The secret behind the all-time high of gold prices | 50 years of a 120-fold surge, will it rise again in the next decade?

Gold, as the oldest store of value in human history, has always been an important asset in financial markets due to its high density, ease of preservation, and wide range of applications. Notably, over the past half-century, gold has experienced a process of being forgotten and then rediscovered—continuing to reach new all-time highs in 2025. What underlying logic is hidden behind this? Can this 50-year bull run be extended into the next 50 years?

From $35 to $4,300: How did gold prices increase 120 times?

The formation of the all-time high in gold prices was not an overnight event.

Rewinding to August 15, 1971, U.S. President Nixon announced the detachment of the dollar from gold, officially ending the Bretton Woods system. Before this, the international trade system fixed 1 ounce of gold at $35, with the dollar essentially serving as a gold exchange voucher. After the detachment, gold was liberated from its frozen price and began to fluctuate freely based on market supply and demand.

From 1971 to today, gold has appreciated astonishingly—from $35 per ounce to surpassing $4,300 in October 2024 for the first time, a cumulative increase of over 120 times. Especially since 2024, the rally has been vigorous, with annual gains exceeding 104%, and since the start of 2025, gold prices have once again hit record highs, with multiple international institutions raising their target prices for next year.

Four eras of gold bull markets: how does history repeat itself?

Looking back over the past 50+ years, the upward trend in gold prices has not been a straight line but has shown four distinct rising cycles, each corresponding to different geopolitical and economic backgrounds.

First wave: U.S. dollar confidence crisis (1971-1975)

After the detachment, gold rose from $35 to $183, a gain of over 400% in five years. The core driver of this rally was concern over the future of the dollar—since it no longer could be exchanged for gold, people began to doubt its value. Subsequently, the oil crisis erupted, and the U.S. increased money issuance to cope, further pushing up gold prices. But once the oil crisis eased and confidence in the dollar was restored, gold fell back to around $100.

Second wave: geopolitical turmoil driving inflation (1976-1980)

Gold surged again from $104 to $850, an increase of over 700%. This rise was driven by the second Middle East oil crisis, the Iran hostage crisis, the Soviet invasion of Afghanistan, and other events, which triggered global recession and high inflation. However, this speculative frenzy was excessive; as crises eased and the Cold War ended, gold prices quickly retreated, oscillating mainly between $200 and $300 over the next 20 years.

Third wave: war and financial crises (2001-2011)

The 9/11 attacks changed the global landscape. The U.S. launched a global anti-terror war, leading to massive military spending, which caused the U.S. government to cut interest rates and issue bonds, fueling housing prices. To curb rising home prices, the Fed began raising interest rates, which triggered the 2008 financial crisis. To rescue the economy, the U.S. launched QE, printing大量 money. Over this decade, gold rose from $260 to $1921, an increase of over 700%. After the European debt crisis erupted in 2011, gold hit a peak and then gradually stabilized around $1000.

Fourth wave: increasing global uncertainty (2015-present)

In the past decade, gold entered a new upward channel. From 2015 to 2023, gold rose from $1060 to $2000. Drivers include negative interest rate policies in Japan and Europe, the global de-dollarization trend, the U.S.疯狂QE in 2020, the Russia-Ukraine war in 2022, and the Israel-Palestine conflict in 2023. Entering 2024-2025, gold’s performance has been epic—surpassing $2800 in 2024 and reaching a record high of $4300 in October. Analysts believe that factors such as U.S. economic policy risks, central banks increasing gold reserves, escalating Middle East tensions, variables in the Russia-Ukraine conflict, and a weakening dollar index are all propelling this historic high.

Behind the record high in gold prices: investment opportunity or risk signal?

What is the return on gold investment?

Over the past 50 years, a 120-fold increase in gold has been astonishing. But compared to other assets, the conclusion is not so straightforward. For the same period from 1971 to 2025, the Dow Jones Industrial Average rose from around 900 to about 46,000, a gain of approximately 51 times. This indicates that the long-term return of gold may not necessarily outperform stocks.

More importantly, the upward trend in gold is not steady. Between 1980 and 2000, gold prices hovered in the $200-$300 range for a long time. Investors who bought gold during this period saw almost no returns. This provides an important insight: gold is suitable for swing trading rather than simple long-term holding.

What is the essence of investing in gold?

Unlike stocks and bonds, gold’s returns come entirely from price differences; it does not generate interest or dividends. Therefore, the core of gold investment is to grasp the timing of entry and exit. The typical pattern is: long-term bull market → sharp decline and correction → stable oscillation → resumption of the bull trend, repeating cyclically.

It’s important to note that even if gold prices retrace, the lows tend to be gradually rising, due to the increasing costs of gold mining over time. This means investors should not panic excessively during corrections but should recognize the pattern of rising long-term bottoms.

Economic cycles determine the value of gold allocation

Gold, stocks, and bonds each have different return mechanisms:

• Gold: returns from price differences, no interest income, driven by market sentiment and safe-haven demand
• Bonds: returns from coupon payments, stable income, influenced by interest rates
• Stocks: returns from corporate growth, best in the long run, driven by economic expansion

In terms of investment difficulty, bonds are the simplest, gold is next, and stocks are the most challenging. But in terms of yield over the past 50 years, gold has been the best, followed by stocks in the last 30 years, with bonds performing the worst.

Economic conditions determine the optimal choice:

During periods of economic growth, corporate profits are promising, stocks tend to rise; bonds, as fixed-income assets, become less attractive; gold, as a store of value, is less favored. Conversely, during recessions, stocks decline, and gold and bonds are preferred for preservation and fixed income.

The most prudent strategy is diversified asset allocation—according to individual risk tolerance, holding stocks, bonds, and gold simultaneously to hedge risks. Market volatility during the Russia-Ukraine war in 2022 and the inflation-driven rate hikes in 2023 underscore the importance of multi-asset allocation.

Five ways to invest in gold

There are various channels for investing in gold:

Physical gold: directly purchasing gold bars, with advantages of high privacy and collectible value, but disadvantages of low liquidity and inconvenient trading.

Gold certificates: bank-issued gold custody certificates, which can be exchanged for physical gold or reversed at any time. Advantages include portability; disadvantages include large bid-ask spreads and no interest.

Gold ETFs: exchange-traded funds tracking gold prices, offering better liquidity than certificates but requiring management fees, not suitable for markets with little volatility.

Gold futures: margin trading instruments with leverage, dual-direction trading, and low costs, mainly used by professional investors.

Gold CFDs: also leverage instruments, but with higher flexibility, capital efficiency, and trading hours, especially suitable for small retail investors engaging in short-term swing trading.

Outlook: Will the record high in gold prices become a new starting point?

Can gold prices replicate this bullish trend over the next 50 years? The answer depends on several variables:

Whether geopolitical risks continue to escalate, whether the dollar continues to weaken, whether central banks keep increasing gold reserves, and whether global economic growth slows. Currently, most of these factors point toward sustained strength in gold prices.

However, investors should remember that the appearance of a record high often signals market extremity, requiring increased caution. The best approach is to allocate gold as a hedge during periods of high economic uncertainty, realize profits during economic upswings, rather than blindly betting on continuous price increases.

In the face of rapidly changing markets, diversified asset allocation remains the best insurance against black swan events. Although gold does not generate income, it plays a crucial role in preserving value at critical moments, which is its true value in an investment portfolio.