Bitcoin and the golden touch; Tariffs mean never having to say you’re sorry

Tariffs topped the week's agenda, but if it's clarity you're looking for — my apologies. 

Which isn't to say there aren't some certainties: Canada and Mexico were hit with new 25% tariffs on Monday — but by Wednesday the Big Three automakers got exemption until April 2 (more on that date below) after speaking to President Trump. On Thursday Trump said Mexico and Canada would get an exemption for products compliant with USMCA — the trilateral trade agreement he negotiated in his first term to replace NAFTA — again, until April 2. About half of Mexican exports would still be subject to tariffs, and nearly two-thirds of those from Canada. And then on April 2 those bets are off, when a grander, global tariff scheme is expected. Or maybe that — or some of them — will be imposed early next week, President Trump teased on Friday.

You might just want to give your brain a rest and skip to the next story. For the determined:

The dollars and cents of all this is something that a CFO could probably cost out. But that data isn't much use to a CEO, who could not conscientiously begin to weave them into strategy. And yet decisions have to be made, which can't include Do Nothing. And all of this is taking its toll not only on balance sheets but on optimism. As Bloomberg put it:

Uncertainty around tariffs and inflation has hurt US business optimism since Donald Trump’s return to the White House in January, marking a sharp reversal from the buoyant mood among executives after his win in the presidential election, a survey shows.

Less than half, or 47%, of US business executives polled by the Association of International Certified Professional Accountants said they are confident about the economic outlook for the year ahead, down from 67% of respondents in a survey conducted in December. The findings coincide with recent data showing eroding consumer sentiment and rising inflation expectations.

Whatever the goal — raising revenue, changing behavior, crippling the fentanyl trade or all of the above — a strict tariff protocol assumes that demand for everything is relatively inelastic. They don’t call the category consumer discretionary for nothing. 

Will tariff pass-throughs help us decide we don’t need as many shoes or T-shirts or TV sets? Is a material decline in macro spending an acceptable outcome? 

It also assumes reshoring is feasible for manufacturers and farmers. Is solving for workers more important than solving for consumers? Is more workers paying more for things an acceptable outcome?

There is also the small matter of brand risk, collateral damage outside a company's control. Bottles of U.S. alcohol are being removed from shelves in Canada (where booze is regulated by the government), and while that market represents only 1% of its sales, Brown-Forman, the maker of Jack Daniel’s, said this kind of reaction was “worse than a tariff.”

Back to April 2: This is when the administration's grand reciprocal tariff plan is scheduled to drop. This would tit-for-tat any additional cost imposed by nations — you tack $5 on my export, I'll tack $5 on your export.

Again, your average CFO could probably figure out what the tax scheme(s) are in real-enough time to produce quarterly reports. But your average CEO might be stuck deciding whether, when, how and if to change big things based on a global economic system that even in some cases incentivized offshoring (cars and smartphones made in places with cheaper labor to compete in economies that can’t afford what Americans can afford, for example) to a new regime. Especially if they are pawns in a game which might be more about drugs and immigration than economic fairness — whatever that is.

It's not the most important proxy but Wall Street really doesn't know what to make of all this. On Thursday, all major indexes were on pace to have their worst weeks of the year on what CNBC called "trade policy fatigue." Even if the markets don't want to blame the player, it's hard to blame the game if you don't know what the game actually is.

"Every day, it seems like the story changes," Brown-Forman CEO Lawson Whiting told CNBC.

Early withdrawals from 401(k) retirement accounts isn’t a new thing. They've always been allowed, with disincentives, because it would defeat the purpose if retirement accounts were used  like ATMs. It's bad enough that some 44% eligible to contribute to a 401(k) do not, especially if they are among the 50% of workers whose employers offer matching grants, known technically as FREE MONEY.

This week we learned that Americans are tapping into their 401(k)s like never before. The 4.8% average 401(k) holders who took early withdrawals last year was a record by far — it was 3.6% in 2023 — and more than 2-½ times the prepandemic average.

Some of this may be simply because Congress eased the rules about withdrawals in a 2018 law, "doing away with a requirement to take a 401(k) loan before a hardship distribution," as reported by The Wall Street Journal. A 2022 law, the WSJ notes, will allow plans to allow members to withdraw up to $1,000 for emergency reasons penalty-free; it would have to be replaced before the account could be tapped this way again.

