How to view the half-century gold price trend｜After reaching new highs consecutively, is there still an opportunity for gold investment?

Gold has been a fundamental store of value in human civilization since ancient times. Its high density, strong ductility, and excellent preservation characteristics enable it to serve both as a medium of exchange and as jewelry craftsmanship and industrial raw materials. Looking back over the past 50 years, gold has experienced multiple fluctuations but overall shows a strong upward trend, especially after entering 2024, repeatedly hitting new all-time highs. So, will this half-century-long rally continue into the next 50 years? How should investors view the current gold price trend?

From $35 to $4,300: The Logic Behind Gold’s 50-Year Appreciation of Over 120 Times

August 15, 1971, marks a pivotal turning point in international financial history. U.S. President Nixon announced the detachment of the dollar from gold, ending the Bretton Woods system. Prior to this, the dollar-to-gold exchange rate was fixed at 1 ounce of gold to $35, with the dollar effectively serving as a circulating certificate of gold.

After the detachment, the international gold market entered an era of free floating. From $35 per ounce in 1971 to a peak of $3,700 per ounce by mid-2025, and then surpassing the critical level of $4,300 per ounce in mid-October, this means gold has appreciated over 120 times in half a century, making it a long-term bullish asset in portfolio allocation.

Particularly noteworthy is the performance from 2024 to early 2025, with gold prices rising over 104% within just over a year, creating a historic surge record. Multiple factors such as increased central bank reserves worldwide, rising geopolitical risks, and a relatively weakened U.S. dollar have jointly driven this rally.

Four Major Market Cycles: From Detachment Crisis to Geopolitical Conflicts

Over the past 50+ years, the international gold market has experienced four distinct upward cycles, each driven by unique factors.

First Wave (1970-1975): Confidence Crisis After Detachment

Following the dollar’s detachment from gold, investors doubted the dollar’s prospects and flocked to gold as a store of value. Gold prices soared from $35 to $183, an increase of over 400%. The 1973 oil crisis and U.S. implementation of quantitative easing to stimulate the economy further pushed up gold prices. However, as the oil crisis eased and confidence in the dollar gradually recovered, gold retreated to around $100.

Second Wave (1976-1980): Geopolitical Turmoil and Inflation Spiral

A series of geopolitical events such as the second Middle East oil crisis, the Iran hostage crisis, and the Soviet invasion of Afghanistan triggered a global recession, with inflation rates in Western countries soaring to historic highs. Gold skyrocketed from $104 per ounce to $850, an increase of over 700%. But this extreme rally quickly reversed after the crises eased, and for the next 20 years, gold traded in the $200-$300 range.

Third Wave (2001-2011): Terrorism and Financial Crisis

Post-9/11, the U.S. launched a long-term anti-terror war, with massive military spending pushing the Federal Reserve into a low-interest cycle. Global liquidity overflowed, inflating the housing bubble. The 2008 financial crisis led the Fed to implement quantitative easing again, causing gold to rise from $260 to $1,921 per ounce over a decade, an increase of over 700%. After the European debt crisis, gold prices dipped slightly but remained at the thousand-dollar level.

Fourth Wave (2015 to Present): Negative Interest Rates, De-dollarization, and New Cold War

Central banks in Japan and Europe adopted negative interest rate policies, re-expanding global liquidity. Coupled with rising geopolitical risks such as the Russia-Ukraine conflict, Middle East crises, and increased central bank gold reserves to hedge against dollar risks, gold broke through $2,000 from $1,060. Since 2024, gold prices have surged unprecedentedly to new highs.

The Reality of Gold Investment Performance: Outperforming Stocks Over 50 Years, But with a Bumpy Ride

Looking at long-term returns, gold has indeed performed remarkably. From 1971 to now, gold has increased by 120 times, while the Dow Jones Industrial Average rose from about 900 points to 46,000 points, a roughly 51-fold increase. Numerically, gold slightly outperforms stocks.

However, this comparison hides an awkward truth: Gold’s returns are not linear. During 1980-2000, gold prices stagnated in the $200-$300 range. Investors who bought during this period saw almost no gains. How many people can wait 50 years?

