The US & Iran Strikes | War Resumes & The Problem w/ GOLD.
Overall Thesis
US military strikes on Iranian positions in the Strait of Hormuz escalate regional tensions, reversing recent diplomatic signals and creating uncertainty for oil markets and equities.
Narratives
Kevin argues that renewed Iranian sea-mining activity and psychological warfare around the Strait of Hormuz will keep pressure on oil prices even without an actual ship being sunk. He notes crude was already up modestly heading into the strikes and expects continued nervousness in shipping to push oil higher.
Key Arguments
- Iran doesn't need to sink a ship — just being caught laying mines creates enough doubt to deter shippers
- Reduced shipping through the Strait of Hormuz (only ~5 ships/day) tightens supply flow
- Long-term pipeline alternatives (Saudi/UAE east-west lines, Iraq-Syria pipeline) will take 2-5 years to reduce Hormuz's criticality
Predictions (1)
Kevin notes Brent crude at roughly $90.50 was already up from the prior week's $85-$87.50 range, and ties further upside to the psychological effect of Iran's renewed sea-mining threats in the Strait of Hormuz. He frames the mining campaign as a deterrent that raises perceived risk for shippers, which supports oil prices.
Key Arguments
- Brent already climbed from ~$85-87.5 last week to ~$90.50 amid escalation
- Iran's sea-mine psychological warfare strategy discourages shippers even without direct attacks
- Only ~5 ships/day currently transiting Hormuz, signaling reduced flow and tightness
Predictions (1)
Kevin explains gold's failure to rally on the Iran news by arguing that Kevin Warsh's selection as a hawkish, anti-money-printing figure undermines gold's traditional debasement hedge narrative. He says he called a top in gold around the time Warsh was chosen and now sees gold as less effective as a hedge in the current environment.
Key Arguments
- Gold's core value proposition is hedging currency debasement from money printing
- Kevin Warsh's anti-printing stance and task force history reduces the debasement risk narrative
- Gold topped near the time Warsh was selected, supporting his weaker outlook
Predictions (1)
Kevin places his personal 'bull-bear scale' at 7.1 out of 10, indicating he is leaning long on stocks overall despite the Iran-related futures dip, while keeping dry powder in reserve. He says he continues to buy dips in stocks even amid the geopolitical uncertainty.
Key Arguments
- Bull-bear scale sits at 7.1/10, leaning long
- Continues buying the dip in stocks despite futures being down on the news
- Maintains dry powder rather than going all-in
Predictions (1)
Hedges & Caveats
- Conflicting reports on damage from Iranian missile strikes (US vs IRGC claims)
- Uncertainty about future escalation trajectory
- Oil price movements described as 'relatively stable' despite geopolitical risk
- Previous month of relative quiet suggests volatility could shift either direction