Tariff Rebate Checks, Dead Pennies, and a $3,200 Missed Chance

Well, it’s been a wild ride this week in the metals markets. Gold has been all over the place in a highly volatile week but is currently up about $100 since last Friday’s close to check in at $4,115 an ounce, good for a 2.5% weekly advance.

Silver has seen even more wild swings. The white metal was white hot mid-week, having gained nearly $6 an ounce since last week’s close and pushing briefly back above the $54 level before retreating. Silver currently comes in $51.39, well off its highs from a couple of days ago but still good for a 5.8% gain since last Friday’s close.

Platinum is up a slight 0.5% on the week to trade at $1,563, while palladium is up 2.6% to come in at $1,435 as of this Friday late midday recording.

Well, there has been a lot of talk about tariff $2,000 rebate checks this week. If they materialize, you should consider using them to buy gold or silver.

It appears the Trump administration is serious about this proposal, although there are plenty of question marks. On Wednesday, White House press secretary Karoline Leavitt said the administration is “committed to making it happen.”

“We are currently exploring all legal options to get that done,” she said, reiterating that “the President made it clear that he wants to make it happen.”

The rebate would likely be subject to an income cap. Treasury Secretary Scott Bessent floated sending checks to families with incomes below $100,000 per year.

The rebate would likely require congressional approval.

The tariffs aren’t generating enough revenue to pay for the rebate. The Committee for a Responsible Federal Budget estimates that if the rebate is structured similarly to the pandemic stimulus, it would cost around $600 billion. That is close to double the projected annual tariff revenue. However, that doesn’t mean the government won’t send out the checks. It would be a politically popular move, and the federal government has shown no hesitation in borrowing more money when it wants to do something.

So, if the checks come through, what should you do with the money?

One thing is certain – you don’t want to hold onto those dollars for very long because they will lose purchasing power every day!

Of course, a lot of people will probably need it to cover bills and pay off debt. However, if you have the option of saving your windfall, you might want to consider putting it in gold or silver.

Just think about where you would be today if you had bought gold or silver with your COVID stimulus.

There were three rounds of pandemic stimulus totaling $3,200 for an individual. You got more if you had kids, but we’ll just stick with the simple number.

The average gold price in 2021 was $1,800 an ounce. At that gold price, you could have bought 1.7 ounces of gold with your stimulus money.

And how much would that 1.7 ounces of gold be worth today, with gold now at $4,115 per ounce? Well, it would be worth $6,995. That represents a 129% gain in just four years.

The average silver price in 2021 was $25 an ounce. At that price, your COVID stimulus money would have bought 128 ounces of silver. At today’s price of $51.39, your silver would be worth $6,578, a 106 percent gain.

Now you understand why I’m suggesting gold and silver might not be a bad way to invest your tariff rebate, should it come to pass.

Of course, gold and silver may not go up that much in the next four years, but odds are it will go up because inflation is rampant, and it appears the Federal Reserve is intent on cranking up the inflation machine.

Meanwhile, on Wednesday, the Philadelphia Mint produced the final five circulating pennies.

Now the Treasury stopped mass-producing pennies months ago after President Trump passed a death sentence, ordering an end to the venerable 1-cent piece earlier this year. However, an unspecified number of pennies were struck with an Omega symbol to signify that they are the last of their kind. The final five pennies produced in Philly were part of that batch, and they will be auctioned off next month.

Trump passed a death sentence on the penny in an announcement in February, citing the rising cost of manufacturing the 1-cent coin.

“For far too long, the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!”

Trump went on to say he is going to rip the waste out of the U.S. budget “even if it’s a penny at a time.”

According to the U.S. Mint, it actually costs 3.69 cents to mint and distribute one penny.

In 2024, the mint produced 3.2 billion pennies and lost about $85.3 million in the process.

So, what happened to the penny?

Well, one cent has become virtually irrelevant in today’s financial system. The greenback has devalued so much that the value of 1/100th of a dollar is approaching zero. It’s worth about as much as the lint in your pocket.

And how did this happen? Well, as stated earlier, it’s because the government is destroying your money.

Simply put, the government and its enablers at the Federal Reserve have printed the dollar into oblivion. The more dollars they create, the less each dollar is worth.

And they have printed a lot of dollars.

Since 2008, the Fed has created over $8 trillion through quantitative easing alone.

The results were predictable.

Based on the CPI, prices have increased by over 713 percent since 1970. And keep in mind that the CPI doesn’t even tell the entire story of inflation. The government revised the CPI formula back in the 1990s so that it understated the actual rise in prices. Based on the formula used in the 1970s, CPI is closer to double the official numbers.

On the other side of the coin (pun intended), production costs have gone up due to this same inflationary pressure. Put into perspective, it’s no wonder it costs so much more to produce a penny than it's worth.

The bottom line is, every time you pick up a penny, it’s a reminder of Uncle Sam’s monetary malfeasance. Instead of actually solving the problem (i.e., end the borrowing, spending, and money printing), your drunk uncle just shot the messenger and sent the penny to its grave.

This isn’t the first time the government has taken steps to obscure its monetary destruction.

In 1982, the mint removed most of the copper from the penny. Before that year, pennies were composed of 95 percent copper and 5 percent zinc (as an aside we actually sell these 95% copper pennies by the 34 pound bags here at Money Metals). Due to rising copper costs (a result of inflation), the mint changed the composition to 97.5 percent zinc with 2.5 percent copper plating.

The government devalued silver coins nearly two decades earlier.

Under the Coinage Act of 1965, signed by President Lyndon Johnson, the U.S. Treasury removed all the silver from dimes, quarters, and half-dollars. Instead, the government mints coins from “composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper.”

Today, you will sometimes hear coins minted before 1965 referred to as “junk silver."

In reality, we should call modern American coins junk.

The demise of the penny is another example of the same phenomenon.

When Johnson signed the Coinage Act, he insisted that removing silver would have no impact on the value of U.S. coinage.

“[The] Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin,” he said.

Just a few years later, President Richard Nixon made a similar claim when he cut the final tie to the gold standard. He said, “Let me lay to rest the bugaboo of what is called devaluation,” and promised, “Your dollar will be worth just as much as it is today.”

Both men were lying.

When you disconnect money from anything of tangible value, it is going to quickly depreciate. It’s as certain as death and taxes.

And that’s exactly what happened.

This currency debasement is ongoing. They killed the penny. What goes before the firing squad next? The nickel?

The way things are going, it's only a matter of time.

This is why you want to have real money – gold and silver. It will not be devalued by government action and can hold the value of your wealth over time.

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