But other forces are likely more significant: A stock market which has appreciated some 20% for the past two years, ballooning the average 401(k) account by an average of 10% to a record high of $148,153. But the emergencies have been mounting, too. Per the WSJ:

About 35% of those who took a hardship distribution last year did so to avoid foreclosure or eviction, down from 39% in 2023. About 16% used it to purchase or repair a home. The median withdrawal was $2,200.

It was a big week for crypto's street cred: President Trump announced a strategic reserve for bitcoin and a digital asset stockpile for all the others. Reaction was muted, ostensibly on disappointment that each would just be repositories for existing U.S. government holdings, from criminal and civil seizures. So, fancy names for stuff we already have, and no indication that there will be any robust — or any — trading in crypto with taxpayer money.

The most tangible impact of this executive order is to require a strict accounting of the government's crypto holdings, which is said to be some 200,000 BTC — about half it has ever held.

But White House AI and crypto czar David Sacks, speaking to reporters amid the first White House Crypto Summit, said it was possible that the USG would get into the crypto buying business — if Treasury could figure out how to do so in a revenue-neutral way. But how?

One way is to sell assets whose proceeds are not earmarked for any other purpose, assuming nobody cares that decisions on how to spend money from a sale of something bought with taxpayer money at some point is the province of Congress, not the executive branch.

But no matter. There are a bunch of assets which might qualify. The administration could resurrect its plan to sell buildings and use real estate profits to buy crypto. It could use proceeds from the auction of other assets seized in criminal and civil proceedings. Maybe even the contents of other strategic reserves: Sell crude high, buy crypto low!

Which brings us to gold, also a strategic reserve that has gained some unusual attention of late, based on questions (just askin') if there is still gold in them thar hills of Fort Knox. Former Treasury Secretary Steve Mnuchin — one of the few non-Fort Knox people ever allowed into the facility — shot this down recently.

But … it's gold, Jerry — GOLD! And, turns out that the gold stockpile is worth more than the amount the U.S. carries on its books.

A lot more.

Per Forbes (Feb. 24, 2025, to note gold price quote; at this writing it's roughly the same at $2,920 per ounce):

The U.S. Bullion Depository in Fort Knox, Kentucky, holds 147.3 million troy ounces of gold, or about 59% of the Treasury’s total supply, according to the U.S. Mint.

With gold trading at more than $2,960 per troy ounce on the open market Monday, that means the Fort Knox gold has a market value of $436 billion, more than the market value of Europe’s most valuable public company, Tiffany and Louis Vuitton parent LVMH.

However, the government denotes the value of this gold at Fort Knox as just $6 billion based on the government-set book value for gold of $42.22 per troy ounce.

That’s just Fort Knox. The other 49% is gathering dust at the Denver Mint, the Federal Reserve Bank of New York, and West Point, who is existence, to the best of my knowledge, nobody has questioned. But for the sake of simplicity, let’s just stick with the Au in Kentucky. 

There aren't a lot of going concerns that would just leave $430 billion lying around doing nothing. And since, say, Bitcoin is about 20% off its lifetime high and gold is near its lifetime high and you have a revenue-neutral arbitrage of $430 billion and a president already calling the strategic bitcoin reserve "a digital Fort Knox" — well, you do the math.

Quotes of the Week

“Access to cheap goods is not the essence of the American dream."

— Treasury Secretary Scott Bessent, on the possibility tariffs could be inflationary

"The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period."

— Treasury Secretary Scott Bessent, acknowledging some signs of weakness in the U.S. economy

"No active buying means this is just a fancy title for Bitcoin holdings that already existed with the government. This is a pig in lipstick."

— Charles Edwards, founder of bitcoin-focused hedge fund Capriole Investments

“I have nothing against XRP, SOL or ADA, but I do not think they are suitable for a Strategic Reserve. Only one digital asset in the world right now meets the bar, and that digital asset is bitcoin.”

— Tyler Winklevoss

“I don’t want to see a big cut where a lot of good people are cut. Elon and the group are going to be watching them, and if they can cut, it’s better. And if they don’t cut, then Elon will do the cutting.”

— President Trump, setting expectations to his cabinet secretaries

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