As the Middle East situation escalates, oil prices and inflation expectations have once again become the market's focus. Recently, the energy sector has been favored, while both stocks and bonds have faced pressure, raising concerns about whether "1970s-style stagflation" will repeat. The most surprising aspect is gold: as a recognized safe-haven asset, gold prices have recently experienced a noticeable pullback. This appears to be because, amid tightening market liquidity, investors are prioritizing selling gold, which is at high price levels, to cash out.

A team from Huatai Securities pointed out in a recent report: "History can serve as a reference, but it will not simply repeat." They divided the stagflation行情 of the 1970s into three stages: first, speculation on "inflation," followed by a tug-of-war between "inflation" and "economic stagnation," and finally, "economic stagnation" taking dominance, with inflation subsequently receding. In other words, even if the market truly retraces the path of the 1970s, the performance of various assets will not be a one-way street of continuous rise or fall, and investors certainly cannot expect to solve all problems by simply "buying gold mindlessly."

Technical analyst Jordan Roy-Byrne provided a more刺激 analogy: gold prices have "just replayed the 1971-1973 trend, including the first major pullback after that big surge." In his review of the 1970s bull market, after gold peaked in 1973, it still rose approximately sevenfold over the next seven years, but along the way, it experienced "hard pullbacks" of 29%, 24%, 45%, and 20%.

When reviewing the asset performance of the 1970s, a team from Caitong Securities offered a more direct conclusion: throughout the entire 1970s, gold's returns far outpaced others and it was the only major asset class to achieve positive real returns after adjusting for inflation. However, they also cautioned that holding gold was not a smooth experience—during its long-term upward trend, gold prices periodically experienced significant pullbacks, and these declines often occurred during periods of stock market rebounds and temporary relief in inflation.

Synthesizing the views of these institutions, a more practical conclusion emerges: discussing whether the market is replaying the "1970s playbook" now is less about betting all chips on a single asset and more about closely observing how long the oil price shock will persist and how the US dollar trend and market liquidity will evolve. The recent short-term weakness in gold does not mean its investment value in a stagflation environment has disappeared. On the contrary, it serves more as a reminder: if the 1970s行情 truly repeats, the first thing investors must adapt to is the剧烈波动 rhythm of "sharp rise—sharp fall—rise again."

Why Gold Won in the 1970s: It Benefited from the Dual Themes of "Monetary Order Change + Energy Shock" Caitong Securities conducted a segmented review of the 1970s and found that gold was almost the best-performing major asset in several key periods:

During the "Breakdown of the Dollar-Gold Link" phase (Jan 1966 – Oct 1973), London spot gold surged by 178.4%. During the first oil crisis (Oct 1973 – Mar 1974), gold rose another 76.5%, while the S&P 500 fell by 13.2%. In the period related to the second oil crisis (Nov 1978 – Jan 1981), gold increased by 161.9%.

Over a longer cycle (Jan 1966 – Dec 1985), gold's cumulative gain reached 829.1%. Caitong Securities particularly emphasized a key data point: after adjusting for inflation, gold was the only asset to maintain a positive real return during this period, while the real returns for stocks and bonds were negative.

These numbers clarify gold's "win rate" in the 1970s: it wasn't just a safe haven; it更像是对高通胀、负实际利率、以及货币信用冲击的一揽子定价.

What the "First Major Pullback After a Big Surge" Looked Like Historically: Gold Pullbacks Occurred During Temporary Inflation Easing and Stock Market Recoveries Looking back at the 1970s, believing gold only moved in a "one-way upward trend" is a misconception. According to Caitong Securities' review of the 1966-1985 period based on the "Merrill Lynch Investment Clock," gold did not maintain gains in every phase: • Early Surge: From October 1970 to August 1972 (economic recovery phase), gold rose 79.5%; subsequently, from August 1972 to December 1974 (stagflation phase), gold surged another 178.9%, while the S&P 500 index fell 38.3%. • Typical Pullback: However, from March 1975 to May 1976 (economic recovery again), gold experienced a significant decline, dropping 29.2%; meanwhile, the S&P 500 index反而 rose 20.2%.

