A Reclassification Is Not a Bubble

Deutsche Bank's frames disagree by two thousand dollars an ounce because two of them price the book gold has left — and an explosiveness test cannot see a transfer between books.

Deutsche Bank’s precious metals desk published a special report on Friday that does something sell-side research rarely risks: it prints its own worst case in full before declining to act on it.

Michael Hsueh and Bryant Xu take the Bank for International Settlements’ December diagnosis of bubble conditions seriously — the Quarterly Review box that put gold and the S&P 500 in explosive territory together for the first time in fifty years — update the BIS’s explosiveness test through July, and confirm gold in a statistically explosive phase since August 2024 — the fifth episode since 1975, the test statistic still at 1.27 against a critical value of 0.63, down from a peak of 3.3 second only to the 1980 episode’s 3.4.