What Every Oil Crisis Has Done to Gold (and Why This One Could Be Bigger)

Happy Tuesday, GoldBuzzers!

If you slept through Monday's markets, I'm jealous. Gold swung nearly $70 in a single session, oil briefly cracked $119 before crashing back to $85, and President Trump declared the Iran war "very complete, pretty much" - which is doing a lot of heavy lifting as a phrase. There's a lot to unpack today.

Ok. Let’s get to it. ⬇️

It was a wild session on Monday. Gold opened lower at $5,095 after Friday's $5,158 close, dipped as low as $5,080, then clawed back to around $5,140 by late afternoon. The overnight oil spike (WTI briefly touched $119 before crashing to close at $85) had everyone's head spinning, and precious metals got caught in the crossfire. The logic is ugly but straightforward: oil above $100 means inflation isn't going anywhere, which means the Fed stays hawkish, which means higher yields and a stronger dollar - none of that is friendly to gold in the short term.

President Trump told CBS the war with Iran was "very complete, pretty much," and that precipitated the oil price drop, but with the Strait of Hormuz still effectively closed and Iraqi/Kuwaiti output slashed, nobody's betting on cheap energy anytime soon.

G7 energy ministers meet today to talk strategic reserve releases, and then we've got February CPI on Wednesday and PCE on Friday - two reports that won't even reflect the current oil shock, which makes them almost quaint. The gold/silver ratio sitting at 61 tells you silver remains cheap relative to gold historically, but until the energy picture settles, industrial demand worries are going to keep a lid on the white metal.

On Monday, Oil briefly cracked $100 a barrel for the first time since 2022. The Strait of Hormuz - where roughly 20% of the world's crude passes through every day - is still a global flashpoint. West Texas crude spiked to $119 before crashing 28% off its Monday high, and G7 finance ministers held an emergency call to discuss tapping strategic petroleum reserves.

If you own gold and silver, you already know this kind of environment is exactly why you own them.

But if you've been watching from the sidelines - or you're not sure what to do with what you've got - let's talk about it.

Since U.S.-Israeli strikes hit Iran on February 28, including the killing of Supreme Leader Khamenei, the region has been on fire - literally and figuratively. Iran retaliated with missiles and drones across Gulf states, and the IRGC declared the Strait of Hormuz closed to Western-allied shipping. Tanker traffic dropped roughly 80% almost overnight. Over 150 ships sat anchored outside the strait, waiting.

Gold is down from its January all-time high near $5,589, but still up over $2,200 from a year ago. Silver is still consolidating after its wild ride from $116 in late January to $71 by early February - a gut-punch 40% drop in barely a week.

Both metals are in what I'd call a coiled spring phase. The next big move is coming - the only variable is whether you're positioned for it.

Every major oil shock in the last 50 years has followed the same two-phase playbook for gold:

Phase 1: The shakeout. Oil spikes, panic hits, and investors sell everything - including gold - to cover margin calls or raise cash. Gold dips. It feels wrong. People question the "safe haven" label.

Phase 2: The surge. Oil-driven inflation takes hold, currencies weaken, and capital floods into hard assets. Gold doesn't just recover - it rips higher.

In 1973, the Arab oil embargo sent crude from $3 to $12. Gold initially dropped from $123 to $97, then nearly doubled to $187 within a year. In 1979, Iran's revolution pushed oil from $14 to $40. Gold sold off briefly, then exploded nearly 300% to $850 by 1980. In 2007-08, crude hit $147. Gold dipped during the initial financial crisis liquidity crunch, then rallied over 170% to $1,900 by 2011.

We already saw Phase 1 play out in February. Gold pulled back hard. Silver got absolutely hammered. That's the shakeout. If the pattern holds - and it has held for 50 years - Phase 2 is what comes next.

A few things make 2026 different from past oil shocks.

Central banks are already all-in on gold. They bought 230 tonnes in Q4 2025 alone, and the World Gold Council projects 750-900 tonnes of buying this year. That kind of persistent bid under the market didn't exist in 1979 or 2008.

Gold ETFs have absorbed over 700 tonnes in inflows this year - and there's still room to grow compared to prior bull cycle peaks.

And the geopolitical risks aren't isolated. You've got Iran, Russia-Ukraine still simmering, U.S. tariff escalation with China and the EU, and now an energy crisis piled on top of all of it. Every one of those feeds into the others.

JP Morgan has a year-end target of $6,300 for gold, and that was before oil broke triple digits.

This is Take Action Tuesday, so here's what I'd be thinking about.

When Insider launches later this month, you'll be able to get specific timing guidance on gold and silver plus detailed coverage of over 240 miners. But in the meantime, here's what I'd be doing right now:

Review your allocation. If precious metals are less than 10-20% of your portfolio, this is a good time to fix that. Gold for stability, silver for leverage on the upside.

Watch for the dip entry. If you’re still waiting to buy the dip, set realistic goals. If you get a 5-8% pullback from current levels - gold below $4,800, silver back toward $78 - that would be a solid entry if you've been waiting. Set alerts now but decide what you’ll do if they’re not met.

Don't ignore the miners. GDX and GDXJ have been lagging metal prices, which means they've got catch-up potential and are currently 10-15% off their recent highs. When gold moves, miners tend to move more - in both directions. Higher reward, higher risk.

Pick your vehicle. Physical bullion or allocated storage if you want to hold it. ETFs like PHYS or PSLV for ease. Mining ETFs for bigger swings. Just make sure you know what you're buying and why.

Set a stop-loss. In this kind of volatility, protect yourself. A 10% trailing stop below your entry gives you room to ride the move without getting wiped on a sudden reversal.

One more thing: if oil regains $100 and stays above it for any sustained period, the inflation that follows has historically been rocket fuel for gold. That's not a prediction - it's just what happened every other time.

The shakeout already happened. Don't miss what comes after it.

That’s all for this Tuesday, folks. See you on Thursday.

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Rick Adams
Founder, GoldBuzz
rick@goldbuzz.com