This phase's market performance can be summarized as: early inflation expectations were fully priced in,随后因经济企稳修复、市场风险偏好回升而发生逆转. In other words, gold in the 1970s was not "only rising, never falling"; it also gave back some gains in specific phases—especially when market expectations shifted towards "stagflation ending" or "policy facing a turn," gold's pullbacks were particularly noticeable.

Why Has Gold Fallen First This Time? Strong Dollar, Crowded Trades, and the "Cash-Out Demand" for Funds Huatai Securities noted in their report that facing recent market shocks, gold and silver, which should have risen as safe havens,反而领跌. The core reasons behind this are: the strong performance of the US dollar, other assets diverting funds, and the fact that gold had risen too much previously, leading to high valuations and overly crowded trades. Simply put, when the market urgently needs liquidity, gold played the role of the asset everyone "sells for cash."

Bank of America Merrill Lynch's fund flow data also corroborates this: in the week of March 7, gold experienced its largest weekly outflow since October 2025 ($1.8 billion); in contrast, the energy sector saw its largest weekly inflow in history ($7 billion). Bank of America Merrill Lynch cautioned that until the US dollar trend becomes clear, one should not expect a significant rebound in gold. Currently, oil prices and the dollar have not shown clear reversal signals, and the S&P 500 index has not yet adjusted sufficiently.

This explains why people feel that "gold surged like in the early 1970s before, but has suddenly fallen now." This is not a failure of gold's long-term logic, but rather the market, under the current macroeconomic backdrop, prioritizing the sale of easily liquidated assets, conducting a "liquidity sorting."

"Stagflation" Trading Needs to Be Viewed in Stages: Gold's Rhythm is Embedded in a Three-Part Logic The team led by Zhang Jiqiang divides the "stagflation"行情 into three stages. Viewed from a gold perspective, this framework is actually more instructive: 1) Stage One: Trading "Inflation" – Gold may not be the strongest, and could even face pressure. Rising energy prices push up inflation, central banks hike rates rapidly, and liquidity tightens. In this stage, commodities overall perform strongly, but gold may not outperform—because rising real rates and a strengthening dollar often suppress gold. This is also the macro backdrop for gold's current correction: not that inflation is gone, but that "liquidity has become more expensive." 2) Stage Two: Tug-of-War Between Inflation and Recession – Gold begins to be repriced. As the economy weakens, the market starts expecting a policy pivot, and real rates peak. In this stage, gold typically starts to strengthen because the market shifts from "fighting inflation" to "fighting recession + fighting policy mistakes." This is often the starting point for gold's true trend-based上涨. 3) Stage Three: Recession Dominates – The gold行情 winds down. Inflation recedes, central banks cut rates, and a bond bull market begins. At this point, gold's logic gradually weakens because systemic risk decreases, and funds flow towards risk assets or interest-rate assets.

In summary: Gold is not simply a "stagflation beneficiary asset," but rather an asset highly sensitive to the "inflection point in real rates." If the current market is still oscillating between the first and second stages, then gold's volatility is essentially提前交易 this inflection point's uncertainty.

The key to this framework is the "sequence of inflection points": policy bottom – rate top – market bottom – inflation top – economic bottom. If the market is truly using the "1970s playbook," the current situation更像在第一段和第二段之间摇摆: fearing both that inflation could be reignited and that liquidity has already started to choke risk assets.

Will the 2020s Lead to Stagflation or "Inflationary Boom"? For Gold, It's Essentially a Judgment on "Oil Price × Dollar" The assessment from Bank of America Merrill Lynch strategist Michael Hartnett's team, while seemingly discussing macro paths, can be compressed into a more direct framework for gold: Oil prices determine the height of inflation; the dollar determines gold's elasticity.

Scenario 1: Conflict is brief, oil prices are controlled (<$90) Inflation pressure is limited, the dollar may remain strong, and liquidity is not significantly宽松. Gold: Mainly oscillates, struggling to establish a trend.

