Golden Fifty Years of Growth: From Bretton Woods to 2025's New All-Time High

Why Has Gold Appreciated Over 120 Times? The Story Behind Half a Century of Fluctuations

Gold has been one of the most important assets in human civilization since ancient times. Its high density, strong ductility, and excellent durability contribute to its revered status, along with its multiple properties as currency, jewelry, and industrial raw material. Over the past half-century of economic changes, gold’s historical prices have shown a magnificent surge trajectory.

From 1971 to today, gold has experienced a skyrocketing / surge from $35 per ounce to over $4,300 in 2025, with a cumulative increase of over 120 times. Especially in the past year, driven by geopolitical tensions, central banks increasing holdings, and dollar depreciation, gold prices repeatedly hit new highs, with a full-year increase of over 104% in 2024.

What secrets are hidden behind this rapid rise in gold’s historical prices? The answer begins with a pivotal moment in 1971 that changed the world’s financial landscape.

The Dissolution of the Bretton Woods System: The Turning Point for Gold Decoupling from the Dollar

After World War II, the United States led the establishment of the Bretton Woods system, an international trade settlement framework centered on the US dollar. Under this system, the dollar was pegged to gold, with 1 ounce of gold exchangeable for $35, and other currencies pegged to the dollar, effectively making the dollar a certificate of gold exchange.

However, as global trade demand grew rapidly, gold mining could not keep pace, and the US faced a large outflow of gold. On August 15, 1971, President Nixon announced via televised speech the suspension of dollar-gold convertibility. This decision marked the official collapse of the Bretton Woods system and ushered in a new era of free-floating gold prices.

Four Major Cycles of Gold Price Surges in History

Over these fifty-plus years, gold has experienced four distinct upward cycles, each corresponding to major global economic and political shifts.

First Wave: Early 1970s Confidence Crisis (1970-1975)

After the dollar decoupled from gold, public trust in the dollar was shaken. During the initial phase of decoupling, fears that the dollar would become worthless like waste paper led people to hold gold. The price soared from $35 to $183, an increase of over 400%. Subsequently, the first Middle East oil crisis erupted, prompting the US to increase money supply to buy oil, further pushing gold prices higher. After the crisis eased, public perception shifted back to the dollar’s practical value, and gold prices fell back to around $100.

Second Wave: Late 1970s Geopolitical Turmoil (1976-1980)

A series of events including the second Middle East oil crisis, the Iran hostage crisis, and the Soviet invasion of Afghanistan triggered a global recession, with inflation soaring in Western countries. Gold once again became a safe haven, skyrocketing from $104 to $850, an increase of over 700%. However, excessive speculation led to inflated prices. After the crises subsided and the Soviet Union dissolved, gold prices quickly retreated, fluctuating within the $200-$300 range for about 20 years.

Third Wave: Long-term Bull Market in the New Millennium (2001-2011)

The 9/11 terrorist attacks heightened global alertness, and the US launched a prolonged global anti-terror war, resulting in massive military spending. To fund these efforts, the US cut interest rates and issued bonds, which eventually led to a housing bubble and the 2008 global financial crisis. To rescue the economy, the US implemented quantitative easing, propelling gold into a decade-long bull market, with prices soaring from $260 to $1921, an increase of over 700%.

Fourth Wave: The Contemporary Era of Multiple Risks (2015-present)

In the past decade, gold has surged again, rising from $1,060 to over $2,000. Negative interest rates, global de-dollarization trends, new US QE rounds in 2020, the Russia-Ukraine conflict, worsening Middle East tensions, and other factors have made gold a favorite among institutional investors and central banks. 2024 even witnessed extraordinary market conditions, with gold prices skyrocketing to $2,800 within a few months and surpassing $4,300 in 2025.

What Is the Return on Gold Investment? How Does It Compare to Stocks and Bonds?

From a long-term perspective of 50 years, gold’s investment return is not inferior to stocks. Since 1971, gold has increased 120 times, while the Dow Jones Industrial Average rose from 900 points to about 46,000 points, an increase of approximately 51 times. It seems gold outperforms, but this conclusion depends on certain conditions.

