To the moon

The week started on a rather calm note across US and European equity markets. This is the first Monday since the start of the year that we can say this: equities opened quietly.

The rally in gold and silver stole the spotlight, as gold surged past the $5’000 per ounce level yesterday, and silver above $100. Both gave back gains during the session, but are once again strongly bid in Asian trading.

Part of the move is clearly speculative — there is no doubt about that. Gold’s volatility index spiked to its highest level since 2020, suggesting that a sizeable downside correction is more likely than not in the foreseeable future. But the fundamentals that pushed precious metals to these levels remain very much alive: exploding US debt and a potentially inappropriately dovish Federal Reserve (Fed) policy are making the US dollar increasingly vulnerable to inflation — in other words, to value deterioration. At the same time, US-induced trade and geopolitical tensions threaten the US dollar’s appeal as a reserve currency. Gold has overtaken US Treasuries in global central banks’ FX reserves. Hence, the long-term outlook for gold remains constructive. Historical data suggests that the rally could extend toward $6’500 per ounce.

As for silver, the parabolic rise clearly calls for a sharp correction — there is little doubt about that. Some, however, prefer to look at the chart on a logarithmic scale, arguing that relative value gains matter more than nominal ones. From that perspective, silver’s move — while impressive — remains broadly in line with historical trends. That suggests that once a pullback has run its course, the rally has little reason to stop, especially as the US dollar continues to lose its fundamental appeal.

Turning to the US dollar, it remains under pressure. The Fed starts its two-day policy meeting today. It is not expected to move on rates. Powell is unlikely to say much more than “we are watching the data and it tells us to wait before cutting further.” This lack of action is expected to trigger renewed fury from the White House. We could even hear the announcement of who might take over the Fed in the coming months. The issue is that the Fed still retains credibility under Jerome Powell, precisely because he has resisted political pressure. The day he is gone, that credibility could come into question — and a loss of faith in the Fed would likely be another tailwind for precious metals.

January is almost over, and amid all the focus on geopolitics and Black Swan risks, we nearly forgot to mark the anniversary of DeepSeek’s chatbot, which first emerged in January last year. Around this time last year, the arrival of the Chinese rival revived fears that advanced AI chatbots could be built using earlier-generation Nvidia chips — potentially making them cheaper while remaining highly efficient. US AI stocks dipped on those concerns, while a Chinese AI rally kicked off.

A year later, appetite for US AI exposure has not been materially dented by Chinese competition. Companies that sold off on the initial DeepSeek headlines — such as Nvidia, Alphabet and Microsoft — rebounded quickly and resumed their rally. Meanwhile, DeepSeek marked the beginning of a broader Chinese AI revival. The Hang Seng Index has rallied roughly 78% through 2025, recovering around two thirds of the losses suffered during the 2018–2022 meltdown.

Appetite for global tech — and AI-related stocks — remains strong, but questions arise. China may not yet have fully explored its upside potential. In the US, meanwhile, the rally is increasingly questioned amid concerns over overspending, leverage and the circular nature of AI-related deals.

The circularity of those deals — in simple terms, companies like Nvidia investing in their own customers so they can, in turn, buy Nvidia’s products — appears to irritate investors more than it worries Nvidia itself. On the contrary, Nvidia announced an additional $2 billion investment in CoreWeave to accelerate build-out and AI adoption. CoreWeave initially rallied around 10% at the open before giving back gains, while Nvidia slipped 0.64%, underscoring investor discomfort with circular funding structures. What investors want to see is money flowing into the AI ecosystem from outside — meaning from end users, enterprises and third-party businesses.

I remain confident that AI will ultimately deliver that external demand. The concern is timing: the speed of adoption may not match the speed of investment. By the time demand accelerates, some infrastructure risks becoming obsolete — implying that part of today’s capex could end up wasted. That is what investors will be watching closely in upcoming earnings: whether they stay invested, or cash out.

Returning to Nvidia, the stock also slipped after Microsoft unveiled its second-generation AI chip, which could reduce reliance on Nvidia’s hardware. That is negative for Nvidia, as hyperscalers such as Google, Meta and Amazon are pursuing similar strategies and together account for around half of Nvidia’s customer base. Nvidia, however, is not standing still. In the context of the CoreWeave deal, it announced to offer standalone CPU chips under the Vera brand, targeting a market long dominated by Intel and AMD.

Hence, things are not getting easier for Intel. After plunging 17% following earnings and a warning over manufacturing challenges, the stock fell another 5.7% yesterday on concerns that Nvidia is entering the CPU space. As per Nvidia, while this expansion could open a new revenue stream for Nvidia, competition will be fierce — and margin pressure is likely to follow.