Gold is driving me crazy. I think gold will trade over $2000 in the future. Right now it’s at around $1300. So I have a huge position in gold coins. But I want more exposure, especially after reading Richard Maybury’s Uncle Eric series.
(He shows how governments always ruin their currencies, and how much inflation we have in the U.S. at the moment. It’s very convincing argument.)
So four days ago I bought gold futures. Using less than $1000 in margin, I bought $30,000 in gold. Problem is, buying gold on margin like this makes you very conscious of every little price movement. I find myself checking gold every ten minutes and obsessing over its price. This isn’t the mindset of someone who is confident in his or her position.
Also, I bought gold at a new high… a multi-month high. I like buying a rising market for its trend. And I like making uncomfortable trades… as it was buying into such an extended market. But I was also scared I was buying into the top of the market, especially after Mum said she was finally about to buy gold herself. (I’ve been telling her to buy gold for five years. The fact she wants to buy it now tell me the crowd is starting to get involved and sentiment is very optimistic.)
Anyway, the next day, gold drops $20 in one session, confirming all my fears. Now my mind is swimming in doubt and I have no place in this position. Time to panic! I felt a little like this guy below.
Gold fell more the next day, stabilized the day after and then today, it jumped $7. I took advantage of today’s strength to ditch my position for a mere $400 loss. If gold keeps rising, I won’t care. I was not supposed to be in it.
When you trade futures, you cannot have doubts. The market will kill you. So next time I’m buying gold when it’s depressed and starting to turn up.
Now I’m off to check to gold price…