Recently, I noticed a pretty interesting phenomenon—many people around me are discussing gold, especially its price surge over the past two years. Honestly, the gold price record keeps getting refreshed, and it’s definitely worth having a good conversation about.

Looking back at the past 55 years, since Nixon announced in 1971 that the U.S. dollar would be decoupled from gold, gold has moved into free-market pricing. From $35 per ounce back then, it has climbed all the way to more than $5,100 per ounce today—an increase of more than 145 times. Just over the past two years, the rise has been from around $2,000 to more than $5,000, and the increase has already exceeded 150%. The pace is truly not ordinary.

I took a careful look at history, and I found that gold’s rises and falls actually follow very clear patterns. Over the past 55 years, there have roughly been three major bull markets. The first was from 1971 to 1980: from decoupling to a frenzy of inflation, rising by 24 times. During that period, people lost confidence in the dollar and preferred holding gold rather than paper money, and later this was compounded by oil crises and geopolitical risks. The second wave was from 2001 to 2011: from the bursting of the internet bubble to the financial crisis, rising by 7.6 times. The third wave is from 2019 to now: driven by central banks buying gold, geopolitical conflicts, and sticky inflation, and it has already risen by more than 300%.

Looking closely at these three bull markets, I found a common point: each time the market climbed, it began with a crisis of trust in the dollar; then central banks eased policy (“flooded” liquidity); and only afterward did inflation and geopolitical factors really give the rally extra momentum. As for how bull markets usually end, they typically require aggressive tightening to rein in inflation. But this time is different—global government debt is already at an absurd level, so central banks can’t raise interest rates as much as they did in the past. That’s why I believe this cycle may not have a clean, decisive end; instead, it may consolidate at high levels for several years.

As for investing, my view is that gold is indeed a good tool—but it depends on how you use it. If you look at a 50-year long-term horizon, gold’s returns are actually not worse than stocks, and may even come out ahead. The problem is that gold’s price gains aren’t steady. In the 20 years from 1980 to 2000, the gold price traded sideways between $200 and $300—essentially yielding no return. How many 20-year periods can a person wait for? So I think gold is more suitable for swing trading—going long or short when there’s momentum—rather than simply holding it long term.

There are many ways to invest in gold: physical gold, gold passbook products (gold passbooks), and gold ETFs. But if you want to do short-term swings, trading gold futures or contracts for difference (CFDs) is more flexible, with lower trading costs for leverage, making it especially suitable for smaller investors.

Finally, what I want to say is that gold, stocks, and bonds each have their own logic. Gold makes money from price differences, bonds from interest payments, and stocks from corporate value growth. In terms of difficulty, bonds are the easiest, gold is next, and stocks are the hardest. But when you look at returns over the past 30 years, stocks actually did better. So the safest approach is to allocate according to your own risk profile and diversify among stocks, bonds, and gold: when the economy is doing well, increase the weight of stocks; when the economy is weak, allocate more to gold and bonds—this is how you can offset volatility risk.