Costco sues the government over tariffs... Seeking 'judicial relief'... The waning days of the Jerome Powell era... Trump vs. a stubborn ox... Gold's little brother is outperforming... There's more to the market than Nvidia and AI...
We didn't have this lawsuit on our 2025 bingo card...
On Friday, wholesale retailer Costco (COST) filed a lawsuit against the U.S. government in hopes of ensuring a "complete refund" of all the "reciprocal" tariffs it has paid since February of this year…
As regular readers know, this isn't the first reciprocal tariffs lawsuit. First, back in April, several small businesses filed a lawsuit to block President Donald Trump's tariffs imposed under the International Emergency Economic Powers Act ("IEEPA").
But even if the Supreme Court strikes down the tariffs in that case (which it sounds like it could), Costco says importers aren't guaranteed to receive a refund, unless they sue on their own to get "judicial relief" from how tariffs are typically processed.
That's why Costco filed the lawsuit on Friday, joining dozens of others that have done the same.
Costco said Customs and Border Protection recently denied its request to delay the "liquidation" – the final calculations of the total tariffs it has paid – past an upcoming deadline on December 15. Costco didn't say how much it has paid, but customs data shows $90 billion through late September.
Without getting too much into the weeds, Costco says once its import entries go through the liquidation process, it may lose the ability to challenge or recover those charges – unless it gets a favorable court ruling in its lawsuit. (Costco has already had one import entry liquidated.) The lawsuit says...
Accordingly, for itself, Plaintiff seeks (i) a declaration that the IEEPA duties are unlawful; (ii) an injunction preventing Defendants from imposing further duties on it under the executive orders challenged in this lawsuit; and (iii) full refund from Defendants of all IEEPA duties Plaintiff has already paid to the United States as a result of the executive orders challenged in this lawsuit, as well as those it will continue to pay.
Add this situation to the pile of uncertainties that tariffs have created this year. It's not clear when the Supreme Court will rule in the tariff case, and it turns out, companies need to file their own lawsuits to get refunds if reciprocal tariffs are deemed illegal.
But one thing is for certain... businesses (large and small) are interested in getting refunds from the government. That would be good for them (and lawyers' billable hours), but not so great for the state of the U.S. debt situation.
Moving on to the waning days of the Jerome Powell era...
Last night, Fed Chair Jerome Powell made a public speaking appearance in California. As we said yesterday, it may have been his final chance to signal to the market what the central bank might do at its policy meeting next week.
Well, Powell chose not to take the opportunity to talk about the economy or monetary policy. Instead, he kept his comments on the topic of the event at Stanford University's Hoover Institution: the legacy of former Treasury Secretary George Shultz.
But in a roundabout way, Powell ended up talking about the present while reflecting on the fiscal and monetary policies during Shultz' time decades ago – collective bargaining with labor unions, wage-price controls, and former Fed Chair Paul Volker's strategy for attacking "stagflation" in the 1970s. Powell said...
High unemployment and high inflation. What do we do? A very difficult problem. Paul Volker kind of had the answer and eventually did it.
Powell was referring to Volker's tighter-money policy (including raising interest rates to a record 20% in late 1980) that succeeded in crushing high inflation... but also ushered in a severe recession.
Critically, Volker had the public backing of President Ronald Reagan to stick with the higher-rate policy. That helped the then-Fed chair resist pressure from other people inside the Reagan administration and in Congress to lower interest rates as a recession took hold.
Powell obviously hasn't enjoyed the same luxury over the past year.
Trump has relentlessly pushed for lower rates, including just today during a portion of a cabinet meeting open to the media. He has also repeatedly said he wants to fire Powell, but he has been talked out of trying by Treasury Secretary Scott Bessent.
Today, Trump described Powell as a "stubborn ox who probably doesn't like your president" and added, "We have an incompetent Fed Chair, a real dope, who should reduce rates."
Trump also revealed that his choice for the next Fed chair to replace Powell when his term is up in May will probably come "early next year." Prediction markets have pegged the White House's director of the National Economic Council, Kevin Hassett, as the favorite.
