Gold fell 3.4% on Monday, a nearly 3-standard-deviation move.
A normal distribution says a drop that size should happen about once every two years.
h/t (KobeissiLetter)
https://blossom.primal.net/32...
That's not a normal distribution; it is leptokurtic. It has a narrower central portion and fatter tails. "Standard" deviation is a poor measure of likelihood here, as rare events occur much more often than a normal distribution would predict.
There is a whole history of financial disasters in the last few decades from not understanding this.
There is a whole history of financial disasters in the last few decades from not understanding this.