I've been thinking about a question lately: what does the trend of gold over the past fifty years really tell us? Especially when looking at Taiwan's ten-year gold price chart, I find the patterns quite interesting.

Since the moment in 1971 when the U.S. announced the decoupling of the dollar from gold, gold entered an era of free-market pricing. It’s a bit crazy to think that gold was $35 an ounce back then, and this year it’s stabilized above $5,000, a rise of over 145 times. This isn’t just a simple increase; it’s the result of three major bull markets stacking up.

Looking back over these fifty-plus years, the first bull run was from 1971 to 1980, with gold soaring from $35 to $850, a 24-fold increase. At that time, people just realized the dollar was no longer redeemable for gold, trust in paper money collapsed, compounded by the oil crisis and geopolitical turmoil. People preferred holding gold over dollars. It wasn’t until 1980, when the Fed aggressively raised interest rates by over 20%, that inflation was brought under control, causing gold to plummet 80%. After that, for twenty years, it hovered between $200 and $300.

The second bull market is even more interesting. Starting after the dot-com bubble burst in 2001, gold rose from a low of $250 to $1,921 in 2011, a gain of over 700% in ten years. The 9/11 attacks triggered a global war on terror, the U.S. kept cutting rates and issuing debt to fund huge military expenses, eventually leading to the 2008 financial crisis, and the government was forced to implement QE to stabilize the economy. Amid these crises, gold kept climbing until peaking after the European debt crisis in 2011.

Now, we’re in the third bull run. From a low of $1,200 in 2019 to over $5,000 this year, an increase of more than 300%. This wave is driven by de-dollarization worldwide, central banks aggressively buying gold, the Russia-Ukraine war, escalating Middle Eastern tensions, and a series of geopolitical risks. Especially between 2024 and 2025, gold’s performance is truly epic.

I’ve noticed an important pattern: each bull market doesn’t appear out of nowhere. It’s always preceded by a credit crisis combined with monetary easing. The bull market starts with a slow bottoming process, then accelerates as crises erupt, and finally, speculators rush in, causing overheating. Each of these three bull markets lasted on average 8 to 10 years, with gains ranging from 7 to 24 times.

The signals indicating the end of a bull market are also quite consistent—they usually occur when central banks start tightening and controlling inflation. But this time, it’s different because global government debt levels are already sky-high. Central banks can’t raise interest rates as aggressively as before, so the traditional tightening cycle might be hard to realize. I think what’s more likely is that gold prices will fluctuate within a high range for several years, forming a so-called high-level consolidation phase. The real signal of an end might only come when the global monetary system finds a new equilibrium.

So, is gold a good investment? That depends on what you compare it to. From 1971 to now, gold has increased 120 times, while the Dow Jones Index rose 51 times, making gold seem superior. But there’s a problem: during the 1980–2000 period, gold was basically flat, trading between $200 and $300 for nearly 20 years. If you invested in gold during that time, you almost had no returns. How many 20-year periods do we have in life?

Therefore, I believe gold is a very good investment tool, but it’s better suited for trading in waves during a trending market rather than holding long-term. Bull markets in gold usually accompany macro crises, while bear markets tend to be long and sluggish. Catching the right cycle can lead to big gains, but missing it might mean sitting idle for years. One thing to note: since gold is a natural resource, its extraction costs increase over time. Even after a bull run ends and prices fall, the low points tend to gradually rise, so you don’t need to worry about it becoming worthless.

There are many ways to invest in gold. For short-term trading, futures or CFD contracts are most suitable because they offer leverage to amplify gains and have low transaction costs. Physical gold is convenient for asset concealment but less liquid for trading. Gold savings accounts and ETFs have better liquidity, but management fees can eat into returns.

Looking at returns over the past 30 years, gold, stocks, and bonds each have their own characteristics. Gold profits come from price differences, stocks from corporate growth, and bonds from interest payments. In terms of investment difficulty, bonds are the easiest, gold is next, and stocks are the hardest. But from recent 30-year performance data, stocks have actually outperformed gold.

My investment logic is simple: during periods of economic growth, choose stocks; during recessions, allocate to gold. The most stable approach is to tailor your asset allocation based on your risk profile, balancing stocks, bonds, and gold. When the economy is strong and corporate profits are good, stocks tend to rise; during downturns, gold’s value-preserving properties and bonds’ fixed yields become more attractive. Markets are constantly changing, and major events can happen at any time. Holding a diversified portfolio of stocks, bonds, and gold can help offset some volatility and make your investments more resilient.