Therefore, gold is not suitable as a purely long-term buy-and-hold asset. Its investment logic should be: Identify trend reversal points, go long during bull markets, and avoid during bear markets or consolidation phases.

It is also worth noting that as gold mining costs increase over time, the lower bounds of gold price corrections in bear markets have gradually risen. Even when the bull market ends, gold will not fall to worthless levels, providing a safety margin for long-term allocators.

Investment Insights from the 10-Year Gold Price Chart in Hong Kong

Analyzing the recent 10-year trend of gold in Hong Kong reveals several key features:

Starting from $1,060 in 2015, after a short-term correction in 2015-2016, a nearly decade-long structural upward trend began. The pace of rise during the COVID-19 period in 2020 and in 2024-2025 is particularly astonishing. The chart shows that even during pullbacks, each bottom is gradually higher, forming a typical upward channel pattern. This implies:

• Mid-term investors: If they can accumulate gradually at each clear correction point, the probability of long-term gains is high.
• Swing traders: Can seize trend reversal points for short-term trading, often achieving higher returns than stocks or bonds.
• Conservative investors: Can use gold as a hedging asset, allocating 5-10% of their portfolio.

Five Ways to Invest in Gold

Gold investment is not limited to a single method. Depending on risk appetite and trading cycle, different tools can be chosen.

Physical Gold: Buying gold bars or jewelry directly. Advantages include asset privacy and ease of storage; disadvantages are inconvenient trading and high storage costs.

Gold Certificates: Bank-issued gold custody certificates, convenient to carry but lack liquidity, with large bid-ask spreads. Suitable for ultra-long-term holding.

Gold ETFs: More liquid than certificates, traded like stocks. However, management fees erode returns, and in long flat periods, the net value may slowly decline.

Gold Futures: Offer leverage, allow two-way trading, and have low costs. Suitable for experienced swing traders.

Gold CFDs (Contracts for Difference): Combine features of futures and spot trading, with low minimum deposits (as low as $50), flexible leverage, and T+0 trading, allowing investors to enter and exit at any time. CFDs are especially suitable for small retail investors due to high capital efficiency, low transaction costs, and fast execution.

The Different Investment Logic of Gold, Stocks, and Bonds

The return sources of these three asset classes are entirely different, which determines their respective strategies.

Gold: Returns purely from price differences, with no yield. The challenge lies in timing—buy at the start of an uptrend and sell at the top; otherwise, holding is meaningless.

Bonds: Returns from interest payments and capital gains, with relatively simple operation—just judge entry and exit based on changes in the federal funds rate. Among the three, bonds are the easiest.

Stocks: Returns from corporate growth and dividends, requiring investors to analyze companies, making it the most difficult.

The ranking of yields over time is also distinct: over the past 50 years, gold has been the best, but over the last 30 years, stocks have outperformed, with bonds being the weakest. This suggests investors should adjust their allocations according to economic cycles.

Economic Cycles Determine Asset Allocation Priorities

Market operation is not eternal but shifts with economic cycles.

During economic expansion, corporate profits are expected to rise, attracting capital into stocks. Bonds, as fixed-income assets, tend to be sidelined, and gold, as a non-yielding asset, may be marginalized.

During economic recession, corporate profits decline, leading to increased selling pressure on stocks. Gold’s hedging properties and bonds’ fixed interest become highly attractive, resulting in significant capital inflows.

Smart investors follow this rule: Allocate stocks during growth periods, and shift to gold and bonds during downturns. The most prudent approach is to set asset ratios based on personal risk tolerance—e.g., aggressive investors might set 70:20:10, conservative ones 30:50:20—effectively hedging risks amid market volatility.

Recent years’ black swan events like the Russia-Ukraine conflict, high inflation, and geopolitical tensions underscore the importance of diversification. Investors holding stocks, bonds, and gold often maintain stability amid turbulent markets.

In summary, gold is not simply a long-term buy-and-hold asset but a tactical tool that requires trend judgment and market timing. While current gold prices are at historic highs, ongoing global political and economic uncertainties ensure its safe-haven appeal persists. For retail investors, incorporating gold into asset allocation and engaging in swing trading during clear trend reversals can often yield more balanced returns than pure stock or bond holdings.