Merk Funds is one of the biggest names in the currency space, and their products have amassed a fair amount of assets as well as attention from the investing world. But the firm has also begun moving into the gold space by laying out plans for a physical gold ETF (OUNZ). With this highly anticipated fund on tap, many investors have been keeping a close eye on Merk’s outlook on the precious metal, especially in light of the fiscal cliff and its impact on gold .
For the coming fiscal year, Merk had this to say concerning gold.
“We expect the volatility in gold to be elevated in 2013, but consider it good news, as it keeps the momentum players at bay. We own gold not for the crisis of 2008, not for the potential contagion from Europe, but because there is too much debtin the world. We think inflation is likely a key component of how developed countries will try to deal with their massive debt burdens, even as cultural differences will make dynamics play out rather differently in different countries.”
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This certainly is an interesting take given that many have been using gold as a defense against a possible global meltdown. Merk seems to be one of the few admitting that holding gold is still a good idea even if markets around the world are not headed for a massive collapse. Instead, Merk’s theory means that gold can still perform well, even if benchmarks around the world surge, as many nations will be forced to face their debts sooner rather than later..
For the United States that time will come in February, as Congress has already begun debates on the U.S. debt ceiling and spending figures. If the last Fiscal Cliff debate is any indication, this one will come down to the wire, and it could have a marked impact on gold’s short-term outlook. Some have proposed harsh spending cuts, while others have gone as far as to suggest minting one or more trillion-dollar platinum coins to pay off our debt. No matter which camp you fall in, Merk believes that gold stands to be the beneficiary of piling debts in the world’s developed markets.
Why Marc Faber Will Never Stop Buying Gold
Marc Faber, author of the famed “Gloom, Boom & Doom Report,” is a respected name in the investing world. If ever there was a perma-bear, it would be Faber. He tends to focus on areas of the world that he sees problems in and allow that information to influence his investing decisions. But no matter what segment Faber has an eye on, his focus always circles back to one asset: gold. The precious metal has long been an important part of his holdings, and he has not been shy about vocalizing his love for the commodity .
Faber’s Gold Strategy
As 2013 opened, Faber was quick to note that the threat of inflation around the world coupled with a weak dollar has him very worried about the future of the global economy. His solution? He buys gold every single month, waiting for a 20% price correction. Though gold took a hit at the end of 2012, Faber is waiting for a further drop to shake out all of the speculators and those with margin calls so he can make a more meaningful increase to his position.
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Faber has also stated that he intends to hold the precious metal for as long as he lives. “I will never sell my gold in my life. As long as I have to look at people like Mr. Bernanke and Mr. Obama I will always buy gold each month.” Though Bernanke will likely end his time at the Fed in 2014 and Obama will exit the White House in 2016, Faber seems comfortably set in his ways. Unlike other experts, he is not concerned that 2013 will bring an end to gold’s 13 consecutive positive years, as he feels that there are too many issues around the world for gold not to go up.
Faber joins a long list of those who have put a fair amount of trust in this precious asset, includingprominent names like George Soros, John Paulson, Jacob Rothschild and Peter Schiff among others. The former three are all heavily invested in the SPDR Gold Trust (GLD) though Schiff does not share the same optimism for the fund. This will be a make-or-break year for this commodity, as markets flirt with pre-recession highs and investors slowly move into “risk on” purchasing. Faber’s bullishness on the metal will certainly be tested in the coming months, as it remains to be seen if the metal can find its footing after falling out of the graces of many towards the end of 2012.
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