquidity, but over the long term, their value can slowly decline due to management fees. For short-term swing trading, gold futures or CFDs (Contracts for Difference) are more flexible, with low leverage costs, and even small investors can participate—minimum deposit as low as $50, with leverage up to 1:100. Using CFDs for short-term gold trading, you can go long or short, and the T+0 trading mechanism allows you to enter and exit at any time.

In summary, gold, stocks, and bonds each have their own logic. Bonds are straightforward, relying on interest payments; stocks depend on corporate growth and are the most challenging; gold relies on price differences, requiring trend capture. In a market that’s constantly changing and full of unpredictable events, the safest approach is to hold a balanced mix of stocks, bonds, and gold. This can help offset some volatility and make your investments more stable.