Should be used in substitution of the entire phrase, either in all caps as "GAHOY" or simply as an actual word "gahoy".
You're friend is doing something in extreme, maybe eating an entire pizza, or obsessing about a girl. Tell him to "gahoy."
You're friend is drunk and OOC, crossing the line with his or her behavior. As a friend you need to step in and assert, "Gahoy!"