Gold Outlook Shifts on Hormuz Whiplash

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Strait of Hormuz reopens… then recloses

Bullion.Directory precious metals analysis 20 April, 2026
By Peter Reagan
Financial Market Strategist at Birch Gold Group

Last Friday, we were told it was “back to normal” and Iran was re-opening the Strait.

Saturday, Reuters tells us 20 ships made it through the Strait (the most since March 1. One of them, however, was an Iranian-flagged cargo ship, which was fired on and seized by the U.S. Navy as part of their blockade duties. And Iran announced the Strait was closed once again.

At the moment, we’re back to a full stop.

It’s hard to overstate just how big a deal this is for the global economy. The Strait of Hormuz is basically the street that leads to the gas station for the entire Middle East. During normal times, 130 ships a day (tankers for oil, natural gas and other industrial gases, container ships and bulk cargo carriers) cross the Strait in both directions.

Recently, though?

Chart via Bloomberg’s Hormuz Tracker; edited to indicate onset of hostilities and temporary reopening.

Note the chart above is only showing half the traffic (it’s jammed in both directions).

Every nation in Asia that isn’t energy independent – notably China, India, Japan and South Korea are the destinations for 69% of these crude shipments – are facing real struggles. Over two weeks, ago, Japan announced that the blockade was not yet “survival-threatening.” (I hope that’s still the case.)

Western Europe first declared they “had maybe six weeks of jet fuel left,” then denied there was an issue (while quietly preparing to share remaining stocks across the Euro Zone).

The UN’s World Food Program warned that “millions will go hungry” due to higher fertilizer and fuel prices.

My friends, this is a big deal. That’s why we keep talking about it! In my lifetime, the Strait of Hormuz has never been fully closed. Even during the peak of the “Tanker War” 1984-88 when Iraq attacked Iranian oil facilities and Iraq retaliated by shooting at everybody, the Strait of Hormuz didn’t fully close. Despite 400 separate attacks on shipping, the Strait stayed open.

Just a few years ago, in 2019, a handful of oil tankers ran into mines or otherwise exploded in the Strait. Iran seized the British-flagged tanker Stena Impero. This was a big deal, too! In the past, wars have broken out over one nation’s interference with another’s freedom to navigate the oceans. After sinking the Lusitania, Germany’s insistence on unrestricted submarine warfare brought the U.S. into World War I.

Now, I’m not saying this is like that. I just think it’s important for you to understand just how severe the crisis is right now.

We don’t know when the largest energy crisis since the 1973 OPEC oil embargo will ultimately resolve, and the situation is rapidly changing.

The global energy market is strained due to this blockade (and subsequent lack of supply, and rerouting those ships not stuck behind the blockade). Obviously, that raises prices.

Briefly, for a few hours over the weekend, prices fell on the hope of an end to the blockade. That turned out to be a mistake… Because the conditions that caused the issue haven’t changed. Tensions in the region remain. Maybe both the U.S. and Iran are eager to stop fighting, I don’t know. What I do know is, unless the fighting ends and the conditions change, there will be no end to this situation.

Global supply chains are fragile. (Even more fragile while Iran is holding a knife to the neck of the global economy and isn’t afraid to use it.)

The big idea I want you to take home is: Until conditions change, the risk isn’t gone. Prices will absolutely move in the meantime. Ignore them. Watch the conditions.

Because prices move very quickly… whether or not the underlying conditions change. Ignore the noise.

Gold and oil diverge – what does that tell us?

When oil spiked, it briefly took center stage. That’s normal. In moments of disruption, markets tend to focus first on the most immediate supply shock – before turning to the broader consequences.

Now that oil has settled, gold is finding its footing again.

A weaker U.S. dollar has helped, as noted across multiple analyst reports, but the more important shift is structural: expectations for rate cuts are creeping back in.

Lower rates tend to reduce the appeal of holding cash. And when that happens, tangible assets like physical gold often become more attractive by comparison.

But here’s where I’d push back on a common assumption.

It’s easy to say, “Oil down, gold up.” Clean, simple, intuitive….

Reality isn’t that neat.

Gold doesn’t just respond to commodities. It responds to confidence – in currencies, in monetary policy, in the growth of the economy itself.

And right now, that confidence looks… tentative.

Rate cut expectations return – and so does the bigger question

Several analysts cited by Reuters and Bloomberg have pointed to renewed expectations for Federal Reserve rate cuts, especially as energy-driven inflation fears ease.

First, let me just say they spoke a little too soon… The end of the blockade lasted for less than a day. “Energy-driven inflation fears” still abound.