In the meantime, Powell's lack of policy comments last night likely signals that he's satisfied with the market's expectations right now. So despite the White House's feud with Powell, the Fed will likely lower rates by 25 basis points at its meeting next week.
Fed-funds futures traders have put a near 90% likelihood on it thanks to a weakening labor market and recent central bank commentary. It would be the third time the Fed has lowered rates in the second half of 2025 – despite the pace of inflation rising.
On a related note...
Chaos hedges like gold are soaring...
Gold is up more than 60% so far in 2025, thanks to economic uncertainty, above-target inflation, and the expectation (and reality) of interest rate cuts from the Fed.
But it's not the only precious metal having a great year...
As we briefly mentioned yesterday, gold's "little brother," silver, has crossed above $58 per ounce and touched a new all-time high. Silver is up nearly 100% over the past year, as measured by the iShares Silver Trust (SLV).
While it's more volatile than gold, silver benefits from all the tailwinds gold does. Put simply, a weaker dollar (through inflation or government money-printing) and concerns over tight supply have pushed the metal up.
But silver has had one extra reason for the recent outperformance... It was historically cheap compared with gold. As our Commodity Supercycles team wrote in the portfolio update of their September issue...
Since the 1970s, gold was valued at an average 65 times the price of silver. This is called the gold-to-silver ratio. It's the price of gold divided by the price of silver. And it's a common indicator used to gauge whether gold is expensive relative to silver.
After the gold-to-silver ratio reached a five-year high of 105 in April 2025, silver has doubled the move up in gold. Yet, with the gold-to-silver ratio still at 87 today, silver has plenty of room to keep rising.
That's a big reason why silver could head even higher in the months to come. The gold-to-silver ratio has come down a bit since that issue. It now sits at about 72.
At today's gold price of $4,200 per ounce, a ratio of 65 would mean silver hits $64 per ounce. That's about 11% higher than today.
But in previous bull runs, the ratio has fallen well below average. When silver hit its last all-time high back in April 2011, the gold-to-silver ratio was around 35 at silver's peak. So we could see silver head much higher in the near future.
Commodity Supercycles has been on top of it...
Editor Whitney Tilson and the Commodity Supercycles team have two silver-focused stocks in their model portfolio. Both have more than doubled since their initial recommendations.
One of those stocks is silver miner First Majestic (AG), which just hit its one-year anniversary in the model portfolio. The timing couldn't have been better...
Since their recommendation, First Majestic is up 140%. That beats SLV's return of almost 85% over the same period... and dwarfs the S&P 500's 14% return. First Majestic has even beaten out some of the top AI stocks like Nvidia (NVDA) and Alphabet (GOOGL).
This is a good reminder of something that our colleague Dan Ferris wrote recently in the November 21 Digest... there's more going on in the stock market than just Nvidia and the AI infrastructure build-out.
The Commodity Supercycles team's returns on AG is a perfect example that you don't need to be "all-in" on AI to beat the market in today's environment... and sentiment about "hard assets" like gold and silver remains positive.
New 52-week highs (as of 12/1/25): First Majestic Silver (AG), Applied Materials (AMAT), ASML (ASML), Atmus Filtration Technologies (ATMU), Barrick Mining (B), Alpha Architect 1-3 Month Box Fund (BOXX), Equinox Gold (EQX), Ero Copper (ERO), Cambria Foreign Shareholder Yield Fund (FYLD), Kinross Gold (KGC), Monster Beverage (MNST), Annaly Capital Management (NLY), Nucor (NUE), Pan American Silver (PAAS), Sprott Physical Silver Trust (PSLV), SandRidge Energy (SD), Skeena Resources (SKE), iShares Silver Trust (SLV), and Vale (VALE).
In today's mailbag, more thoughts on a few trading recommendations on Palantir (PLTR) from Marc Chaikin, founder of our corporate affiliate Chaikin Analytics... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Not that I'm advertising for Marc Chaikin, but it's worth pointing out that one of his trading services recommended Palantir three times in the last 12 months. I invested twice and did quite well both times, but the third time I thought the stock was too pricey (ha, ha), and stayed away..." – Subscriber Sherwin R.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
December 2, 2025
