Looking back at the history of gold trends, we can start with the United States' withdrawal from the Bretton Woods system in 1971. Since then, the US dollar has decoupled from gold, and the price of gold is determined by market supply and demand. In the 50 years from 1970 to 2020, the gold price trend has the following milestones:

1970-1975: The disintegration of the Bretton Woods system

The Vietnam War brought a heavy burden to the US economy, reduced gold reserves, and the depreciation of the US dollar also made the US lose its ability to exchange gold abroad. The disintegration of the Bretton Woods system, coupled with the subsequent oil crisis, have caused the price of gold to skyrocket.

International gold rose sharply from US$35 per ounce when the Bretton Woods system began to collapse to US$183, an increase of more than 400%, lasting for 5 years.

1980-1990: The Middle East crisis

The second Middle East oil crisis and geopolitical tensions, including the Iran hostage incident, the Soviet invasion of Afghanistan, etc., these incidents exacerbated the world economic depression, soaring inflation rates in Western countries and soaring gold prices. In the past ten years, the U.S. bill rate has reached 90%, and Japan, which is known for its low bill rate, is also at 20%.

On the first two trading days of January 1980, the price of gold reached US$634. U.S. Treasury Secretary Miller announced that the Treasury Department would no longer sell gold. Less than 30 minutes later, the price of gold rose by US$30 to US$715, hitting US$850 on January 21. New high, an increase of more than 700%. This forced US President Carter to suppress the gold market. As soon as the news came out, the price of gold fell by $50 at the close of the day. By February of the same year, the price of gold had plummeted by US$145, and the first major bull market in contemporary gold was declared over.

During the 12 years when the price of gold rose from US$35 in 1968 to US$850 in 1980, there was an annual profit rate of 30%.

After the gold price reached a high of US$852 per ounce, there was a sharp drop in shock. This price adjustment lasted more than two decades. From the historical high of US$850 in 1980, by the end of 1988, the price of gold had fallen by 52%; in August 1999, the price of gold hit the lowest price in a bear market of US$251 per ounce.

2001-2011: 9.11, Subprime mortgage crisis

International gold prices broke through from 260 US dollars per ounce to 1921 US dollars, an increase of more than 700%, lasting 10 years.

The rise in gold prices at this stage can be divided into two stages. The first stage is from 2001 to 2006, which was caused by the September 11 incident. Since then, the United States has started a ten-year global anti-terrorism period.

The second phase began with the 2008 US subprime mortgage crisis. Market risk aversion drove gold prices to new highs, until the outbreak of the European debt crisis in 2011 pushed gold to a record high of $1921 per ounce.

It should be noted that as risk aversion eased and the US dollar strengthened, the price of gold fell back and forth to a low of around US$1,500 in 2012.

2015 to today: Sino-US conflict, COVID-19

In 5 years, the international gold price has soared from US$1,060 per ounce to US$1,800 today. It is still unknown whether gold will rise in the future. There are many reasons for this round of rising gold prices. The main reason is that Japan and Europe have successively implemented negative interest rate monetary policies, Sino-US trade frictions, the 2020 US-Iran conflict, and the coronavirus that is now sweeping the world.

From the history of gold prices in the past, the 2008 subprime mortgage crisis is similar to the current situation. All are due to the poor global economic outlook and rising market risk aversion. Similarly, the Fed also launched a QE plan to rescue the market. The volume easing environment introduced by the United States this time is similar to that of that year. When the liquidity of the U.S. dollar becomes more and more abundant, and the exchange rate of many currencies is under pressure, investors will buy gold as a hedge. This means that after short-term adjustments, gold prices still have room for upside. Taking into account the long-term nature of the Fed's QE actions, after the market risk sentiment further stabilizes in the future, gold prices still have broader upside space.

Buy gold for preserve value, not to add value 

In the current environment, if you want the price of gold to go out of a new round of highs, it depends on three factors:

1. The global epidemic continues to worsen, and its duration and destructiveness will exceed expectations;

2. Geopolitics, Sino-US relations;

3. The US dollar further depreciated sharply.

Although the price of gold will fall after each sharp rise. But gold is for value preservation, not value appreciation. It can be seen from the gold price trend in the following two decades that the price of gold has also been steadily showing an upward trend following the exchange of accounts.