Data from the past 30 years shows that stock returns are better, followed by gold, with bonds at the bottom. Gold’s main gains come from price differences, lacking dividends; bonds provide regular interest income with relatively low risk; stocks generate value through corporate growth, requiring long-term stock-picking skills.

In terms of investment difficulty, bonds are the easiest, gold is next, and stocks are the most challenging. However, if one can seize the major trend of gold—usually characterized by long-term bull markets, rapid corrections, consolidations, and subsequent bull cycles—the returns often surpass those of stocks and bonds.

The Role of Gold in Different Economic Cycles

Market participants follow an experiential rule: allocate stocks during economic growth, and allocate gold during recessions.

In periods of economic prosperity, corporate profits outlooks are optimistic, attracting investors to stocks, while interest in fixed-income bonds and non-yielding gold is relatively low. During recessions, stock attractiveness declines, and gold’s value-preserving properties along with bond fixed yields become more appealing.

The principle is simple: unexpected events like the Russia-Ukraine war, inflation, and interest rate hikes can change market expectations at any time. Holding a balanced portfolio of stocks, bonds, and gold can effectively hedge against the volatility of individual assets, making the investment portfolio more resilient.

Should You Hold Gold for the Long Term or Use Swing Trading?

Before investing in gold, you must recognize a fact: gold prices do not move in a smooth linear fashion. Between 1980 and 2000, gold traded within the $200-$300 range. Investors who bought and held during this period saw no significant gains. How many 50-year periods in life can one wait?

Therefore, gold is an excellent investment tool but is more suitable for swing trading to capture short- to medium-term cycles rather than purely holding long-term without action. It’s worth noting that as a natural resource, the costs and difficulty of mining increase over time, and after each bull cycle, the retracement lows tend to be higher than the previous cycle. This means that although gold will undergo corrections, it is unlikely to fall to zero. Investors should grasp the timing of entry and exit based on this规律.

Overview of Gold Investment Methods

Depending on investment needs and capital scale, gold investment can be divided into five main categories:

1. Physical Gold
Direct purchase of gold bars or other tangible gold assets. Advantages include asset concealment and the ability to wear jewelry. Disadvantages are poor liquidity and difficulty in quick liquidation.

2. Gold Passbook
Similar to early dollar passbooks, serving as a custody certificate for gold. Advantages are portability; disadvantages include no interest paid by banks, large bid-ask spreads, and suitability mainly for long-term holders.

3. Gold ETFs
Much more liquid than passbooks, with easy trading. Holders own shares representing a certain amount of gold ounces, but the issuing company charges management fees. Over time, the value may slowly decline if the fund’s net asset value remains stable.

4. Gold Futures and CFDs
The most commonly used tools for retail investors. Both futures and CFDs are margin trading, with extremely low transaction costs, support for two-way trading, and small minimum investments. CFDs are especially flexible, with high capital utilization, suitable for short-term swing traders. They use T+0 trading mechanisms, allowing instant entry and exit, with risk management tools like stop-loss and take-profit.

5. Gold Funds
Invest through funds holding gold-related assets, offering diversification but with higher fees.

For investors aiming to capture short-term swing opportunities, futures or CFDs are the best options due to leverage, low costs, flexible trading hours, and small entry thresholds.

Outlook: Will Gold Continue to Rise in the Next 50 Years?

Looking at the historical trajectory of gold prices, each major surge was triggered by significant events—currency trust crises, geopolitical conflicts, economic recessions, etc. As of 2025, factors such as escalating Middle East tensions, the Russia-Ukraine conflict, US tariff policies, stock market volatility, and dollar depreciation remain. Central banks continue to increase gold reserves.

These background factors suggest that gold may maintain a relatively strong stance, but whether it will replicate the past 120-fold surge over the next 50 years remains uncertain. The key questions are: Will the economic system undergo major changes again? Will geopolitical tensions persist? Will technological progress alter gold’s demand?

In any case, gold’s status as a safe-haven asset and a tool for price difference trading is unlikely to change. Investors should tailor their strategies based on their risk tolerance, investment horizon, and market environment—whether to participate in swing trading or use gold as a defensive asset in asset allocation—to make rational decisions.