War. Inflation. Instability. Why Isn’t Gold Going Through the Roof? Gold is off roughly 1.5% this morning. The direct cause: Trump announced “Project Freedom” over the weekend, a US military-backed operation to guide stranded civilian ships through the Strait of Hormuz. Two US-flagged commercial vessels transited the strait this morning under US escort. The market read that as progress and sold. Meanwhile, Iran’s navy fired warning shots near US destroyers operating in the strait, threatened to attack any US military force that enters the waterway, and drone-struck an ADNOC tanker belonging to Abu Dhabi’s state oil company. The ceasefire expires Tuesday. The strait is not open. The oil market is saying the same thing. Brent is up 3.8% today to $112 — traders are not reading Project Freedom as a resolution. Goldman Sachs estimates the closure has removed 14.5 million barrels per day from global supply. Two ships getting through does not reopen a strait. The market is pricing in a resolution that Iran’s own deputy parliament speaker said publicly will never happen on prewar terms. This pattern has played out multiple times since February 28. Every diplomatic signal that has moved gold lower has reversed within 48 hours.

The deeper issue: even if talks succeed and the strait reopens tomorrow, ten weeks of supply disruption to 27% of global seaborne oil trade have already embedded themselves into the cost structure of manufacturing, food, and transportation. The ISM prices paid sub-index hit 84.6 in April — its highest since 2022 and the biggest three-month surge on record. Fertilizer prices have doubled since February. Gas is up 61% since December. A diplomatic handshake does not unwind those inputs. The inflation already baked into this economy does not reverse on a ceasefire announcement. Gold sold off on a rumor. The structural case hasn’t moved.

On The Radar

The Fed Changed One Word. It Means More Than It Looks.

For months the Fed described inflation as “somewhat elevated.” The April 29 FOMC statement dropped “somewhat.” Inflation now simply “is elevated.” The Fed also noted for the first time that Middle East energy costs are a specific driver. That language shift confirms what the ISM data showed last week: the Fed sees the same stagflation setup the market is trying to trade around. A central bank that cannot hike into a weakening labor market and cannot cut into 84.6 prices paid is the ideal environment for a non-yielding hard asset.

WHAT THE SOUND MONEY COMMUNITY IS SAYING

The Kobeissi Letter posted this weekend: “It’s official: The world is now experiencing its biggest energy crisis in history with 600 million barrels of lost oil supply. US gas prices are up +47% since December and inflation is nearing 4% in a similar path to the 1970s.” The post drew 1.5 million engagements. The framing — 1970s path, not aberration — is the one the sound money community keeps returning to.

Egon von Greyerz published over the weekend that sovereign defaults in the next phase will not look like formal bankruptcy — they will come through currency debasement, as governments expand debt and rely on central banks to finance deficits until money printing becomes the only exit. His framing: the question is not whether gold matters in that scenario, but whether your allocation reflects the probability you assign to it.

Pensiamento Peligroso

Credit GoldSilver.com