Gold and tech stocks are both technically in a rally right now, and that’s not supposed to happen, according to the Bank for International Settlements (BIS).
In its very last report of the year 2025, BIS said this is the first time in half a century that these two very different assets are rising together like this. According to the BIS, that signals something might be seriously off, and if both crash at the same time, there’s nowhere safe for investors to run.
Gold has jumped 60% this year, its strongest yearly performance since 1979. At the same time, equity markets, especially the ones driven by artificial intelligence, are flying higher, pushing the S&P 500 into what the BIS called “explosive behavior.”
Hyun Song Shin, the BIS’s top economic adviser and head of its monetary and economic department, said, “Gold has behaved very differently this year compared to its usual pattern.” He explained that it’s no longer just a safe-haven asset. This year, “gold has become much more like a speculative asset.”
That shift is what makes the situation so unstable. The BIS, often described as the central bank for the world’s central banks, has warned about bubbles before. But now it’s concerned about what happens if both gold and stocks fall together.
Shin asked: “Where would investors shelter if stocks and gold both crash?” The answer is what’s keeping policymakers and reserve managers awake. Many of them have gone big on gold recently. If it tanks alongside equities, their safety net is gone.
BIS highlights role of retail buyers and ETF pricing pressure
The rally isn’t just coming from central banks or institutions. Regular investors are piling in too. This year, prices of gold ETFs have been trading above their net asset value, showing what Shin described as “strong buying pressure coupled with impediments to arbitrage.” That means buyers are paying more than what the funds actually hold, a red flag for market froth.
Central banks have made aggressive purchases over the past few quarters, and Shin said those moves “clearly set a very firm tone in the price of gold.” But once prices started rising, others followed. “Whenever you have prices actually doing quite well, you will see other investors jumping in,” he said.
The bigger picture, according to the BIS, is that the whole environment is becoming more fragile. That’s not just about gold and stocks. Bitcoin has dropped by about 20% this past month, and the BIS warned the market’s appetite for risk might be hitting a ceiling.
The European Central Bank and Bank of England have also raised concerns about inflated AI stock valuations in recent weeks, specifically saying that all of this rests on overly optimistic assumptions.
BIS questions AI profits and watches dollar drop
Shin drew comparisons between now and the dotcom bubble in the early 2000s. The difference, he said, is that today’s AI firms are actually making money. But that doesn’t mean their massive spending on infrastructure is a good bet.
Many of these companies are spending billions on data centers, and Shin said the key question is whether all that will pay off. “The fundamental question is whether those expenditures will be seen as being justified in the long run,” he said.
He also pointed out that the strength of global markets going into 2026 will depend heavily on how the economy holds up. For now, things are holding steady. “So far, activity has been surprisingly resilient,” he said.
But the BIS is also watching currency markets closely, especially the US dollar. After Donald Trump announced sweeping new trade tariffs back in April, the dollar took a hit.
Now, it’s headed for its biggest yearly decline since the 2007 collapse of Lehman Brothers. Shin said “the dollar has been relatively stable” since then, but added that something else is coming into play.
“I think the hedging behaviour of non-U.S. investors is going to be a very, very important input into how markets will co-move from here,” Shin said.
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