Name: Stocks, Gold To Soar? Trump's Sovereign Wealth Fund Is A Game Changer | Axel Merk
Uploaded: 2025-02-07T03:55:41+00:00
Duration: 1858 s

Speakers

Axel Merk — President, Merk Investments

Summary

Axel Merk joins David Lin to discuss tariff-driven market volatility, the announced U.S. sovereign wealth fund, DOGE and Fed policy, and the outlook for gold and gold miners. Merk sees the sovereign wealth fund as a sign of active industrial policy that supports gold and lower long-term yields, while he treats most tariff headlines as noise. He favors smaller development-stage gold miners and notes Canadian gold miners can benefit from a weaker Canadian dollar, though he warns mining equities are volatile.

Tariff announcements caused sharp swings in the dollar, yields, stocks, and gold.
Merk views much of the tariff news as political noise rather than durable market change.
Trump's sovereign wealth fund is read as a move toward industrial policy and less efficient capital allocation.
Merk argues industrial policy and elevated tariffs warrant lower long-term yields and support gold.
He is skeptical that DOGE can fix long-term fiscal issues such as entitlements.
The S&P 500 is described as range-bound and top-heavy, supporting diversification demand.
Merk favors gold mining equities, especially smaller development-stage miners.
Canadian gold miners may benefit from tariff-driven CAD weakness and margin expansion.

Ideas

Axel Merk President, Merk Investments 7:07

Industrial policy warrants lower long-term yields.

Merk argues that Trump's sovereign wealth fund signals a return to active industrial policy, which means more government spending, less efficient resource allocation, and a higher cost of doing business alongside elevated tariffs. In his bond-market read, that combination warrants a lower long-term yield, so he is effectively positive on long-duration Treasuries even as policy uncertainty remains high.

Axel Merk President, Merk Investments 7:12

Gold benefits from policy and diversification.

Merk is bullish on gold because industrial policy and the sovereign wealth fund imply more government spending, inefficient resource allocation, higher business costs, elevated tariffs, and lower long-term yields. He also cites gold's reduced correlation to real yields after dollar weaponization, continued central-bank and foreign buying, and investors seeking diversification from a top-heavy S&P 500. Speculative flows have been absent, so if speculators return, gold can rise sharply.

Axel Merk President, Merk Investments 25:22

Higher gold prices favor mining equities.

Merk manages about $1.8 billion in gold and gold mining and likes the space. Higher gold prices help miner economics, while the market is paying less for ounces than it used to after investors got burned; he says the environment has been favorable and thinks many of these equity prices remain compressed, though he cautions the space is very volatile.

Axel Merk President, Merk Investments 25:49

Smaller gold miners are the sweet spot.

Within gold mining, Merk says the sweet spot is smaller development-stage miners. Large miners underinvested for years and are now scrambling with huge projects that are difficult to complete on time and on budget, while smaller projects are more manageable and benefit from higher gold prices. He also says the market pays less for ounces than it used to, and he has been an insider buyer in the space, though he warns investors to only take risk they can afford.

Axel Merk President, Merk Investments 26:37

Weak CAD boosts Canadian gold miner margins.

Tariffs and the resulting weaker Canadian dollar can be positive for Canadian gold miners because gold is priced internationally. A weaker CAD raises the local gold price while labor and other local costs are paid in CAD, so margins can expand. He cautions against investing in gold miners solely on tariff threats, but says tariffs are not a negative for every miner.

Stocks, Gold To Soar? Trump's Sovereign Wealth Fund Is A Game Changer | Axel Merk

Summary

Ideas

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