Gold has increased 120 times over the past 50 years. Will it reach new highs in the next 50 years? The investment logic behind gold's historical high prices

Since ancient times, gold has been an important asset in the economy due to its high density, excellent ductility, and durability. Besides its use as currency and jewelry, gold is also widely applied in industrial fields. In recent years, gold has repeatedly rewritten historical records, and 2024 has been the most turbulent year in gold price history. So, will the gold bull market of the past half-century continue into the next 50 years? How to judge the trend of gold prices? Is gold a long-term asset or a swing trading tool?

Gold’s All-Time Highs and Over 120x Growth in 50 Years

The reason gold has attracted attention mainly stems from a key historical moment. On August 15, 1971, U.S. President Nixon announced the detachment of the dollar from gold, breaking the fixed exchange rate system of the Bretton Woods system (at that time, 1 ounce of gold was exchanged for 35 USD). Since then, gold prices began to fluctuate freely.

From 1971 to now, international gold prices soared from 35 USD per ounce to 3,700 USD in the first half of 2025, and in October, they broke through the critical level of 4,300 USD per ounce. Looking back at the 50-year increase, gold has risen over 120 times, with the single-year increase in 2024 exceeding 104%. In comparison, the Dow Jones Industrial Average rose from around 900 points to about 46,000 points, an increase of approximately 51 times. Over a 50-year span, gold investment returns even outperform the stock market.

Four Key Bullish Cycles Behind Gold’s Historical Highs

Reviewing the gold price trajectory over the past 50+ years, it can be roughly divided into four distinct upward phases, each accompanied by major geopolitical or economic events.

First wave (1970-1975): Trust Crisis After Detachment

After the dollar was decoupled from gold, international gold prices surged from 35 USD to 183 USD, an increase of over 400%. Public confidence in the USD wavered, and people preferred holding gold. Subsequently, the oil crisis erupted, with countries issuing more currency to buy oil, further pushing up gold prices. But after the crisis eased, confidence in the dollar’s liquidity was restored, and gold prices fell back to around 100 USD.

Second wave (1976-1980): Geopolitical Turmoil and High Inflation

Gold prices again broke through from 104 USD to 850 USD, an increase of over 700%. Events such as the second Middle East oil crisis, the Iran hostage crisis, and the Soviet invasion of Afghanistan triggered global economic downturns, with inflation soaring in Western countries. After excessive speculation, as crises eased and the Soviet Union disintegrated, gold prices rapidly declined, fluctuating between 200-300 USD over the next 20 years.

Third wave (2001-2011): Anti-Terror Wars and Financial Crisis

The 9/11 attacks triggered costly anti-terror wars, prompting the U.S. government to cut interest rates and issue bonds. Low interest rates boosted housing prices, but rising rates triggered the 2008 financial crisis. To rescue the market, the Fed implemented QE, causing gold prices to soar from 260 USD to 1,921 USD over this decade, an increase of over 700%. During the European debt crisis in 2011, gold hit its then all-time high.

Fourth wave (2015-present): Negative Interest Rates, De-dollarization, and Geopolitical Tensions

In the past decade, gold has again experienced a strong rally. Japan and Europe implemented negative interest rates, global de-dollarization trends persisted, the US engaged in massive QE in 2020, the Russia-Ukraine war in 2022, and conflicts in the Middle East and the Red Sea in 2023. These factors continuously supported gold prices above 2,000 USD. 2024-2025 has witnessed an epic rally, with central banks increasing gold reserves, US economic policy risks, and escalating Middle East tensions all contributing to record-breaking highs.

Is Gold Suitable for Long-Term Holding or Swing Trading?

The answer depends on your investment strategy. Gold’s returns come solely from price differences; it does not generate interest. Over the past 50 years, gold has increased 120 times, making it a high-quality investment asset, but the key is—these gains are not evenly distributed.

Between 1980 and 2000, gold prices stagnated in the 200-300 USD range, yielding no returns. If you bought gold then and held it long-term until now, it would have increased 120 times, but the cost during those 20 years was enormous. How many 50-year periods does one have in life to wait?

Therefore, gold is a good investment tool, but it is more suitable for swing trading during clear market trends rather than simple long-term holding.

It is also worth noting that as a natural resource, the cost and difficulty of mining gold increase over time. Even after a bull market ends and prices fall, each subsequent low point tends to be higher, indicating that the long-term value support for gold remains. Investors should recognize this pattern to avoid futile efforts.

Five Methods of Gold Investment Compared

For different investors, gold investment mainly includes the following five methods:

1. Physical Gold

Direct purchase of gold bars or other physical gold. Advantages include asset concealment, collectible value, and the ability to wear jewelry. Disadvantages are inconvenience in trading and large bid-ask spreads.

2. Gold Passbook

Similar to a gold custody certificate, recorded by banks, allowing for holding and redeeming physical gold at any time. Advantages are portability; disadvantages include no interest, large spreads, suitable mainly for long-term investment.

3. Gold ETFs

More liquid than gold passbooks, tradable directly on stock markets. After purchase, you hold corresponding shares, which represent a certain amount of gold. Management fees apply. If gold prices remain stable long-term, the value may slowly depreciate.

4. Gold Futures and CFDs

Main tools for swing traders. Support leverage trading, both long and short, with low transaction costs. Futures have expiration dates, while CFDs are more flexible, especially suitable for small investors. Through margin trading, small capital can participate. Different platforms offer varying leverage ratios, minimum trading units, and deposit thresholds; investors should choose based on their situation.

5. Gold Funds

Participate in gold price appreciation via professionally managed funds, with relatively diversified risk.

Return Rate Analysis of Gold, Stocks, and Bonds

The three asset classes have completely different sources of returns:

• Gold: Returns come from price differences, no interest, the key is timing entry and exit
• Bonds: Returns come from coupon payments, requiring continuous increase in holdings and judgment of central bank policies
• Stocks: Returns come from corporate growth, focusing on long-term holding of quality companies

In terms of investment difficulty: bonds are the easiest, gold is next, stocks are the hardest. Over the past 30 years, stock returns lead, followed by gold, and then bonds. But the advantage of gold over other assets is that if you can seize bullish trends for long positions or sharp declines for short positions, your returns can far surpass bonds and stocks.

Economic Cycles and Asset Allocation Strategies

A common rule of thumb is: During economic growth, allocate to stocks; during recessions, allocate to gold.

When the economy is doing well, corporate profits are optimistic, and stocks tend to rise, while gold and bonds are less favored. During economic downturns, stocks lose appeal, and the market tends to chase gold’s hedging function and bonds’ fixed yields.

The most prudent approach is to set asset allocation ratios based on your risk appetite and investment goals. Holding these three asset types can effectively offset some volatility risks during unpredictable events. The Russia-Ukraine war, inflation, and rate hikes have demonstrated this—markets are unpredictable, and diversified asset allocation is the foundation of long-term stable investing. The historical highs of gold reflect investors’ renewed recognition of its hedging function.