# Precious Metals Crash and AI Valuation Risks

**Podcast:** Bloomberg Daybreak: Asia Edition
**Published:** 2026-02-02

## Transcript

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Welcome to the Daybreak Asia Podcast.
I'm Doug Christner.
We're keeping a close eye on the precious metals market.
This is after Silver Cratered in the Friday session in New York, where the spot price fell 26%.
Joining me now is Bloomberg Strategist Mark Cranfield, who is in our studio in Singapore.
Mark, thank you for being here.
Some analysts were tracing the sell-off that we had in the precious metals market to news on Kevin Walsh being selected as President Trump's nominee to lead the Fed.
He's been known as an inflation hawk.
So with that, and at least the history that he has, the dollar was able to strengthen quite a bit in New York Trading Friday.
We were up about nine tenths of one percent.
Was that the only factor here in the pullback in metals prices?
It's very unlikely that it is the only thing.
Probably the coincidental timing of the announcement on Friday probably helped to spook the market a bit more.
A big part of what was going on in silver and gold in the past couple of weeks is the massive build-up of retail positioning, both in the U.S.
and China especially.
So we've seen some extraordinary outperformance where the futures prices priced in China have been actually even further ahead than those priced in the U.S.
So you've seen very large volumes of retail participation there.
In the US markets, we've actually had reports that the silver ETF from at certain times the trading in there has by retail people has been more extreme than NVIDIA, which is normally their favorite equity stock.
So you can see that speculation was building up dramatically throughout January.
It was going to turn at some point.
But if you want to point the fingers in one particular direction, it's retail trading and the fact that they were very quick to try and book in the gains they'd seen from earlier in the month.
Do we have a sense of whether these were leveraged positions, levered long so that when you get a move that goes against your trade and it may be that you are forced to liquidate the position, is is that likely, do you think a part of the story?
Highly likely, uh especially in China.
It's very typical that Chinese investors have leverage when they're using futures contracts, whether it's for equities, for metals, for currencies, whatever they're trading, they love to use leverage.
And if you look at the the size of transactions was extraordinary, which again points to the fact that these were mostly enhanced by more than not just single buy and hold positions, these were leverage positions.
So I mentioned that Kevin Walsh has been selected as President Trump's nominee to lead the Fed.
We had a stronger dollar as a result of that move.
I mentioned earlier that he has been viewed in the past as an inflation hawk.
What do you think this nomination means for global bond markets?
The bond vigilantes are not going to give Kevin Walsh much of a honeymoon if he does become chairman of the Federal.
They're going to really test him on his inflation credentials.
So of course things may change if he gets the job.
But in the past, he's also said that he thinks that AI will help to reduce inflation costs across the board for American companies, which may well pan out.
Trying to achieve both looks pretty ambitious.
Also, there's question marks over whether the CPI data in the U.S.
is still really the quality that we used to get in terms of the data in the past.
So the bond vigilances are not going to give him much time.
They're gonna you can already see the yield curve was pushing higher on Friday.
And that's a an understandable response to the fact that you're gonna have a chair uh potentially a new chairman coming in who's gonna have to very quickly persuade markets that on the one hand he might think that interest rates can come a bit lower, and yet he can keep inflation under control.
Those two very hard to get them in sync unless you're going into recession, and there's no suggestion that the US is going to recession anytime soon.
I want to change gears and talk a little bit about artificial intelligence because we heard over the weekend from NVIDIA CEO Jensen Wong, he was saying that his company's proposed 100 billion dollar investment in open AI was never a commitment.
Although, to be fair, back in September, NVIDIA did sign a letter of intent, and the indication at that time was that the company planned to invest, planned, my emphasis here, to invest as much as a hundred billion in open AI, ostensibly to support new data center construction and the build out of other AI infrastructure.
Friday, though, the Wall Street Journal said this plan had stalled, and I think that Huang over the weekend in Taipei was asked about this report.
The journal went on to say that Huang privately emphasized that that $100 billion dollar agreement was non-binding.
Do we have a sense here of of what's happening?
It seems like Wong may have been doing a bit of damage control over the weekend.
I think one thing you need to to help us understand this situation is the whole market cap pricing of open AI and the backbone it has provided to all the hype about AI pricing within the market.
So if you trace, particularly over the past year, every time OpenAI does a fundraising, its implied market cap goes higher and higher each time.
It adds fuel to the speculation across the AI sector.
So as of going in towards the end of last year, OpenAI was thought to have a market cap above 800 billion US dollars.
People are speculating they're going to bring an IPO.
In fact, there was a report last week that the IPO is probably for the fourth quarter of this year.
Maybe they're going to be the first trillion dollar company for an IPO in the United States.
However, if major investors such as NVIDIA are questioning whether they want to be involved in all these fundraisings, suddenly that continuous upward path of the market cap of AI, open AI is under question.
If that stalls, the whole AI space is under threat because people need to see a continuing step up in the valuation to keep on investing in the outlook for open AI for AI in general.
So really it's the crux of the whole AI bubble.
If open AI suddenly the valuation peaks, that's bad news across the sector.
And it affects everybody who's been speculating on the AI bubble.
