## Why has gold increased tenfold in 20 years? This number is jaw-dropping

As of October 2025, the spot price of gold hovers around **$4,270 per ounce**. To put this in perspective, 20 years ago, the price was just over $400, and 15 years ago, it was less than $1,200. What does this mean? **If you invested 100 yuan in gold in 2005, it could now be worth 1,000 yuan**.

This is not a coincidence, nor is it some magical investment rule. Behind it is a profound global economic upheaval.

## From 400 to 4,270: The Four Acts of Gold

**Act One (2005-2010): Dollar depreciation, gold soars**

During those years, the US economy was struggling. The subprime mortgage crisis was brewing, the dollar was depreciating, and oil prices were soaring. Investors lost confidence in financial assets and flocked to gold. Over five years, gold rose from $430 to $1,200, nearly doubling. In 2008, the Lehman Brothers bankruptcy nearly collapsed the global financial system, but gold became the only "psychological comfort." Central banks and institutional investors began frantic gold hoarding.

**Act Two (2010-2015): Economy recovers, gold takes a break**

After weathering the financial crisis, the US economy started to recover. People regained confidence in stocks and bonds, and demand for gold declined. During these five years, gold fluctuated between $1,000 and $1,200, neither rising nor falling significantly. Many investors began to doubt whether gold still had value.

**Act Three (2015-2020): Signs of trouble**

Looking back, this period was the critical turning point. The US and China started imposing tariffs on each other, government debt levels soared, and central banks cut interest rates to near zero. Traditional financial assets began to seem unreliable. Then, in 2020, the COVID-19 pandemic struck suddenly. Economies halted, and central banks and governments flooded the markets with money. Gold broke through the $2,000 mark, becoming the last fortress for investors.

**Act Four (2020-2025): Gold takes off**

This was the most疯狂 five years for gold. It rose from $1,900 to over $4,200, an increase of **124%**. In simple terms, global economic problems remained unresolved and became more complex. Geopolitical tensions, debt issues, and inflation all intensified. Amid this anxiety, gold continued its upward trajectory.

## How can gold outperform stocks? This has only been true in the last 5 years

In the recent decade (2015-2025), gold rose from $1,000 to $4,200, a cumulative increase of about **295%**. Converted to annualized return, that’s roughly **7-8% per year**.

It may seem modest, but the key is that gold **doesn’t pay dividends or rely on company reports, yet still provides this return**.

Compared to that, the S&P 500 gained about 800%, and the NASDAQ 100 over 5,500%. Stocks outperformed. But here’s an interesting phenomenon: **In the last five years, gold actually outperformed the S&P 500 and NASDAQ**. This is rare. Why? Because the past five years have been a recurring story: central banks releasing liquidity, lowering interest rates, rising inflation, geopolitical conflicts. In such an environment, gold naturally became the winner.

Another crucial detail: In 2008, during the financial crisis, stocks plunged over 30%, **gold only fell 2**%. In 2020, when the pandemic caused global markets to tumble, gold escaped unscathed. That’s the true value of gold — not maximizing returns, but protecting your wealth during crises.

## Why does gold keep rising? Four underlying truths

**1. The lower the interest rates, the more attractive gold becomes**

Gold has no interest income; holding it means giving up returns from bonds and savings. But when central banks cut interest rates to zero or negative, the opportunity cost disappears. Over the past decade, the Fed and ECB have been aggressively lowering rates, making gold the most rational choice.

**2. The declining US dollar**

Gold is priced in dollars. A weaker dollar makes gold cheaper for non-US investors. In recent years, especially after 2020, the dollar has indeed depreciated. Emerging market central banks have even started using gold to replace US dollar reserves to reduce dependence on America. This has boosted gold demand.

**3. The ghost of inflation and fiscal spending**

After the pandemic, governments and central banks poured money into the economy. More money means higher prices. When inflation actually arrives, investors worry about their wealth shrinking. Gold becomes the best "wealth insurance." Moreover, if governments continue borrowing and printing money, inflationary pressures will persist, giving gold ongoing reasons to rise.

**4. Increasing global instability**

Trade wars, energy crises, geopolitical conflicts — recent years have seen one bad news after another. Every time, investors rush into gold. Central banks also hoard gold as a "lifeline" during times of financial instability.

## How much gold should be in your investment portfolio?

Gold isn’t for getting rich overnight. Its primary role is: **preserving your capital**.

The usual recommendation is to allocate **5-10% of your total investments to gold**. If your portfolio is heavily weighted in stocks, you might lean toward the higher end. Gold acts like an insurance policy for your assets — when the stock market crashes, gold helps stabilize your position.

Another advantage is liquidity. Gold can be exchanged for cash in any market worldwide at any time, unlike some assets that require waiting for buyers. In times of financial chaos or currency fluctuations, this "liquidity" feature becomes very valuable.

## Final thoughts: Why will gold continue to rise?

Gold’s essence is an **inverse indicator of confidence**. The more stable the global economy, the clearer the policies, and the lower the risks, the less gold is worth. Conversely, when economic outlooks worsen, debt pressures mount, and geopolitical risks increase, gold becomes more attractive.

Currently, these factors show no signs of abating. The Fed has limited room to cut rates further, global debt levels are at record highs, tensions in the Middle East remain high, and energy supplies are unstable. In this context, gold is not just an investment asset but a form of "hedge" — the oldest and most effective way to counter uncertainty.

This is why gold, which was $400 twenty years ago, is now worth $4,270. It has witnessed two financial crises, seen global policies reverse repeatedly, and ultimately spoken through its gains. For those seeking steady wealth management, the story of gold is far from over.