Edition 32 | 2026 — Systemic Fragility Is Accumulative
✍️ by Amir Kabir | Founding Partner at Overlook VC
🧠 IN THIS ISSUE:
The Take: Systemic Fragility Is Accumulative
The Signal: Waterfall Liquidation in Gold & Silver
The Builder: Piris Labs || Unified Optical Infrastructure Fabric for AI Datacenters
🔥 1. The Take — Systemic Fragility Is Accumulative
We’ve long operated under the “Control-Alt-Delete” myth: the belief that when a system glitches, a reboot returns it to a baseline of zero.
But in the hyper-complex landscape of 2026, there is no zero. Modern infrastructure from global cloud clusters to just-in-time supply chains is governed by Hysteresis (yes, I am getting technical here :-)), a property where the state of a system is permanently altered by its history of stress.
The last 18 months have provided a very robust view in how small failures compound into systemic paralysis.
The following data points illustrate why modern systems don’t “reset” cleanly anymore:
The CrowdStrike “Manual Recovery” Trap: The July 2024 outage was a watershed moment for systemic fragility. A single malformed content file in a routine update crashed 8.5 million Windows machines.
The 2025 Tariff Tangle & Supply Chain Scars: As of early 2026, the 2025 tariff spikes (25% on imports from major partners like Mexico and Canada) have forced a tactical reshuffling of global trade.
The “Normalization of Deviance” in AI: A Dec 2025 report on “Normalization of Deviance in AI” highlights a dangerous trend: as agentic AI systems (AI that takes actions) become common, we are ignoring minor hallucinations.
None of these failures were catastrophic on their own. Fragility today is accumulative, not episodic.
The compounding nature of fragility means that business as usual is actually a state of slow-motion collapse.
📡 2. Signal Watch — This Week in Risk
The final week of January 2026 will be remembered for a “waterfall” liquidation in gold and silver that defied standard volatility models.
After a month-long parabolic growth fueled by dollar debasement fears and Middle East escalation, the market hit a structural wall.
Gold: Peaked near $5,600/oz before a violent 12% intraday correction to the $4,900 level.
Silver: Suffered its worst single-day percentage drop since 1980, collapsing over 30% from a high of $121/oz to a brief dip below $80/oz.
Risk Drivers: Why the Floor Fell Out
The collapse was not a change in long-term fundamentals, but a lethal combination of policy shifts and technical fragility:
The “Warsh Shock”: President Trump’s nomination of Kevin Warsh to lead the Federal Reserve served as the ultimate catalyst. Markets interpreted this as a pivot toward a stronger dollar and a more independent, inflation-fighting Fed, instantly crushing the “infinite debasement” trade.
The Paper-to-Physical Fracture: In Western markets (COMEX/LBMA), the sell-off was driven by a leverage unwind. With an estimated 377 paper claims per physical ounce, the cascade of margin calls and automated stop-losses created a liquidity vacuum.
CME Margin Hikes: To stabilize the plummet, the CME Group implemented emergency margin requirement increases, effectively forcing over-leveraged “longs” to liquidate their positions at any price.
Crucially, the collapse appears to be a Western financial event rather than a global loss of appetite for metal.
While New York futures plunged, the Shanghai Gold Exchange (SGE) maintained a massive premium. Physical silver in China continued to trade at nearly $20–$30 above Western spot, as industrial demand for AI hardware and solar infrastructure remains inelastic.
🚀 3. Founder Focus — Who’s Building in the New Risk Economy?
Each week, I’ll spotlight one company solving a “hard risk” problem.
This Week: Piris Labs
🚨 Problem: AI data centers are hitting a hard physical limit. GPUs are getting faster, but the plumbing between them, the electrical networking, can’t keep up. Data movement is the new bottleneck: too slow, too power-hungry, and increasingly the dominant cost in large-scale AI training and inference.
🔬 Solution: Piris Labs is building a unified optical fabric for AI data centers. By shifting data movement from electrons to photons, Piris targets massive gains in bandwidth, latency, and energy efficiency, enabling AI clusters to scale without melting power budgets or performance ceilings.
👨🔬 Team: ex-Meta, Cisco, X, Stanford, MIT, USC - founders with deep backgrounds in optical systems, networking, and AI infrastructure.
📈 Why it matters: AI progress is no longer gated by models—it’s gated by infrastructure physics. Whoever solves data movement at scale defines the next decade of AI economics. Optical fabrics aren’t a nice-to-have; they’re becoming foundational infrastructure. Piris is attacking the choke point where compute ambition meets physical reality.
🔭 Coming Next Week
Topic: Insurance Is the Canary for Macro Stress
We’ll explore:
What coverage withdrawals tell us about recessions and crises.
— Amir
Founder, Managing Partner – Overlook VC
Twitter: @AmirKabir99
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