Well, it's interesting because over the weekend we learned that Oracle is planning to raise between 45 billion and 50 billion US dollars this year to build additional capacity for the company's cloud infrastructure.
When you get news like that, doesn't that help engender a little bit more optimism or some level of enthusiasm?
Or do you think right now uh it's a little dangerous to conclude that combined with what Jensen Huang is saying, some investors will look at that and say, wow, that's looking like a peak in the investment cycle to me, and maybe it's time for me to step aside.
Um still a chance that some other investors will be more optimistic.
But if you look at the performance of NASDAQ futures, for example, they have not been making new highs in the way that you would expect.
If people were so optimistic, how comes NASDAQ futures are not taking making record highs in the way that the SP index has, for example.
Just look at last week the diversion between Meta and Microsoft.
MetaShares popped up, Microsoft collapsed.
So it's not a uniform response to what you're seeing in earnings and the outlook.
And that is completely different to what we were seeing, say six, twelve months ago, when everything was good news in the tech space.
So we've got earnings in the week ahead from Alphabet and Amazon, obviously two players in the cloud space, and I think the market's going to be very attentive to any suggestion that CapEx is perhaps a little bit off track.
Um is that the focal point that we need to kind of remain uh fixated on, CapEx?
It it's about investors are gonna be looking for you've been spending a lot of money already.
You plan to spend more money.
Where's the return in relation to the amount of money you're putting into these data centers and other aspects of your business?
There comes a point when you can you can tell investors for several months that yes, we promise these things in the future.
Eventually the future arrives.
And Nvidia may have just told us now's the time to start calculating whether we've really gonna get the payback on these investments or not.
It's gonna be a much tougher week.
Alphabet and Amazon would have to be pitch perfect to satisfy investors this week.
Any question marks, and you could see quite a big reversal in the market.
Mark, before I let you go, I have to ask about Bitcoin.
We saw the price in uh weekend trading here in the States break below 77,000.
We're trading at around that level now in the overnight session.
Can you help me understand what's going on here with the crypto space a little bit?
Well, crypto, the the biggest threat to cryptos really was the the rise of precious metals when we had the the rallies in gold, silver, platinum when they started to build up.
That was a serious threat because part of the attraction of cryptos was that they were an alternative to other major currencies, and they were possibly potentially a safe haven if there was going to be a blow-up in other markets.
Well, precious metals do a much better job.
They attracted a lot more money, so people were gradually removing the from the crypto space anyway.
So crypto is has gone into the into a back seat situation here.
It's possibly on a decline that which will continue.
Unless gold and silver go back to the kind of levels they were a year ago.
The the forward-looking space for crypto is not as exciting as it has been in the past.
Mark, it's always a pleasure.
Thanks so much.
Uh Bloomberg strategist Mark Cranfield joining us from Singapore here on the Daybreak Asia Podcast.
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Developer Honglung Properties says the real estate markets in both Hong Kong and on the Chinese mainland do remain under strain.
We had the chance to catch up with the company's chairman Adril Chan.
Adriel spoke with Bloomberg TV host David Inglis and Yvonne Mann after Hanglung released its latest results.
Definitely if you look at our retail sales numbers, uh they've been coming back.
Second half last year was strong.
Uh fourth quarter was especially strong.
Uh we broke records in terms of occupancy, foot traffic, and uh retail sales.
So it does feel like it's coming back.
Um Hong Kong a little bit weaker.
Uh we're still finding the bottom there.
Uh I think we've found it, uh, but the we'll have we'll have to see how the retail numbers come out uh these next couple of months.
Uh so overall, uh mainland China definitely giving us cause for some hope.
Yeah.
Uh that being said, I think the numbers are strong, but we're still a little bit careful uh on the outward uh outlook.
What assumptions are you making on mainland retail uh leasing specifically, along the luxury space, of course.
You mentioned that's a bright spot for you guys.
So for January so far has been uh a little bit uh down, basically flat from last January.
Okay.
The bright spot is that January last year was Chinese New Year.
Uh this year Chinese New Year is in February.
So uh we're hoping that that means uh good retail sales uh uplift, uh, and we think that it's tracking.
It looks like you're you're being quite active in expanding your your China retail using portfolio, right?
Cities like Shanghai, Hangzhou, Wuxi.
How do you compete with some of these domestic big names and big developers and landlords like China Resources Land, for example, in this market?
So the way I describe ourselves is we're a small small and beautiful.
Um you know, so we have to do things in in a slightly different way.
Uh definitely we don't have the scale.
Um, everything from finance costs um and uh access to capital is different.
Uh so we have to really try to stand out in terms of doing things uh as high quality, as niche uh and as um as high end as possible.
And that's what we continue to do.
Um what we've announced recently is our V3, which is uh starting uh on asset light uh path, and this is definitely gonna make better use of our capital, especially when that's constrained.
Uh we're working on reducing our gearing.
Uh and the question is how do you expand while reducing your gearing?
And that's uh basically with asset light.
So that's what we've been doing, and only in the cities where we have the strongest presence and the best performance already.
Uh so that's where we're working to expand.
