Half a Century of Golden Legend | Hong Kong Gold Price Trends Over the Past 10 Years: A Spectacular Wave, Can the Bullish Pattern Continue?

The 50-Year Bull Cycle of Gold: From $35 to $4,300

Over the past half-century, gold has undergone a remarkable revaluation. Before U.S. President Nixon announced the detachment of the dollar from gold in 1971, the international gold price was fixed at $35 per ounce. By October 2024, spot gold broke through the $4,300 per ounce barrier for the first time, reaching an unprecedented high in human history. This means that in just 53 years, gold prices have increased by over 120 times.

In comparison, the Dow Jones Industrial Average rose from about 900 points to 46,000 points during the same period, a gain of approximately 51 times. From this perspective, gold as part of an asset allocation has shown long-term returns that are not inferior to the stock market.

Four Key Cycles Explaining Gold Price Fluctuations

Gold’s rise has never been a smooth straight line. The 53-year trend can be divided into four distinct upward cycles, each corresponding to geopolitical or economic events of the time.

First Wave (1970-1975): Trust Crisis After the Detachment
After the dollar was decoupled from gold, the price rose from $35 to $183, a gain of over 400% in five years. Public confidence in the dollar wavered, coupled with the oil crisis driving inflation higher, making gold the preferred safe haven.

Second Wave (1976-1980): Geopolitical Risks Escalate
Gold prices soared from $104 to $850, an increase of over 700%. Events like the Iran hostage crisis and the Soviet invasion of Afghanistan triggered global recession and high inflation, again making gold a focal point for investment.

Third Wave (2001-2011): The Decade of Anti-Terror Cycles
Gold rose from $260 to $1,921, an increase of over 700%, spanning a 10-year cycle. The 9/11 attacks triggered the U.S. decade-long anti-terror war, with massive military spending leading to rate cuts, debt issuance, and soaring housing prices, ultimately igniting the 2008 financial crisis. The Fed’s QE policies further boosted gold prices, reaching a peak during the European debt crisis in 2011.

Fourth Wave (2015-Present): A Super Bull Market Driven by Multiple Factors
From $1,060 to surpassing $4,300, this cycle encompasses negative interest rates in Japan and Europe, de-dollarization globally, the U.S. reinitiating QE in 2020, the Russia-Ukraine war, and the Israel-Palestine conflict. 2024 especially witnessed an epic rally, with annual gains exceeding 104%, and 2025 has continued to hit new highs.

Insights from Hong Kong Gold Price Trends Over 10 Years: Why Are Short-Term Fluctuations So Volatile?

The past decade of Hong Kong gold prices reflects the complexity of the global economy. Gold is not just a commodity but also a barometer of confidence in the economic outlook held by central banks and investors worldwide. When central banks increase gold reserves, geopolitical conflicts intensify, or dollar depreciation expectations emerge, Hong Kong gold prices tend to rise. Conversely, when economic optimism, dollar appreciation, or rising interest rates appear, short-term corrections often occur.

This also explains why gold was range-bound between $200 and $300 from 1980 to 2000—an entire 20-year period. Investors who bought and held during that time faced the most boring part of their “50 years.”

Gold, Stocks, Bonds: How to Choose?

The return logic of these three assets is entirely different:

• Gold: Gains come from price differences, no interest, requiring precise timing of entry and exit
• Bonds: Gains come from coupon payments, requiring attention to interest rate policy changes
• Stocks: Gains come from corporate growth, requiring long-term holding of quality companies

In terms of difficulty, bonds are the easiest, gold is next, and stocks are the most challenging. But over the past 30 years, stocks have delivered the best returns, followed by gold, with bonds at the bottom.

Five Ways to Invest in Gold

1. Physical Gold - Easy to conceal assets, can be worn as jewelry, but inconvenient to trade

2. Gold Certificates - Similar to custody receipts, portable but banks do not pay interest, large bid-ask spreads

3. Gold ETFs - Good liquidity, easy trading, but management fees of issuing companies are involved

4. Gold Futures and CFDs - Support leverage and two-way trading, suitable for swing trading, low transaction costs

5. Paper Gold - Other forms of investment products

For short-term swing trading, futures or CFDs offer more flexibility and capital efficiency.

Wisdom in Asset Allocation: Economic Cycles Determine Gold Proportion

Markets are constantly changing, and a single asset class cannot handle all scenarios. A smarter approach is to adjust allocations based on economic cycles:

Expansion Phase: Corporate profits are optimistic, stocks attract capital, gold is relatively ignored

Recession Phase: Corporate profits decline, gold’s hedging properties and bonds’ fixed yields attract funds

Crisis Phase: Events like the Russia-Ukraine war, high inflation, and rate hike cycles remind us that holding a mix of stocks, bonds, and gold can effectively offset volatility risks.

Will Gold Rise Another 50 Years?

This is the most concern among investors. Considering the following factors:

1. Rising extraction costs: As a natural resource, the difficulty and costs of mining increase over time, gradually raising the low point
2. Normalization of geopolitical risks: Global political and economic uncertainties seem to have become the new normal
3. Central bank reserve demand: Countries continue to increase gold holdings
4. Uncertainty in monetary policy: Unconventional policies like QE and negative interest rates could restart at any time

The bull market is likely to continue, but not in a simple straight line. A probable scenario is: after a long bull run, a sharp correction occurs, followed by stable consolidation, and then a new upward phase. The key to making money is whether you can seize the opportunities during the bull phases or the dips for shorting, rather than blindly holding long-term.

The past 50 years of gold tell us: it is an excellent investment tool, but requires active management; it is a reliable hedge asset, but not a passive buy-and-hold product. In the next 50 years, gold’s role will remain important, but investors need to use it more intelligently.