Gold Mania and the Psychology of Market Traps
Welcome back,
I know this is a difficult phase for traders because in recent times, gold has seen massive price gains. I was going through the liquidations caused by the sudden price movement in gold, and around $2.5 trillion USD was wiped out of the market.
This amount is almost equal to the entire crypto market. Just imagine how strong gold is when it comes to pulling money out of the market.
There are many people who are going to get trapped in this move. They will see the price going up and up, and sooner or later they will start feeling the fear of missing out.
That is when they will feel like they should start buying gold. Until that fear comes in, the market usually does not cool down.
Market makers and whales are very experienced. They know exactly how to play with human psychology. Retail investors cannot battle the mindset of whales. Whales are built differently, and if you fall into their trap, they can completely destroy your financial stability.
That is why I think the best decision right now is to pause and simply observe the market.
Believe me, what is happening right now is extraordinary, and the market will definitely cool down. If not in a few weeks, then in a few months, things will normalize.
Most of what we are seeing right now is because of geopolitical tensions between major countries. At this point, I do not think this is the right time to aggressively buy anything.
Instead, if you already hold gold, you can consider selling it in portions. Gold has climbed significantly, and this could be a reasonable time to book some profits.
At the same time, I think it is wise to still hold around 50% of your gold holdings, because nobody knows what might happen next.
Right now, gold is everywhere in the headlines. It has become a mainstream topic of discussion. Even my mother is upset with me because I told her not to buy gold for my sister, as I believed prices would come down.
Since then, gold has gone up by around ₹50,000 INR, so she is understandably not very happy with me. But that is how markets work.
I am still not panicking. I believe things will settle down sooner or later.
Thank you and happy trading everyone.