The price of gold has experienced numerous fluctuations from one tael: two tests of historical patterns

Recently, a hot topic in the market has been: Will gold prices continue to rise? Is silver really about to catch up? The answers to these questions might be found in historical patterns—not by looking at candlestick charts, but by examining market laws that have been repeatedly validated through history.

Central Banks Are Buying, Super Rich Are Getting Ahead

Let’s start with a striking set of data. In the global ranking of central bank gold reserves, the United States leads with 8,133 tons (accounting for 75% of its foreign exchange reserves), followed by Germany with 3,350 tons. China currently holds about 2,304 tons, ranking sixth.

An interesting phenomenon is that central banks worldwide continue to increase their gold holdings, private capital is also accelerating its entry, and global super-rich individuals are getting ahead of the curve. This looks like a silent consensus: everyone is paying in advance for the worst-case scenario. From geopolitical tensions, exchange rate instability, to the de-dollarization trend accelerating, these variables are pushing various forms of capital in the same direction.

But this phenomenon itself highlights a deeper market issue—when everyone is optimistic about the same thing, it’s often the moment when risks are accumulating the fastest.

History Repeats: Why Two Major Bull Runs Ended in Sharp Corrections

Looking back over the past half-century of precious metal prices, two particularly critical cycles stand out.

The first occurred in 1979-1980. At that time, the global situation was chaotic—oil crises, hyperinflation, geopolitical conflicts—currency credibility was collapsing. The result? Gold skyrocketed from $200 to $850, quadrupling in just a year. Silver shot from $6 to $50. It seemed like a sign of a “new order beginning.”

But just two months later, gold halved, and silver lost two-thirds of its value. What followed was a 20-year period of silence—stagnation, downward trends, and waning investment enthusiasm—almost crushing all confidence.

The second occurred in 2010-2011. After the global financial crisis, central banks flooded the markets with liquidity. Gold rose from $1,000 to $1,921, and silver again surged near $50. The script was almost identical—the familiar logic of rising prices, ending in the same fate: gold retraced 45%, silver fell as much as 70%. In the following years, the market was trapped in a pattern of downward moves and consolidation.

What do these two cycles have in common? Both occurred under seemingly solid, logical support—out-of-control inflation, excess liquidity, geopolitical risks—all justified by the logic. But timing was ruthless.

The Market Law: Gains and Corrections Are Proportional

From these cycles, a proven rule emerges in the precious metals market: The more violent the rise, the more severe the correction that follows.

This has become a physical law of the market. The fourfold increase in 1979-1980 was followed by a two-month correction; the near doubling in 2010-2011 led to a 45%-70% deep retracement. The regularity is so strong that we can say the historical highs of gold often mark the points of greatest risk accumulation.

Currently, gold prices are already clearly exceeding historical volatility ranges. Silver’s performance is even more extreme—after adding narratives like “AI industry demand,” prices have surged even more aggressively. What does this mean? It suggests that once a correction begins, the downward move could be far beyond market expectations.

The Current Price as a “Pre-Expected Pricing”

Here’s a thought-provoking point: The current gold price may be more about the market pre-pricing a “bad scenario” around 2027 than about current fundamentals.

This isn’t traditional trading logic but a form of anticipatory valuation. Central banks, wealth management institutions, super-rich individuals—all these participants are doing the same thing: using the current price to lock in protection costs against potential worst-case scenarios in the future. While this behavior is rational, it also means that a lot of risk has already been priced in.

If this expectation proves false or is delayed, a reverse correction will follow. When that happens, the speed of the decline could catch many high-position investors off guard.

How Should Ordinary Investors Respond?

Before giving advice, here’s a straightforward point: Don’t gamble.

No one knows where the top of gold prices is. Blindly going all-in with full positions is essentially challenging historical laws with real money—and history has already given two clear answers.

Gold’s average retracement is over 30%, and silver often drops 50% or more. The current gold and silver trends have long departed from comfortable historical ranges.

The real approach isn’t “betting on the rise,” but:

• Understanding risks: Recognize the positive correlation between gains and corrections
• Rational allocation: If participating, do so as part of asset protection, not as the main source of profit
• Strict control of proportions: Better to miss some upside than to face extreme risks
• Continuous review: Regularly reassess positions instead of “buy and forget”

Final Insights

The market never owes anyone a rise. But it will test participants’ true preparedness with a deep correction when most are least prepared.

History doesn’t repeat exactly, but its echoes often land in similar places. The rise in gold prices and the silver catch-up behind these apparent peaks hide risks quietly building up. The seemingly invincible logic is often the most fragile at its peak.

Remember this: commodities with larger gains tend to leave the deepest scars in retracements. This is not pessimism; it’s a market reality we’ve learned.

This analysis is based on market observations and historical patterns and does not constitute any investment advice. Risk awareness and rational decision-making are essential before engaging in any trading.