The first signs of greed can be sensed.
We’re talking about Gold.
A few months ago, serious players in Gold had identified Rs. 28,000 / 10 grams as their target for Gold.
This target has been achieved for a while now. Nobody’s booked their Gold.
Instead, the target has been revised to Rs. 30,000 / 10 grams, which is just another 40 $ an ounce away.
Please don’t tell me that nobody is going to book (meaning sell, as in booking profits) their Gold @ Rs. 30,000 / 10 grams. I’ve got this nagging feeling that they’re not.
Hmmm, greed is setting in. Nothing unusual. That’s how a bubble progresses.
Yesterday, an update from Reliance alerted me to the hypothesis that Rs. 40,000 / 10 grams was a real possibility in Gold.
Maybe, maybe not. As of now, Reliance is sounding like that fellow who predicted a Dow level of 36,000 some years ago. Today, 36k on the Dow seems impossible, even in one’s dreams.
Does it matter to you how high Gold can go? Or is your target more important? Both are valid questions.
If your target has been achieved, here’s one scenario. Book the Gold and put the released funds into debt. Debt in India is safe, and is giving excellent returns, especially to the retail investor.
If your stomach is full, do you dream about more food?
Seriously people, playing this by targets is a serious option.
It’s also ok if you wanna play it in a “let’s see how high this can go” manner. That’s just another way of playing it. Fine. In this case, you need to set trailing stops, and you need to stick to these if they get hit.
Either way, identify a booking strategy for Gold and stick to it.
Take greed out of the equation. There’s no room for greed in the career of a market player. There’s no room for fear either.
We’ll talk about taking fear out of the equation some other day, if and when unprecedented gloom and doom abounds.