Can the Half-Century Golden Bull Market Be Recreated? | Interpretation of the 2001 Gold Price Turning Point and Future Investment Outlook

Why Gold Investment Deserves Attention

Since ancient times, gold has not only been a symbol of wealth but also a vital asset within the economic system. Its high density, excellent ductility, and outstanding value preservation characteristics make it the preferred safe-haven asset. The market performance over the past half-century speaks for itself—the gold price in 2001 marked a significant turning point, and over the following twenty-plus years, gold experienced multiple breakthroughs to new highs, especially in 2025, setting new records repeatedly. What exactly drives this? Is gold suitable for long-term holding? Let’s analyze in depth.

The Dissolution of the Bretton Woods System: The Beginning of the Bull Market in Gold

To understand the modern gold price trend, we must look back to the pivotal moment in 1971. At that time, U.S. President Nixon announced the detachment of the dollar from gold, officially ending the Bretton Woods system. Before this, the dollar served as a “gold exchange certificate,” with gold prices officially set at $35 per ounce in international trade.

After the detachment, gold prices started at $35 per ounce and, after more than 50 years of growth, reached a historic high of $4,300, an increase of over 120 times. During this long-term upward trend, four distinct acceleration phases emerged, each accompanied by different economic or geopolitical backgrounds.

Analysis of Four Major Gold Bullish Cycles

First Wave: Double Gains in the 1970s (1970-1975)

Following the dollar’s detachment, the first challenge was a credit crisis. People worried that the dollar, no longer backed by gold, would depreciate, prompting a shift toward physical gold holdings. Simultaneously, the oil crisis forced the U.S. to increase money supply to buy energy, further pushing up gold prices. In just five years, gold soared from $35 to $183, a gain of over 400%.

However, this rally eventually retraced as global awareness of the dollar’s practical value grew, and the oil crisis was gradually resolved. Market rationality returned, and gold prices fell back to around $100.

Second Wave: Geopolitical Crises Driving Prices Higher (1976-1980)

The second wave was driven by successive events such as the Middle East oil crisis, the Iran hostage crisis, and the Soviet invasion of Afghanistan. The global economy entered a recession, and inflation soared in the West. Gold surged from $104 per ounce to $850, a rise of 700%.

But this boom was short-lived. As the oil crisis eased and the Soviet Union disintegrated, the overvaluation collapsed rapidly. Over the next 20 years, gold traded in a long consolidation range of $200-$300.

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

In 2001, gold was at a low point, but the 9/11 attacks triggered a new long-term bull market. The U.S. launched a decade-long war on terror, leading to massive military spending, continuous interest rate cuts, and rising housing prices. To cool the overheated housing market, the Fed was forced to raise interest rates, ultimately triggering the 2008 financial crisis.

During the crisis, the Fed implemented quantitative easing(QE) to stabilize the economy, providing strong support for gold prices. Subsequently, the European debt crisis erupted, and gold peaked in 2011 at $1,921 per ounce. Over this decade, the gold price rose from $260 to $1,921, an increase of over 700%.

Fourth Wave: New Highs in a Complex Contemporary Environment (2015-present)

Factors driving gold upward in the past decade include: negative interest rate policies in Japan and Europe, the global de-dollarization trend, massive monetary stimulus in 2020, the Russia-Ukraine war in 2022, and conflicts in the Middle East and the Red Sea in 2023.

Entering 2024, gold accelerated further. Amid multiple factors such as central banks increasing gold reserves, rising economic policy risks, and geopolitical tensions, gold prices first broke through $2,800 per ounce in October. Since 2025, trade frictions, a weakening dollar, and escalating Middle East tensions have continued to push gold higher, reaching a new high of $4,300.

Gold vs. Stocks vs. Bonds: Who Is the Winner?

To evaluate the investment value of gold, it must be compared with other asset classes:

• Gold returns come from price differences; it offers no interest income, requiring precise timing for buying and selling.
• Stock returns derive from corporate growth and dividends, suitable for investors optimistic about economic growth.
• Bonds provide fixed interest payments, with the lowest risk but limited returns.

Over the long term, the past 50 years saw gold increase by 120 times, while the Dow Jones Industrial Average rose 51 times, outperforming stocks. However, data from the last 30 years shows stocks leading in returns, with gold following.

The key difference is: in the twenty years after 2001, stocks benefited from globalization and technological revolutions, while gold mainly gained from monetary easing and safe-haven demand.

Is Gold Suitable for Long-Term Holding?

Short answer: Not entirely.

Long answer: Gold’s historical trend shows “discontinuity.” For example, from 1980 to 2000, gold was stuck in the $200-$300 range for 20 years, yielding no returns. Buying gold during this period meant capital was frozen.

The true value of gold lies in swing trading. Markets typically follow this pattern: long-term bull → sharp correction → consolidation → bull resumes. Successful gold investors buy during bull runs and short during sharp declines, rather than holding long-term.

Another important observation is: although prices retrace, each bottom tends to be higher than the previous one. This reflects rising costs of gold extraction over time and the long-term impact of inflation. Therefore, even at the bottom, gold’s price doesn’t fall to zero.

Five Ways to Invest in Gold Compared

1. Physical Gold

Buy gold bars or coins. Advantages include asset concealment; disadvantages are inconvenient trading and difficulty in liquidation.

2. Gold Savings Account

Similar to a traditional USD savings account, recording the amount of gold held. Advantages are portability; disadvantages include large bid-ask spreads and no interest, suitable only for very long-term holding.

3. Gold ETFs

Much more liquid than savings accounts, easy to trade, but management fees are involved. Over long periods without volatility, fees can cause slow depreciation.

4. Gold Futures and CFDs

Most commonly used by retail investors. Futures and CFDs are margin trading, low-cost instruments. CFDs offer flexible trading hours, higher capital efficiency, and are more suitable for short-term trading.

With CFDs, investors can freely choose to go long or short based on market judgment. For example, buy if expecting gold prices to rise, sell if expecting decline. Leverage can amplify gains but also increases risks.

5. Gold-Related Stocks and Funds

Indirectly hold shares of gold-related companies or specialized funds, diversifying risk across assets.

Wise Asset Allocation

In unpredictable markets, relying on a single asset class can pose significant risks. Events like the Russia-Ukraine war and inflationary rate hikes repeatedly remind us that during economic growth, stocks should be favored; during recessions, increasing gold holdings is prudent.

The most prudent approach is to allocate funds among stocks, bonds, and gold based on individual risk tolerance. When the economy is strong, corporate profits improve, attracting investment into stocks; during downturns, gold’s preservation function and bonds’ fixed income become safe havens.

Such diversified allocation can effectively offset volatility risks of individual assets, maintaining resilience of the investment portfolio amid market turbulence. In the face of ever-changing financial markets, this is the long-term winning strategy.