Week 6 CY26, wrapped: Lateweek chaos for EOS holders; silver panic; AI unto itself & first RBA hike

It’s been a week of macro catalysts this week, and it’s been a particularly crazy one – even by post-COVID standards. Silver crashed, then bounced back, fell again; the RBA hiked rates, we’re watching the US tech investment narrative cannibalise itself, the S&P500 turned negative YTD; Wall Street’s sentiment index fell back to “fear,” uranium was rattled … that isn’t even everything that happened.

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Let’s re-cap, though I’m only gonna focus on the big stuff.

To kick the week off, we were graced with a crash on gold and silver markets, when the price of both precious metals plummeted relative to where they had gone in Week 5.

That’s because Trump announced he’s looking at Kevin Warsh to head the Fed once Powell leaves, and Warsh is perceived as less of a MAGA crazy than some other potential candidates who were in the mix.

In turn, that rattled confidence in widespread belief that precious metals were the place to be, given that now there’s less concerns over a rapid American economic deterioration.

Explaining the thesis

The thinking goes that had Trump installed a preferred loyalist, that loyalist would have blindly cut interest rates despite inflation risks, and that America may have driven itself into a populist hole. That Warsh is so fondly looked on by Trump may still give some cause for concern.

So what else happened? Staying overseas, or at least not focused on Australia yet, the chaos in silver and gold markets waas matched by another popular investment option hitting record lows – we’re in another crypto winter.

Long story short, when silver and gold prices make silver-and-gold-exposed ETFs (cheaper than Bitcoin) just as volatile as the leading cryptocurrency asset, why bother going for the far more expensive and complicated BTC when you can just invest in the iShares silver ETF? (Which, last week, became more popular than NVIDIA and even the leading Wall Street index fund, SPY.)

I also wrote on Friday that the increasingly-popular realm of Prediction Markets are stealing young male investors with a risk appetite from crypto.

AI turns to cannibalism

There’s also something interesting we’re seeing on Wall Street right now when it comes to the tech and AI narrative trade broadly, and that was the release of a new ‘AI agent’ product from Claude.

Basically, a new AI product was released last week that allows law firms to greatly automate the work that junior paralegals may or may not (depending on the firm and law focus) typically perform.

That got a lot of headlines (PR stunt, anyone?), and a wave of fear kicked into the market when it comes to software stocks – things like Salesforce, and Australia’s Xero, were badly hit, as the market now becomes convinced that AI will change the world.

(Wasn’t it supposed to have done that already?)

Long story short, the intensity of fear in software stock exposure spread to the Mag7 itself, so in a way, the AI trade is shooting itself in the foot. Especially when it comes to Amazon who dropped 10% on the American Thursday session over fears related to AI spend.

Talk about a feedback loop.

Then there’s the RBA

And of course, bringing it back home, there’s the fact the RBA raised interest rates again this week.

We’re likely to get at least one more hike this year; the main culprit is electricity prices, now soaring up because the Federal government’s power bill rebates have worn off (as well as State rebates offered by some State governments.)

We are expected to believe, apparently, that the best minds in the RBA, as well as those in Canberra, never saw this coming. (I refuse to pretend they don’t talk to each other behind closed doors, because how naive can one get.)

So the question in my mind, then, becomes a very loud: Why Did We Cut Rates In The First Place?

It’s a good question, and nobody else appears to be asking it. Which I find strange, because Philip Lowe wasn’t re-selected to govern the RBA after he made a not entirely dissimilar bungle only a few years ago.

EOS mauled by short seller

When it comes to company specific news, there was one big item this week that came through only on Friday.

Defence darling Electro Optic plummeted 16% on Friday after short selling research entity Grizzly Research put out a report alleging EOS won’t make $80M from a contract it announced with an undisclosed Korean party last year.

According to Grizzly, they reckon they’ve figured out who that mystery Korean partner was; alleging the company’s a small agritech business that has no business doing business with EOS. WHo, in turn, are accused by Grizzly of (alleged) fraudulent activity.

EOS is in a trading halt; the company will respond to Grizzly next week. We’ll also be discussing it on the HotCopper Wire podcast, but you have to wait: we’re releasing that on Fridays right now. (Shoot me an e-mail if you hate that idea.)

All a bit curious, in a word, not only the RBA call and EOS, but generally the entire world right now.

Will Week 7 be a calmer week, perhaps? Somehow, I’d be surprised.

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