But let’s say that, tonight, a final comprehensive cease-fire is signed. Everyone’s friends again. The Strait of Hormuz is once again seeing up to 150 ships transit hassle-free every day. Then, the Fed can lower interest rates.

Well, there admittedly are benefits for American families:

• Lower borrowing costs
• Easier financial conditions
• More accessible debt for cash-strapped households
• Higher inflation

But step back for a moment. Why are these rate cuts needed in the first place?

Historically, the Fed doesn’t lower interest rates when the economy is strong and stable. Rate cuts are on the table when the economy is weak and erratic. When unemployment is high, or when something (usually the financial sector) needs support.

And what are the costs of lower interest rates?

• Higher borrowing costs
• Tighter financial conditions
• Less accessible debt for cash-strapped households
• Lower inflation

That’s the tension here.

Investors are cheering the idea of rate cuts. Cheaper debt means more borrowing means greater leverage means line goes up even faster than before. (Yes, that’s really the logic.) Even the most cash-strapped business can get massive loans when banks are competing to hand out money!

But those same cuts signal underlying economic weakness – slowing growth, rising debt burdens or stress across the financial sector.

If you’ve been paying attention to the economy for the last 20 years, there’s one lesson I really hope you’ve learned by now:

The lower-interest-rates party (no matter how long it lasts) is always followed by a hangover.

The longer the party goes on, the worse the headache that follows. (For a more in-depth discussion of this idea, see the exclusive Birch Gold article Ron Paul Explains Malinvestments, Inflation and Crashes.)

And this brings us back to gold.

One of the things I love about gold as a financial asset? The price of gold doesn’t require a panicked headline to move higher. No, gold responds to the realization that the economy is in such bad shape it needs ongoing financial “life support” to function.

Silver’s “rangebound” future – bigger than it sounds

Bloomberg’s Mike McGlone suggests silver could be stuck in a $50–$100 range for an extended period, specifically, “for years.”

At first, that sounds… underwhelming.

“Rangebound” is finance jargon for “stuck, moving back and forth within the specified range.” Assets in such a state are sometimes said to be trading “sideways,” neither up nor down. Directionless.

But in McGlone’s statement (as in all things), context matters.

Specifically, $50-$100 constitutes a doubling range.

And historically, silver has often lagged before making sharp, catch-up moves relative to gold. The gold-to-silver ratio remains elevated by long-term standards. I believe that suggests silver hasn’t fully reflected the same forces driving gold higher. Not yet.

In other words, “rangebound” doesn’t necessarily mean stagnant. It can mean coiling for a sharp, fast move upward. Exactly like we saw between November and January…

Wells Fargo’s $8,000 gold case – and the assumption behind it

Wells Fargo recently outlined a path to $8,000 gold, largely tied to prolonged currency debasement cycles.

Their framework is interesting: Currency devaluation cycles tend to last around 8-9 years, and we may only be a few years into the current one.

That’s a reasonable historical observation.

But here’s the assumption worth questioning: That these cycles end in a clean, predictable way.

In past cycles, governments eventually tightened monetary policy, stabilized currencies at new lower lows and restored some degree of balance.

Today, the backdrop looks different. Consider: Global government debt continues to expand at a pace that would have been unimaginable even a decade ago. There’s little political appetite to meaningfully reverse that trend. We’ve already seen near-crises in developed nations (UK, France and Japan) over lack of government debt demand.

So the real question isn’t whether gold reaches $8,000. I have no doubt in my mind that it will. (It might take one more year of spectacular price action… it might take less than a decade of gold’s average 8% a year growth… or nations could get their fiscal houses in order, reduce debt and we might not see $8,000 gold until my grandchildren are thinking about their IRAs. It will happen, I’m confident, although I’m not sure I personally will be around to see it.)

Forecasts aren’t as important as conditions. What matters is whether the forces driving that Wells Fargo forecast – persistent currency weakness, rising government debt, ongoing monetary policy interventions – are temporary… or not.

A final thought

I’ve always believed that the most important financial decisions aren’t made in moments of panic.

They’re made in moments like this one.

When things seem stable… But you can feel in your gut that something isn’t quite right. An issue hasn’t quite been resolved. When the cheerleading you overhear on financial news channels sounds just a bit too shrill…

That’s where diversification is a wise decision. Not as a reaction to crisis, but as an antidote for uncertainty. (And preparation for the next crisis. Because we all know there’s going to be another one.)

If you’d like to better understand how physical precious metals can help with that kind of preparation, it may be worth taking a closer look now – before the apparently quiet times get loud again.

This article was originally published here

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