Math, Spin, and a Milestone Episode

(Money Metals News Service) Mike Maharrey opens this near-100th episode of the Money Metals Midweek Memo by admitting he’s always been bad at math.

But his main point is that math’s weakness as a personal skill doesn’t change its strength as a reality check. Words can spin. Narratives can be massaged.

Numbers can’t. Two plus two is still four, no matter what a politician says.

Tariff Rebate Dreams Versus Federal Reality

There’s growing chatter about tariff rebate checks. Some rumors even suggest payments could go out by year-end.

Maharrey doubts it. Congress would have to approve any checks, and Washington is already neck-deep in red ink. The bigger problem is the claim, pushed by Donald Trump and echoed online, that tariffs can both replace the income tax and help pay down the national debt.

That sounds nice. The math doesn’t cooperate.

Record Tariffs, Record Deficits

In October, customs receipts hit a record. Tariff revenue totaled $31.4 billion, a 330.1 percent increase over October 2025.

At the same time, the federal government spent $689 billion that month. Those record tariffs covered only about 4.5 percent of spending.

Despite the “tariff windfall,” October still produced the biggest October budget deficit on record. The Trump administration ran a $284.35 billion shortfall to kick off fiscal 2026, which began on October 1.

That was about 10 percent higher than the October deficit a year earlier and roughly $200 million worse than the prior October record set in 2020, during the pandemic lockdown era.

“Cuts” That Aren’t Cuts

Some of October’s deficit spike came from calendar effects, with November payments pulled into October. Adjusting for that, the deficit would have been around $180 billion.

That’s smaller, but still among the top four October deficits ever. And it came while the federal government was supposedly “closed” during a shutdown that likely trimmed less than 5 percent of total outlays.

Total October revenue, including tariffs, was about $44 billion, up 24 percent from October 2024. For an individual, a 24 percent raise is life-changing. For Washington, it wasn’t enough to even slow the borrowing.

To close an average monthly deficit using tariffs alone, receipts would need to jump to around $150 billion per month. That’s a 377.7 percent increase over October’s record $31.4 billion. Even then, you’re only covering current spending, not paying down debt or abolishing the income tax.

Washington’s Spending Addiction and the Inflation Tax

Maharrey drives home a simple conclusion: Uncle Sam does not have a revenue problem. He has a spending problem.

In October, the Trump administration spent about $688.72 billion, a 17.9 percent increase from a year earlier. Over the prior year, total federal spending topped $7 trillion, averaging $583.3 billion per month, or about $19.2 billion per day.

Politicians talk about cuts, but most of them are cuts only in the rate of increase. If a program was supposed to rise by $10 and instead rises by $5, they call that a $5 cut. Actual spending still goes up.

Meanwhile, interest on the national debt has become the second-largest budget item after Social Security. The U.S. now spends over $1 trillion per year just on interest. That interest burden is one more reason the Federal Reserve keeps leaning toward easier money.

Borrowing and spending push the Fed toward rate cuts, bond-buying, and quantitative easing. That’s inflationary. Even if your tax bill doesn’t rise, you pay through the inflation tax—at the grocery store, the hardware store, and everywhere else.

From Cash in a Card to Real Money

To make the point vivid, Maharrey recalls getting cash in cards from his grandmother. The amounts rose as he aged, which was her way of adjusting to inflation.

A friend wasn’t so lucky. His grandmother was still giving him $10 bills when he was 20. By then, that $10 hardly bought anything.

Today, a $10 bill tucked in an envelope is close to a token. Its purchasing power shrinks year after year. Maharrey suggests that instead of handing out fiat that will buy less tomorrow, people consider gifting real money—gold and silver—through products offered by Money Metals.

Silver’s Price Surge and Structural Shortage

The back half of the episode turns to silver, where the math is also stubborn.

Silver topped $58 an ounce on Monday, slipped briefly on profit-taking, then bounced back above $59. So far this year, silver has gained over 99 percent, essentially doubling in price.

Maharrey expected a run once silver broke $50, but he didn’t expect it to challenge $60 so quickly. The core driver, he argues, is a multi-year mismatch between supply and demand.

If the world needs 10 ounces of silver and miners only produce 9, that missing ounce must come from existing above-ground stocks. That’s where we are now.

Five Years of Deficits and Weak Mine Supply

Metals Focus projects that 2024 will mark silver’s fifth straight structural market deficit.

Industrial demand hit a record in 2024 and is projected to dip about 2 percent this year due to high prices. That may pull overall demand down roughly 4 percent, but it still leaves total demand close to record levels.

Mine output isn’t keeping up. Production peaked in 2016 at about 900 million ounces. It has not returned to that level. Until last year, output actually declined by an average of 1.4 percent annually. In 2023, mines produced around 814 million ounces.

For 2024, Metals Focus forecasts a 95-million-ounce deficit. That would push the cumulative five-year deficit to roughly 820 million ounces—about a full year of average mine supply.

Going back further, since 2010, the silver market has accumulated a supply deficit of more than 580 million ounces. All of this has been covered by drawing down above-ground stocks, but those stocks are finite and require higher prices to pry metal loose from long-term holders.

Global Squeeze: London, Shanghai, and Beyond

The recent silver squeeze exposed how fragile the system has become.

Ahead of possible U.S. tariffs, large amounts of silver were shipped into the United States to “get ahead” of new taxes. That left London short. Available “free float” silver in London vaults plunged from around 850 million ounces to roughly 200 million, a drop on the order of 75 percent. Metals Focus estimates it may have briefly fallen as low as 150 million ounces.

At the same time, demand in India surged as buyers pivoted to silver with gold at record highs. Lease rates spiked. Money Metals shipped multiple pallets of 1,000-ounce bars to India. Metal eventually flowed back from New York to London, and the immediate panic eased.

But, as Bloomberg and ANZ analysts note, the shortage didn’t vanish. It moved. Warehouses linked to the Shanghai Futures Exchange now report the lowest silver inventories in nearly a decade. Lease rates have climbed again, signaling continued tightness.

Strategic Designation and Fed Tailwinds

Policy shifts add more fuel.

The U.S. recently designated silver as a strategic mineral. Metals Focus director Matthew Piggott told Kitco this will create “far more tightness” in the market. Bloomberg notes that fear of sudden U.S. premiums has made traders hesitant to ship metal out of the country, limiting global relief if conditions tighten further.

On top of that, markets expect the Federal Reserve to keep easing. After some hawkish talk in October, traders have drifted back to expecting another rate cut in December. Lower rates and easier money tend to support both gold and silver.

Letting the Math Work For You

Maharrey closes by returning to his core theme: math wins.

Thirty-odd billion dollars in monthly tariffs will not erase multi-hundred-billion-dollar deficits. A $7 trillion annual budget and more than $1 trillion in interest payments aren’t going away.

You can’t legislate away decades of overspending and money printing. You can’t vote away structural silver shortages.

What you can do is decide how you save. Keeping everything in fiat means letting inflation steadily eat your purchasing power. Shifting part of your savings into real money—gold and silver—lets you step outside that game.

In a world where the numbers no longer add up for the dollar, Maharrey argues, the math still adds up for sound money.