February 2025 – Week 2 Edition
Gold is Running “Fast Forward” near Warp Speed
Maybe 2025 is on “Fast Forward,” thanks to President Donald J. Trump’s rapid and radical actions to cut government spending and urge most other nations to “play fair” in their tariffs and trade practices.
Maybe, that’s why gold has set a series of new record highs in the past few days. This week, gold set another record high above $2,900 on Monday, February 10th, including a peak price of $2,947 on the futures market. The market is already closing in on our minimum gold high-price prediction of $3,000 per ounce – and $3,300 if the dollar falls 10% or more this year. We were not alone in the $3,000 target but I haven’t seen many mention the potential of a weaker dollar and $3,300 gold. In fact, I now think it’s possible gold could reach $3,500 an ounce in 2025, which is why I urge everyone to speak with our professional account representatives to learn more about why you should buy gold now before it goes even higher.
Part of the increase is due to President Trump’s series of tariff threats, which could help revive inflation. He makes new announcements almost every day. His latest promise was to raise steel and aluminum tariffs on almost every nation that has higher tariffs than America – which is many.
These threats boosted gold to over $2,900 on Monday, both as a “safe haven” investment and an inflation hedge. One of the many indications of higher inflation expectations is the widely watched University of Michigan Consumer Sentiment Index for February, which showed an increase in year-ahead inflation expectations of 4.3%, well above the previous 3.3% expectation.
This week, the Consumer Price Index (CPI) will be released early Wednesday morning, February 12th, and the Producer Price Index (PPI) will be released the next morning at 8:30 am (Eastern).
In other news, The World Gold Council just published their full-year totals for central bank gold buying, reporting that central banks in 2024, for the third year in a row, bought over 1,000 metric tons of gold and that’s only the buying through official channels. There are still some clear indications that China is buying far more gold than they are reporting to global authorities.
So “fasten your seat belt” and enjoy this first “fast forward” year of President Donald Trump, in a race to fulfill many of his major campaign promises before the 2026 mid-term elections.
Not All Pennies Are “from Heaven” –
America Has Discontinued Small Coins Several Times Before
Almost 90 years ago, America enjoyed a popular song, “Pennies from Heaven,” and Steve Martin made a Depression-era spoof about the song but back in 1936, a penny carried value. The Federal Reserve had cut the money supply in the early 1930s and we were in the midst of deflation. Measured by the Consumer Price Index, prices have risen 23-fold since then, so a penny in 1936 was worth close to what a quarter is worth today – $0.23, a desirable coin for many purchases.
One of President Trump’s first cost-cutting moves – as I have urged here and have written or spoken about repeatedly – was to work toward the end of penny production. This should not be controversial but it will take Congressional action to make it permanent. The president can only pause production, so any long-term change means legislation. It would not be the first time a small U.S. coin was cut from circulation. The last time we discontinued coins, they were top-tier coins – the removal of circulating gold coins in 1933 – but America removed smaller coins several times in the 1800s:
- Half-cent coppers were produced for 64 years from 1793 to 1857, before becoming obsolete.
- Two-cent copper coins were produced for nine years from 1864 to 1873. They were the first circulating U.S. coins to bear the motto, “IN GOD WE TRUST”
- Three cent coins, some made of silver, later nickel, were produced 38 years from 1851-89.
- The 20-cent silver coin was only made from 1875 to 1878.
Of course, we really don’t make “pennies,” as such. The official Lincoln Penny’s name is a cent coin. The current size of the one-cent coin we have today was first struck in 1856 and Abraham Lincoln has appeared on the front of U.S. cents since 1909, the centennial year of his birth.
So, the “Lincoln “penny” one-cent coin has run for 106 years so far, longer than any of the discontinued coins listed above. Major countries around the world have cut their equivalent of the “penny” from their arsenal, so it should be no problem for the U.S. As I have argued in the past, cash transactions are shrinking in volume and customers in many other nations have had no problem rounding up or down to the nearest 5- or 10-cent level, depending on the nation.
Many have assumed the penny is made of copper, however, since 1982, the one-cent denomination has had a “copper suntan” composed of a 2.5% plating of copper. The other 97.5% is comprised of zinc, a metal rising in price to the point that the cost of making our penny has now grown to over four cents apiece.
Do Pennies Make Sense? The elimination of the one-cent coin would save taxpayers $1 billion per decade. There is bipartisan support for the removal of the penny, which should make it a “no-brainer” for cost-cutting programs under the Trump campaign.
Gold is now up 10-fold in the new century, rising from $290 on the eve of Y2K to $2,900+ on February 10, 2025. If gold rose 10-fold every 25 years this century, it would reach $29,000 per ounce in 2050 and $2.9 million per ounce in 2100. Gold is also well on its way to doubling since the start of the 2020s, up 92% so far. The silver benchmarks are also notable, rising six-fold (over 500%) since Y2K and +80% since the start of the 2020s. Gold leads the S&P 500 by three-fold this year (+10.6% vs. 3.15%) and gold leads major stock indexes about three-fold since Y2k (900% vs 300%)