Is the US stock bubble about to burst? Analysis by David Rosenberg

Global financial markets are experiencing a period of deep contradiction. While gold is in a secular bull market driven by continuous purchases from central banks worldwide, the bubble in U.S. stock markets is growing ever larger. This dichotomy reveals an uncomfortable reality: two assets, two completely opposite dynamics that reflect current economic uncertainty.

The secular rise of gold driven by central banks

Gold keeps rising. Central banks, seeking to diversify their reserves and protect against monetary volatility, have made this precious metal one of their main allies. However, short-term market analysis suggests that gold has reached overbought levels, which could lead to technical corrections in the near future. David Rosenberg, founder of Rosenberg Research, warns about this contradictory dynamic: the secular rally is real, but so is the speculative euphoria.

U.S. stocks: a risky setup

While gold enjoys its bull market, the bubble in U.S. equities presents a worrying picture. U.S. stocks seem disconnected from fundamental economic realities. One metric in particular alarms analysts: the risk premium on capital has turned negative. This means investors are being inadequately compensated for the risk they take. When risk premiums are negative, market logic collapses, and speculation replaces prudence.

Lessons from the past: when the bubble bursts

Financial history is clear: when certain market conditions converge—such as a price bubble, negative risk premiums, and extreme bullish sentiment—the outcomes are rarely favorable. Historical patterns warn that this specific setup has preceded severe corrections and moments of panic in markets.

Rosenberg emphasizes that investors should navigate cautiously in this environment. Prudence is not pessimism; it is recognizing that the U.S. stock bubble requires constant attention and a robust risk management strategy. The contrast between the bullish gold and the bubble in stocks defines the current market reality.