How does that so what does it mean as far as the business model is concerned?
So you mentioned asset light.
So try and explain that to uh to a five-year-old, for example.
Yeah, so if if I go back, um our our last version, version two, was really asset-heavy, where we'd buy a plot of land, we'd develop it, and then we'd lease it.
Um so this is really where we're leasing the plot of land or leasing an existing mall uh and operating it.
So uh if you look at China retail uh real estate prices, yeah, you know, they feel like they've uh topped out.
Um it's it's hard to see a lot of upside in the near to medium term.
Uh and therefore it's you know, so we used to want to capture that capital upside, yeah.
Uh and now we're more about capturing capturing the operational upside.
Uh so increasing our operational exposure uh without uh having too much capital exposure.
You mentioned Hong Kong's recovery might be a bit not I mean, maybe not as solid right now as as mainland and what you're seeing.
Um at what point are you gonna start looking at maybe opportunities then?
I mean, are you looking to sell more properties or even acquire any new projects in Hong Kong this year?
So in Hong Kong, we've really been uh working hard to sell.
Uh last year we actually sold a lot, we contracted a lot of sales, but we're not gonna recognize a lot of it until this year.
Uh so last year was actually a good year for sales, um, but uh that'll be recognized this year.
Uh we're looking to sell down uh more.
We still have some properties for sale, mostly on the high end, but we have some uh remaining in aperture.
Uh so that's that's what we're looking to do.
Obviously, if good opportunities come by, I think we're happy to buy as well.
Uh we've we do feel like the markets have uh bottomed, or at least uh we found the bottom on this round.
What do you think is driving this recovery?
So in in Hong Kong, yeah.
Yeah, in Hong Kong, there's a lot of mainland uh uh new Hong Kong uh people coming in.
The talent scheme has definitely brought in and brought up uh rental levels, and as these people have rented now for a couple of years, they may be looking to buy.
Uh these tend to be slightly higher end buyers, so I am look more bullish on the top end of the market uh than I am on the mass.
Um I think the mass uh has seen sort of a structural re-rating over the past couple of years.
Uh it'll be some time before that comes back.
Whereas I think the high end is definitely more cyclical and therefore more resilient for us.
I mean, it's really been noticeable uh the the pickup in tourist flow visitor flow, let's just call it uh tourists and businesses, and we've had a lot of mega events.
We're moving into March where traditionally it's like a mega event month, right?
You have everything from art basel all the way to the seventh.
Tangibly is that starting to show up as far as you talked about foot traffic, but what about leases and retail sales, for example?
Is that starting to pick up too?
We're we're really happy that foot traffic is picked up.
Um we're not as happy uh at the retail sales.
They haven't picked up the say at the same pace that uh traffic has.
Okay.
It's oh it's usually lagging, uh a lagging indicator, but um we're gonna have to work harder to transmit those uh foot traffic into sales.
Uh and you know, right now I the the appeal of Shenzhen is still strong.
Uh Hong Kong people, even though it sounds like they're going up a little bit less, um, it's still difficult to compete on price.
Um we're still able to maintain your occupancy rate uh during these turbulent times, right?
Ninety percent offices, yeah.
Yeah, uh of your office portfolio, despite the headwinds, but revenue was still kind of edging lower.
I mean, because of falling rents uh, uh of course.
Do you think that that's the next place to follow in terms of this recovery?
I mean, now that we've seen, at least when it comes to the housing market is is recovering, that maybe rental is gonna be the next thing to watch.
I would really like for office rents to rise this year.
Uh that's what's that.
And I like how you started that answer already.
That was really what dragged our um numbers last year because offices have been tough both in Hong Kong and in the mainland.
Um it actually took away some of the gains that we made in uh retail.
So retail's done well, uh, offices not so much.
I don't see the end in sight for offices just yet.
Um of course here in Hong Kong we're talking about the IPOs um and the financial services industries uh helping with that occupancy, but there's still a lot of occupancy, especially here in central.
Uh and so I think occupancy has to come up before prices are gonna come up, and I don't yet see uh the end to that.
And the strategy to maintain the sort of 90% occupancy rate, is that do you think that's gonna be down to price?
Supply seems to be an issue, I think is what you're mentioning too.
Yeah, so I think there's still gonna be a little bit of price pressure because occupancies haven't fully uh caught up yet.
Uh, in the mainland of of China, it's also tough.
Um uh offices, I think it's you know, I've had this discussion with a lot of my friends and peers.
Uh, is it cyclical or is it structural?
Right.
And when you're having that discussion, it's not a good discussion to have.
That means that things are bad.
Um, and so I don't yet see the end uh for office rentals in China yet.
What is the answer to that though?
Yeah.
Is it cyclical or more structural?
Yes.
My answer is actually that it's more cyclical.
Um, and I think that if the con economy comes back, when it comes back, uh office rents will come back.
Um, you know, there's still that dynamism, uh, and if they can reignite that, uh, then I think that offices can uh come back, uh, at least at the high end of the market.
That is Honglong property chairman Adriel Chan speaking to Bloomberg TV host David Inglace and Yvonne Mann here on the Daybreak Asia podcast.
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