Stand by the grounds you have set
“Because there’s a crisis, buy gold” — that thinking paralysis will kill you
That single phrase isn’t analysis; it’s just a preconceived notion.
When a major event happens in the world, many people think this: “Gold during a crisis. Gold will go up.” And they buy on impulse after watching the news. This idea of “buy gold because of a crisis” is actually very dangerous.
Indeed, gold is said to be a “safe asset,” and it tends to be bought in times of higher risk. This general notion isn’t wrong in itself. But,to make that general notion the basis for the trade in front of you is a form of thinking paralysis.
If you enter solely with the belief that “it will go up because of a crisis,” you’ll end up in trouble. This time, we’ll explain why this idea is dangerous.
“During a crisis, gold” does not function as usual
The term “gold during a crisis” is famous, but actual markets aren’t that simple.Even if a crisis occurs, gold does not necessarily rise smoothly. For example, in a major financial crisis, investors may try to secure cash and sell off various assets. In such times, gold, which should be a safe asset, can also be sold temporarily. The phenomenon of “gold falling despite a crisis” can actually occur.
Also, when crisis-related news breaks, its impact is often already priced in. Buying after seeing the news is late. By the time you rush in with “buy because of a crisis,” the price may have already risen and then start to fall—this pattern is not uncommon.