Recently looked at the historical trend of gold prices and found some interesting patterns. Over the past 50 years, the gold price has risen from an initial $35 per ounce to over $5,000 today, experiencing three major bull markets, each with its own story.

First, let's talk about why starting from 1971. That year, Nixon announced the detachment of the dollar from gold, and the Bretton Woods system officially collapsed, marking the true entry of gold into a free-market pricing era. Before that, gold was pegged at $35 per ounce and had no trading value. So, this 55-year gold price history is actually a microcosm of modern financial markets.

The first bull market was from 1971 to 1980, with gold rising from $35 to $850, a 24-fold increase. At that time, people just realized the dollar might become worthless, so everyone rushed to buy gold as a store of value. Plus, the subsequent oil crisis and geopolitical turmoil further fueled the rally. But in 1980, the Fed aggressively raised interest rates by over 20%, and after controlling inflation, gold plummeted 80%. After that, it traded between $200 and $300 for a full 20 years.

The second bull market started in 2001 and peaked at $1,921 in 2011, an increase of over 700%. During these ten years, nine/11, the US War on Terror, the 2008 financial crisis, and the European debt crisis all pushed up gold prices. But after the Fed ended QE in 2011, gold entered an 8-year bear market, falling more than 45%.

Now, we are in the third bull market. From the low of $1,200 in 2019 to over $5,000 today, the increase exceeds 300%. The driving forces behind this cycle are de-dollarization worldwide, central bank gold purchases, geopolitical risks, and inflation expectations. Especially in the past two years, from early 2024 when it was around $2,000, surging to over $5,000 by May 2026, a cumulative gain of over 150%, which is among the top performances of all assets.

From these three bull markets, I’ve noticed a pattern: the start of a bull market is always triggered by a credit crisis combined with loose monetary policy. Each time, it’s due to the collapse of trust in the dollar or problems in the financial system. The end of a bull market is also quite consistent—central banks aggressively tighten to control inflation. But this time is different; global government debt has already reached sky-high levels, and central banks can’t raise interest rates significantly like before. So, the traditional tightening cycle may not occur. A more likely scenario is that gold prices will fluctuate at high levels for several years, forming what’s called a “high-level consolidation phase.” The true end might only come when the global monetary system is rebuilt and trust in the financial system is genuinely restored.

So, is gold worth investing in? My view is that, over a 50-year long-term horizon, gold’s historical performance isn’t bad—an increase of 145 times, even outperforming stocks. But the problem is, gold’s gains are not smooth. During the 20 years from 1980 to 2000, gold prices just moved sideways with no returns. How many 20-year periods can one afford to waste? Therefore, gold is a very good investment tool, but it’s suitable for trading in waves rather than pure long-term holding.

Gold’s returns come entirely from price differences; it doesn’t generate interest, so timing entries and exits is crucial. You can make big gains during bull markets, but if you miss the cycle, you might be flat for many years. However, there’s a pattern worth noting: because gold mining costs increase over time, even after a bull run ends and prices pull back, the lows tend to gradually rise. This means gold won’t fall to zero.

There are many ways to invest in gold. Physical gold is the most direct, while gold savings accounts and ETFs offer better liquidity. For short-term trading, gold futures or CFDs are more flexible. These instruments all have leverage, allowing small capital participation, and trading costs are low.

Finally, I believe gold, stocks, and bonds each have their own characteristics. During economic growth, stocks are preferred; during recessions, gold is a safer allocation. The most prudent approach is to align your holdings with your risk appetite, maintaining a certain proportion of stocks, bonds, and gold. This can offset some volatility risks. Markets change rapidly, and unexpected events can happen at any time. A balanced asset allocation makes investing more stable.