Gold investment has increased over 100 times in 50 years | The gold price trend since 2001, is there still room for a bullish rally in the future?

Gold, as an important store of value, plays an indispensable role in human economies. Due to its high density, ductility, and ease of preservation, it is not only used as a medium of exchange but also widely applied in jewelry, industrial fields, and more. Looking back over half a century of gold market trends, despite fluctuations, the overall trend has been upward, with 2025 marking a new all-time high. So, will this 50-year-long bullish trend in gold continue? How can we judge the future direction of gold prices? Should we hold long-term or engage in swing trading? This article will provide an in-depth analysis.

Five Ways to Invest in Gold Explained

Investors have multiple options to invest in gold:

1. Physical Gold — Direct purchase of gold bars or jewelry. Advantages include strong asset privacy; disadvantages include lower liquidity.

2. Gold Passbook — Similar to traditional custody certificates, allowing free buying and selling recorded in a ledger, supporting conversion between physical gold and passbook. The advantage is portability, but banks do not pay interest, and the buy-sell spread is large, making it suitable for long-term investors.

3. Gold ETFs — More liquid than gold passbooks, with each share representing a certain amount of gold ounces. Trading is convenient but management fees apply. If market fluctuations are minimal over the long term, the value may slowly depreciate.

4. Gold Futures and CFDs — Common tools for retail investors, offering leverage to amplify gains and supporting both long and short positions. CFDs have lower trading costs, higher capital efficiency, and lower entry barriers, especially suitable for retail investors with limited funds engaging in short-term swing trading.

5. Gold-Related Funds — Managed by fund managers, reducing individual investment risk.

For short-term swing traders, choosing gold futures or CFD(CFD) offers advantages due to flexible trading hours and relatively low capital requirements.

Review of 50 Years of Gold Price Growth Since 2001

The End of the Bretton Woods System

From the end of WWII until 1971, the US aimed to establish the dollar as the world’s trade settlement currency, pegged to gold at a fixed rate of 1 ounce of gold = 35 USD. This system, known as the Bretton Woods system, essentially made the dollar a gold exchange voucher.

However, as trade developed, gold mining could not keep pace with demand, and with large US gold outflows, President Nixon announced the dollar’s disconnect from gold in 1971, officially ending the Bretton Woods system.

From 1971 to 2025, gold prices experienced four major upward cycles:

First Wave (1970-1975): Driven by Confidence Crisis in the Dollar

After the dollar’s disconnect, international gold prices rose from $35/oz to $183, an increase of over 400%, lasting about 5 years. Early gains were driven by market distrust in the dollar, as it was no longer convertible to gold, prompting investors to prefer holding gold. Later, the first oil crisis and US monetary expansion to buy oil further pushed up gold prices. Once the crisis eased, confidence in the dollar recovered, and gold prices fell back to around $100.

Second Wave (1976-1980): Escalation of Geopolitical Crises

Gold surged from $104/oz to $850, an increase of over 700%, over about 3 years. Events such as the second Middle East oil crisis, Iran hostage crisis, and Soviet invasion of Afghanistan intensified global recession, driving inflation in Western countries and triggering a gold rally. However, the rapid rise led to a quick correction after crises eased and the Soviet Union disintegrated, with prices fluctuating between $200-$300 over the next 20 years.

Third Wave (2001-2011): Terrorist Attacks and Financial Crisis

The 9/11 attacks changed global perception, prompting a decade of US anti-terrorism efforts. To fund large military expenses, the US lowered interest rates and issued bonds, boosting housing prices and eventually triggering the 2008 financial crisis. To rescue the economy, the US implemented QE, leading to a decade-long bull market in gold, which rose from $260/oz to $1921, an increase of over 700%. After the European debt crisis, gold hit a band high, then stabilized due to EU intervention and support from the World Bank, ending around $1000.

Fourth Wave (2015-present): Central Bank Accumulation and Geopolitical Risks

In the past decade, gold prices resumed upward momentum, rising from $1060 to over $2000. Factors include negative interest rate policies in Japan and Europe, de-dollarization trends, US QE in 2020, the Russia-Ukraine war in 2022, and conflicts in the Middle East and Red Sea in 2023.

2024 has been even more intense. Early in the year, gold surged, reaching a record high of $2800/oz in October. Risks such as US economic policy uncertainties, central bank gold reserve increases, and geopolitical turmoil drove prices higher. Entering 2025, escalating Middle East tensions, Russia-Ukraine conflicts, US tariff policies causing trade worries, global stock market volatility, and a weakening US dollar index have repeatedly pushed gold to new highs, with prices once soaring to $4300/oz.

Data Highlights

Since 1971, gold has increased over 120 times. In comparison, the Dow Jones Industrial Average rose from 900 points to 46,000 points, about 51 times. From a 50-year long-term perspective, gold investment returns are not inferior to stocks, even better. Since early 2025, gold has risen from $2690/oz to around $4200/oz in October, an increase of over 56%.

Is Gold a Good Investment? Long-term Holding vs. Swing Trading

The advantages and disadvantages of gold investment need to be compared comprehensively. Over the long term, a 50-year increase of 120 times is impressive. But the key issue is: Gold prices do not rise steadily. Between 1980-2000, gold hovered between $200-$300 for 20 years, yielding no profit if invested then. How many 50-year periods does one have in life to wait?

Therefore, the conclusion is: Gold is indeed a high-quality investment tool, but it is more suitable for swing trading during market trends rather than purely long-term holding.

Another important characteristic is that, as a natural resource, the cost and difficulty of mining increase over time. After a bull market ends, prices may fall back, but each low point tends to be higher than the previous one. This means investors need not worry about prices crashing to worthless levels; the key is to grasp the pattern of gradually rising lows.

Gold vs. Stocks vs. Bonds: Return Comparison

The income sources of these three assets differ significantly:

• Gold: Mainly gains from price differences, no interest, emphasizing timing of entry and exit
• Bonds: Mainly from interest payments, requiring larger units for profit, influenced by central bank policies
• Stocks: Mainly from corporate growth, suitable for long-term holding of quality companies

In terms of investment difficulty, bonds are the easiest, followed by gold, then stocks.

Looking at returns, although gold performed best over the past 50 years, focusing on the last 30 years shows stocks have the highest returns, followed by gold, then bonds.

To profit from gold, one must grasp trend cycles, typically involving long bull phases, sharp declines, stabilization, and new bull phases. Successfully capturing bull runs or sharp drops can yield returns far exceeding bonds and stocks.

Asset Allocation Strategy: Aligning with Economic Cycles

The basic rule is: Allocate stocks during economic growth, and gold during recessions.

When the economy is strong, corporate profits are expected to rise, stocks tend to perform well, while bonds and gold are less favored due to lack of yields. During downturns, corporate profits decline, stocks fall out of favor, and gold’s hedging and bonds’ fixed interest become more attractive.

A more prudent approach is to tailor asset allocation based on individual risk tolerance and investment goals, adjusting proportions of stocks, bonds, and gold accordingly. Given the market’s volatility and sudden geopolitical or economic events (like Russia-Ukraine war, inflation, rate hikes), holding a diversified portfolio can effectively hedge risks and make the investment more resilient.

Since 2001, the trajectory of gold prices clearly demonstrates that, although gold may not be a quick path to wealth, as part of long-term asset allocation, its hedging and preservation qualities are unquestionable. The key lies in understanding market cycles and timing entry and exit points.