Axel Merk, Founder of Merk Investments, outlines how significant Fed rate cuts in 2024 could support the recent record-price of gold.
(Note: All of this information is educational only - the show host and guest may own shares - all investments involve risk and potential loss potential.)
- The discussion begins with a video review of the Conference Board's LEI, leading economic index.
- The economic analysis includes the Fed's latest rate cut probability curve.
"In my school of thought (and call me old-fashioned) we have a Federal Reserve that's quote-unquote, "higher for longer" and Federal Reserve policy acts with a lag and so to me, that is a downward pressure...Also, if you think about it, Powell's communication; He has pivoted away from higher for longer. Well, why would he do that? The main reason why he might want to do that is because he is seeing a weakening economy...and he knows that Fed policy sets acts as a lag. Now, it could be strictly that he thinks inflation has been beaten and mission is accomplished.
But if you look at the Fed minutes and whatnot, they seem to be on board with a slowdown. And of course, quote-unquote everybody is saying, 'Oh it's going to be a soft landing.' and the reason why a soft landing vs. hard landing matters, especially with regard to a program that's on gold, is that gold tends to perform better in a hard landing scenario...because in a hard landing scenario, risk assets (meaning S&P 500 and the like) tend to perform worse because they reflect the economic downturn, whereas in a soft planning type of scenario, the markets look through that and so forth, right? ...And so, to me, any of this crystal ball assessment is not about whether we have a recession on March 3rd or October 3rd but it's about risk assessment..."
- Investment portfolio risk-assessment.
- Will the domestic economic experience a "Hard-Landing," and if so, how to prepare?
- Might the US Fed lower key lending rate substantially more than the FFF's is predicting? Axel says perhaps if the uptick in domestic unemployment persists.
- Closing commentary.
- Merk Investments launched a Stagflation resistant fund: Merk Stagflation ETF:
(STGF) Daily Holdings as of 10/13/23:
Ticker Holding Name % of Net Assets
SCHP SCHWAB U.S. TIPS ETF 70.88%
DBO INVESCO DB OIL FUND 12.08%
OUNZ VANECK MERK GOLD 9.15%
VNQ VANG REAL ESTAT ETF 7.88%
USD US DOLLAR 0.00%
- Merk Investments funds small PMs mining companies:
Merk Investments LLCs top holdings:
Orla Mining Ltd (US:ORLA)
Americas Gold and Silver Corp (US:USAS)
Alamos Gold Inc. - Class A (US:AGI)
SSR Mining Inc (US:SSRM)
Barrick Gold Corp. (US:GOLD)
Integra Resources Corp. (US:ITRG)
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