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To investors,

President Donald Trump announced yesterday that he instructed Secretary Scott Bessent and the US Treasury to stop production of all new pennies. The main objective is to eliminate government waste and save money for the American taxpayer.

Here is what you need to know about the production of pennies:

1. It costs $0.03 to produce one penny, which is 3x more than the face value of the coin in circulation.

2. There are more than 13 billion pennies produced each year.

3. There are 288 billion pennies in circulation, but only 150 billion are in use. The rest are believed to be sitting in jars, made into jewelry, or thrown in fountains.

4. Penny production includes the use of zinc and copper, so the US government will save those metals for other use cases by ceasing production of the penny (ex: cleaning energy, water infrastructure, national security, etc).

5. It is estimated that $400 million to $500 million annually could be saved by stopping production of new pennies. Even more would be saved if pennies were taken out of circulation.

Pennies are not the only coin that cost more to produce than their face value —nickels cost slightly more than 2x the necessary expense.

It is important to call out that Trump is not making any decisions on the nickel at the moment, nor is he eliminating the penny from circulation. The only instructions so far are to stop the production of new pennies.

This is the first step to addressing the government waste and mismanagement involved in coin production. There is precedent in other countries to take the lowest denomination coin out of circulation.

Here is a list of where this has happened with success:

• Canada: Eliminated the penny in 2013.

• Australia: Phased out the one-cent and two-cent coins in 1992.

• New Zealand: Stopped minting the one and two-cent coins in 1990.

• Sweden: Discontinued the one-öre coin in 1972 and the five-öre coin in 2010.

• Norway: Abolished the one-øre coin in 1972 and the five-øre coin in 1982.

• Denmark: Stopped circulating the one-øre coin in 1973 and the five-øre coin in 1989.

• Finland: Removed the one-penni coin in 1990 and the five-penni coin in 1993.

• Netherlands: Ceased the use of the one-cent coin in 1982.

• Belgium: Discontinued the one-centime and two-centime coins in 1989.

• South Africa: Stopped minting the one-cent coin in 2002.

While most people are debating the merits of potentially eliminating physical coins this morning, I took away something different from President Trump’s announcement yesterday — the current administration is very serious about cutting the annual deficit and no idea is off limits.

Saving an extra $500 million annually does not sound like a meaningful amount when your annual deficit is $2 trillion. But every dollar counts. And it seems like DOGE and Trump are finding a few hundred million dollars of savings every day.

For example, Elon Musk tweeted the following a few hours ago:

“The DOGE team just discovered that FEMA sent $59M LAST WEEK to luxury hotels in New York City to house illegal migrants. Sending this money violated the law and is in gross insubordination to the President’s executive order. That money is meant for American disaster relief and instead is being spent on high end hotels for illegals! A clawback demand will be made today to recoup those funds.”

American citizens knew their tax dollars were subject to some waste and/or fraud, but the mismanagement identified in the first three weeks of the administration is surprising everyone. It is going to take a herculean effort to continue slashing costs in the face of increasing resistance from the establishment.

And we should expect a few unexpected surprises along the way. No one has dug this deep into government spending in decades, so who knows what will be found.

One of the potential surprises was mentioned by Trump yesterday on Air Force One as he flew to attend the Super Bowl in New Orleans. He mentioned that DOGE may have found irregularities in the US Treasury market, which would insinuate “maybe we have less debt than we thought.”

He also stated, “There could be a problem, you’ve been reading about that, with Treasuries. That could be an interesting problem because it could be that a lot of those things don’t count.”

This would be an insane plot twist that the best Hollywood writers could not come up with. The US treasury market is worth an estimated $25 trillion and comes with deep liquidity built off the high degree of trust embedded into the asset. If there are irregularities (aka fraud) in the treasury market, the ramifications will be unlike anything we have seen in my lifetime.

On one hand, this claim seems outlandish. It would be the unthinkable. Hedge fund manager Nick Givanovic stated “USTs, every single dollar worth, is issued publicly through primary dealers with their own systems. Logging everything. There can be no discrepancy between them and the Treasury. Unless they are all part of some massive fraud that has been going on for close to a century, Trump is talking bull. I’ll go with the bull.”

On the other hand, given the fact that the United States government has no clue where it spends money, nor can the various government organizations pass an audit, it is not the craziest idea that the Treasury may have a few errors in a $25 trillion market that spans the entire globe.

Regardless of what ends up being true with the treasury market, one thing is crystal clear — the Trump administration is going to overturn every stone in order to figure out where government waste, abuse, or fraud exists. This campaign promise sounded good on the trail, but every day proves that Trump is very serious about this work.

Speaking of the campaign trail, some of you may remember that I was disappointed last year that neither presidential candidate was promising to balance the budget. I figured it was nearly impossible, but I thought it was important that the candidates at least pretend like the deficit was important enough to tackle.

It seems like I may have spoken too soon. While balancing the budget was not a big campaign promise from Trump, it appears that his team is going to make a run at accomplishing this gargantuan task. DOGE will cut expenses. Tariffs will raise revenue. And GDP growth should deliver more tax revenue even if the nominal tax rate gets cut.

This would be the elusive trifecta — Cut costs. Drive growth. Increase revenue.

News from the White House is continuing to come fast and furious. We got the treasury irregularities comment yesterday afternoon. This came after rumors of an incoming 25% tariff against foreign steel and aluminum. Hours later Trump posted on social media that the US would stop production of the penny. All of this on a random Sunday while Trump was the first sitting president to attend the Super Bowl.

The next four years are going to be insane. And if we are fortunate, we may end up with a balanced budget.

Hope you all have a great start to your week. I’ll talk to everyone tomorrow.

– Anthony Pompliano

Founder & CEO, Professional Capital Management

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