How is the historical high of gold prices formed? Analyzing the 55-year increase to forecast future trends

By February 2026, gold prices have stabilized above $5,100 per ounce, reaching a new all-time high. This achievement is not overnight but the result of a 55-year-long upward trend. From $35 in 1971 to over $5,000 today, gold has increased by more than 145 times. What patterns are hidden behind this half-century bull market? Will it continue to reach new highs in the future?

Why Has Gold Increased 145 Times? The Patterns Behind Three Major Bull Markets

August 15, 1971, marks a turning point in the gold market. U.S. President Nixon announced the suspension of the dollar’s convertibility to gold, officially ending the Bretton Woods system, freeing gold from its fixed price of $35 per ounce and ushering in an era of market-driven pricing. Over the next 55 years, gold experienced three major bull markets, each bringing astonishing gains.

First Bull Market (1971-1980): From Trust Crisis to Inflation Surge

In the early days after the gold standard ended, public trust in the dollar was shaken—once a dollar was a ticket to gold, now it was just paper. Amid panic, gold soared from $35 to $850, a 24-fold increase. Subsequent geopolitical events like the oil crisis, the Iranian Revolution, and the Soviet invasion of Afghanistan further pushed gold prices higher. It wasn’t until 1980, when the Fed aggressively raised interest rates (over 20%) to control inflation, that gold sharply declined by 80%.

Second Bull Market (2001-2011): A Decade of Growth Driven by Financial Crises

After the dot-com bubble burst in 2001, gold started from a low of $250. Over ten years, it experienced a slow bull run, peaking at $1,921 in September 2011, a 700% increase. Key drivers included the 9/11 attacks, prolonged low interest rates in the U.S., the 2008 global financial crisis, and subsequent quantitative easing (QE). During the European debt crisis, gold hit its peak for that cycle, then entered an 8-year bear market, losing over 45%.

Third Bull Market (2019-present): Central Bank Gold Buying and Geopolitical Risks

Starting from $1,200 in 2019, gold surpassed $5,100 by February 2026, gaining over 300%. This cycle’s drivers are more complex: global de-dollarization trends, the U.S. again implementing massive QE in 2020, the Russia-Ukraine war in 2022, conflicts in the Middle East and Red Sea crises in 2023, central banks increasing gold reserves in 2024-2025, and U.S. economic policy risks. Post-2025, tensions in the Middle East, U.S. tax policies sparking trade concerns, and a weakening dollar continue to push gold to new highs.

Three Key Patterns of Bull Markets:

Each bull market stems from a crisis of confidence in the dollar or systemic stress: end of the gold standard, low interest rate stimulus, pandemic QE. The rise typically occurs in three phases—initial slow accumulation, mid-term crisis acceleration, and late-stage speculative overheating. On average, each cycle lasts 8-10 years with gains ranging from 7 to 24 times. Signals of end include central banks entering tightening cycles: the aggressive rate hikes of 1980 and the end of QE in 2011.

However, the current cycle faces new variables. Major economies’ government debt levels are at historic highs, making large rate hikes difficult. The traditional “clean” tightening cycle may not occur; instead, gold prices could fluctuate within a high range for years. The true end might only come with the emergence of a new, more credible global monetary and credit system.

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

This is a common concern among investors. Over the past 50 years, gold has increased 120 times, while the Dow Jones rose about 51 times, seemingly outperforming gold. But this figure hides a trap: gold’s gains are not steady.

From 1980 to 2000, gold mostly traded between $200 and $300, stagnating for two decades. Investing in gold during this period would have been a waste of 20 years, with opportunity costs of capital being locked in. How many 20-year periods do we have in life?

Therefore, gold is a good investment tool but is better suited for swing trading during market phases rather than long-term holding. Bull markets are often driven by macro crises (inflation, geopolitical risks, monetary easing), while bear markets can last long and be sluggish. Catching the right cycle can lead to big gains; missing it may result in years of stagnation.

Another key point: as a natural resource, gold’s extraction costs and difficulty increase over time. Even after a bull market ends and prices retreat, the lows tend to gradually rise. This means investors need not worry excessively about gold becoming worthless; understanding that lows tend to lift over time is crucial.

Five Investment Paths for Gold: A Multi-Dimensional Comparison

Different investors have different suitable ways to invest in gold.

Physical Gold is the most traditional, buying gold bars or jewelry directly. Advantages include asset concealment and dual use as jewelry; disadvantages are inconvenience in trading and difficulty in liquidation.

Gold Certificates are similar to early bank deposit receipts, serving as proof of gold custody. They are portable but do not pay interest, and buy-sell spreads can be large. Suitable for long-term holding.

Gold ETFs offer better liquidity and can be traded directly on stock markets, representing a certain amount of gold. However, issuers charge management fees, and during prolonged sideways markets, their value can slowly depreciate.

Gold Futures and CFDs are the most flexible tools, supporting both long and short positions with leverage. CFDs are especially suitable for small investors, with flexible trading hours (T+0), low minimum deposits (as low as $50), and minimum trade sizes of 0.01 lots. With 1:100 leverage, small capital can participate. These tools are ideal for investors aiming to capture swing opportunities.

How to Combine Gold, Stocks, and Bonds for Steady Growth?

The return logic of these three assets differs completely. Gold profits mainly from price differences, with no interest, so timing is key; bonds rely on interest income, requiring continuous accumulation; stocks depend on company growth, suitable for long-term holding of good companies. In terms of difficulty, bonds are easiest, followed by gold, then stocks.

Over the past 50 years, gold performed best, but in the last 30 years, stocks have outperformed, with gold second and bonds last.

A simple investment rule: Choose stocks during economic growth, allocate gold during recessions. A more prudent approach is to set proportions of stocks, bonds, and gold based on personal risk appetite and investment goals.

When the economy is strong, corporate profits rise, and stocks tend to perform well. During downturns, corporate earnings decline, stocks fall out of favor, and gold’s hedging and bonds’ fixed interest become safe havens.

Markets are unpredictable; major events like the Russia-Ukraine conflict, inflation pressures, and rate hike cycles can happen at any time. Holding a balanced portfolio of stocks, bonds, and gold can effectively hedge risks and make investments more resilient. The achievement of all-time high gold prices fundamentally reflects the era’s emphasis on safe-haven assets.