Scenario 2: Conflict escalates, oil prices spike ($100-$120) Risk of inflation spiraling out of control rises, and policy被动性增强. Gold: Medium-term logic strengthens, but short-term performance may still be suppressed by the dollar.

In other words, gold does not simply follow oil prices higher; it depends on whether "oil prices force policy to lose control." Gold only enters its strongest phase when the market begins to question the effectiveness of monetary policy.

Fund Flows Have Already Started to "Reverse": What Does This Mean for Gold? The four "market bottom signals" proposed by Hartnett's team, interpreted specifically from a gold perspective, actually describe a typical process:

1. Gold experiences large-scale outflows (has occurred) Indicates it has completed the phase of being a "liquidity ATM." 2. Energy siphons funds (is occurring) Indicates the market is still trading the "Stage One inflation" theme. 3. Oil prices and the dollar have not yet declined (has not occurred) Means the factors suppressing gold remain. 4. Risk assets have not fully cleared (has not occurred) Means safe-haven demand has not truly returned to gold.

Therefore, gold's current state can be summarized as: having completed the first round of adjustment, but not yet meeting the macro conditions needed to "drive another round of上涨."

The Real Lesson from the 1970s: Gold is a Core Asset, But Its Rhythm is Never Smooth Caitong Securities provided a more detailed breakdown of the sector, style, and country-specific performance of the 1970s, which is crucial for understanding gold. Because if one only looks at the outcome—gold significantly outperforming over the long term—it's easy to draw an overly simplistic conclusion, but the actual historical path was much more complex.

Judging from asset performance at the time, energy was始终 the "primary driver" pushing inflation expectations higher, while the stock market内部 experienced frequent and剧烈 style rotations, and performance varied significantly between countries. Against this macro backdrop, gold was not the leading asset in every phase, but rather更像贯穿全周期的一条 "pricing主线."

Specifically, when inflation first emerged and the market was still trading growth and demand expansion, cyclical commodities like energy often rose first, while gold's performance might not be outstanding. When inflation remained persistently high, monetary policy gradually lost its binding force, and the market even began to question monetary信用, gold would then enter its most explosive phase. Finally, when real economic downward pressure emerged and inflation began to recede, funds would turn to interest-rate assets like bonds, and gold's relative advantage would weaken.

In other words, although gold was one of the most successful assets of the 1970s, its上涨 was not linear; it was embedded within the rhythm of the反复博弈 between "inflation—policy—growth." This also means that simply using "stagflation benefits gold" for linear extrapolation often underestimates the inevitable volatility and pullbacks along the way.

Back to the Present: Gold's Pullback Looks More Like History Unfolding "Step by Step" Mapping the above historical experience to the current market yields a more explanatory judgment: if the market is indeed running along the "1970s playbook," then gold's recent decline is not a negation of this narrative, but rather one of its most typical, and easily overlooked, segments— namely, the "first significant pullback" triggered by liquidity tightening and fund reallocation after a rapid上涨.

At the current stage, the oil price shock is re-emerging, and inflation expectations are heating up, but simultaneously, the dollar remains strong, real rates are high, and overall market liquidity is tight. In such an environment, gold being sold off优先 is not fundamentally due to its long-term logic being broken, but because it had accumulated substantial paper gains during the previous rally, possessing the characteristic of "high liquidation efficiency."

Therefore, rather than纠结 over "why gold fell," it's better to focus on the core variables that will determine its next trend: whether the oil price shock will persist, pushing inflation towards失控区间; when the dollar will peak and real rates will begin a trend decline; and whether the market will evolve from单纯的 liquidity tightening to the exposure of credit risks.

Only when these conditions gradually fall into place can gold potentially transition from its current role as a "passive cash-out asset" back to being a core asset for active market allocation.

Until then, the more realistic path might be: gold will continue to play out the rhythm of "rise—get cashed out—rise again" amidst volatility. This was the true picture of the 1970s, and it may also be the market常态 that investors must readapt to in this cycle.