00:00 Speaker A
Let’s read Gold hits a fresh all-time high as investors flock to the precious metal for more on what to make of this shining trade, want to welcome here Merk Investments founder, president and chief investment officer, Axel Merk. Axel, as someone who listen, manages over 3 billion in precious metals and precious metals mining. I want to start with you on what you just make of this record run in gold, Axel. What in your opinion is driving this?
00:26 Axel Merk
Yeah, great to be with you and it’s indeed been truly astounding. Just for reference, we more than doubled our assets on the management of the last year and uh I would say it’s our brilliance, but more likely it’s just the the trend in there in that that space. Um historically, we have different types of investors in gold, the diversification investor, the the gold bug concerned about the purchasing power, we have the speculator and we have the central banks. Um noteworthy is that the speculator is not very loyal, but in recent weeks
00:54 Axel Merk
has uh has seen that there’s a trend in gold, has jumped on it. Obviously, as we’re talking today, that that’s been somewhat in going in reverse. The main buying we have seen, I would argue and from our analysis has been from institutions rather than retail. And that’s very noteworthy because the historically when you reach these all-time highs or highs, it’s a retail frenzy. I cannot say that we see a retail frenzy. It is institutional buying. You can attribute it to the quote-unquote debasement trade. It’s mostly I think institutions diversifying because that’s one of the things to diversify to, but obviously, that’s gone up, gold has gone up quite quite a bit in in recent months.
01:26 Speaker A
Can I ask you Axel Axel, if one reason, one, one big driver, um, it’s the central banks, is that also potentially Axel, a downside risk? I mean, if that’s true then then what would happen if the central bank stopped buying or or even started selling, Axel?
01:40 Axel Merk
Well, first of all, central banks historically are not very very price sensitive. So if they have a mission to do something, they’ll execute on that. I think the reason we have to think about why are central banks buying? And I think it relates to the weaponization of the dollar a few years ago when the dollar has been used as an active tool to to react when other countries don’t act the way that it’s in the US interest. And that is a quote unquote incentive to the central banks to diversify their reserves.
02:08 Axel Merk
It doesn’t mean that all the reserves are piled into into gold, but it means that gold is a beneficiary of that process.
02:17 Axel Merk
And so the question to me is what could get that trend into reverse? And I don’t see that we see an increased um national activism throughout the world that monetary tools, fiscal tools are used to defend the interest of a country.
02:37 Axel Merk
We we’ve gone away from globalization where we’re all a happy family. So, I think the risk is that we have globalization come back, um where we have this this period where the global wheels of finance are oiled um through trade. The one thing I’d like to add to to digress a little bit from your question is that when you have tariffs, you don’t just impede the flow of goods, you impede the flow of money.
03:01 Axel Merk
So, if you think that tariffs are going to go away, that’s a somewhat related risk. And of course, the Supreme Court can throw a wrench into that if you believe that tariffs are a good thing. Um and so that’s the sort of way I would would try to to look at the the issues of quote unquote central bank buying and beyond.