THE IMPOSSIBLE JUST HAPPENED

The probability of what is happening is near zero.

Three 6-sigma events occurred in one week.

– Bonds
– Silver
– Gold

We are currently living through a statistical impossibility.

Let me explain:

Last Tuesday, Japanese 30-year debt recorded what’s called a “6-sigma” session.

2 days ago, silver did even better: it was at 5-sigma on the rally, then reached 6-sigma on the drop. IN A SINGLE SESSION.

Gold right now? It’s up 23% in less than a month. We’re getting very close to a 6-sigma event.

That’s three 6-sigma events in ONE WEEK.

To explain quickly: in finance, we measure price moves around an average using the standard deviation, which we call sigma.

1-sigma: mundane
2-sigma: common
3-sigma: becomes rare
4-sigma: exceptional
5-sigma: extremely rare
6-sigma: supposed to occur once in 500 million

Here are the 6-sigma-type episodes we saw previously:

– The october 1987 crash, 22% drop in 1 session
– March 2020 covid crash
– The swiss franc’s surge in january 2015
– WTI oil turning negative in april 2020

But we’ve never had 3 events occur in one week.

Do you see the point?

A 6-sigma event is almost NEVER triggered by a simple macro headline.

It almost always comes from the market’s structure: leverage, positions that are too concentrated, margin calls, collateral problems, and forced selling or buying.

That’s important to understand because we’re talking about internal strains in the system’s mechanics.

As you know, the Japanese bond market sits at the heart of the global financial system, and I won’t go back over the whole topic, but a 6-sigma move in a market that enormous doesn’t go unnoticed.

Seeing a 6-sigma move in silver a few days later gives one a lot to think about.

And now gold?? That’s absolutely insane.

Why are we seeing extreme statistical events, only days apart, in such different markets?

When a pillar of global funding becomes unstable, leverage tends to contract, and two things happen at the same time: forced selling in certain assets and forced buying of protection in others.

Historically, precious metals are often among the beneficiaries.

Long-term rates say something about the credibility of states: that is, their ability to honor future debts without resorting massively to inflation.

Precious metals say something about the credibility of the currency itself, and when both become unstable at the same time, we’re looking at a challenge to the monetary framework.

I won’t go on, because I want to share the rest in another tweet tomorrow, but generally when a regime starts to crack, the adjustments are BRUTAL.

It’s exactly in those moments that several high-sigma events appear across different asset classes.

I’ll repeat it: seeing three 6-sigma events back to back is not normal.

Gold and silver are telling you, explicitly, that we’re living through a real paradigm shift.