Global Currencies Part I

By: Gordon Long & Axel Merk | Wed, Sep 4, 2013
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US$, Fiat Reserve Currencies & Gold

US$, Fiat Reserve Currencies & Gold

With Special Guest Axel Merk
President & CIO Merk Investments,
Manager of Merk Funds

& Gordon T Long & Ty Andros

34 Minutes, 46 Slides

In Part I of this 70 minute two part series, Axel Merk in discussions with Ty Andros and Gordon T Long covers a broad range of the most important Global Currency issues relevant to investors. Named a Currency Guru by Morningstar, there is no one more qualified to assist investors understand this complex environment. Though markets may appear unpredictable, Merk Funds' research has found that politicians are not. Currencies markets most closely reflect the Macro realities without taking on associated equity and interest rate risks. Currencies are the cornerstone of successful investment strategies in the global financial markets.

Dollar versus Gold Cartoon


Currency: US Dollar

As serious as the issues are with the US Dollar losing its function as a "store of value", it is best viewed as the "least ugly" within the world's beauty contest of fiat currencies. As such it is likely to be the last to fall as global fiat currencies feel the pressures of having over-inflated their currencies while allowing negative Primary Current Accounts. The US$ is presently the safehaven for investors singularly because of its liquidity, rule of law and a dominant sovereign military.


Currency: Fiat Reserve Currency

As global currencies have been moving more and more away from the Gold Standard over the last 100 years, investors must continuously re-evaluate the "risk-free" element of their portfolio. This is now urgently dictated, since with negative real interest rates most currencies are no longer a safe 'store of value". It is a simple reality or "new normal" that Investors cannot trust the government to protect their purchasing power for them and must adopt personal strategies that match their own risk tolerance. The days of 'mom and pop' investing are over as macro and monetary decisions control the investment landscape.

Cumulative Change in Central Bank Balance Sheets

 


Currency: Gold

Gold versus Dollar Cartoon 2

Aggressive accumulation of gold by Emerging Market Central Banks and the Bank of International Settlements (BIS), suggests that the historic shift to fiat currencies is 'running out of runway'. In an increasingly unstable world, changes are overdue. Axel argues that the solution will unfortunately not be another Bretton Woods Monetary agreement, but rather is likely to first lead to chaos and social disorder before any possible consensus can be reached.

Gold will continue to be volatile, especially when priced in US dollars and with parallel distortions by the bullion banks in disconnecting the physical price of gold from gold's 'paper' price.


Currency: Euro

Though the Euro is the only major currency not backed by a tax base nor an army, it is in fact the most difficult currency to debase. Poorly understood is how the ECB has been successful in holding up the Euro by 'mopping up' liquidity, despite an expanding and seemingly intractable crisis in the peripheral nations throughout a relentless six quarter recession.

Euro Cartoon

Axel Merk lays out what the surprising hidden strategy is for the survival of the Euro, both from a sovereign and banking perspective.

 


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Gordon Long

Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.

Copyright © 2010-2017 Gordon T. Long

Axel Merk

Author: Axel Merk

Axel Merk
President and CIO of Merk Investments, Manager of the Merk Funds,
www.merkfunds.com

Axel Merk

Axel Merk wrote the book on Sustainable Wealth; peek inside or order your copy today.

Axel Merk, President & CIO of Merk Investments, LLC, is an expert on hard money, macro trends and international investing. He is considered an authority on currencies.

The Merk Absolute Return Currency Fund seeks to generate positive absolute returns by investing in currencies. The Fund is a pure-play on currencies, aiming to profit regardless of the direction of the U.S. dollar or traditional asset classes.

The Merk Asian Currency Fund seeks to profit from a rise in Asian currencies versus the U.S. dollar. The Fund typically invests in a basket of Asian currencies that may include, but are not limited to, the currencies of China, Hong Kong, Japan, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.

The Merk Hard Currency Fund seeks to profit from a rise in hard currencies versus the U.S. dollar. Hard currencies are currencies backed by sound monetary policy; sound monetary policy focuses on price stability.

The Funds may be appropriate for you if you are pursuing a long-term goal with a currency component to your portfolio; are willing to tolerate the risks associated with investments in foreign currencies; or are looking for a way to potentially mitigate downside risk in or profit from a secular bear market. For more information on the Funds and to download a prospectus, please visit www.merkfunds.com.

Investors should consider the investment objectives, risks and charges and expenses of the Merk Funds carefully before investing. This and other information is in the prospectus, a copy of which may be obtained by visiting the Funds' website at www.merkfunds.com or calling 866-MERK FUND. Please read the prospectus carefully before you invest.

The Funds primarily invest in foreign currencies and as such, changes in currency exchange rates will affect the value of what the Funds own and the price of the Funds' shares. Investing in foreign instruments bears a greater risk than investing in domestic instruments for reasons such as volatility of currency exchange rates and, in some cases, limited geographic focus, political and economic instability, and relatively illiquid markets. The Funds are subject to interest rate risk which is the risk that debt securities in the Funds' portfolio will decline in value because of increases in market interest rates. The Funds may also invest in derivative securities which can be volatile and involve various types and degrees of risk. As a non-diversified fund, the Merk Hard Currency Fund will be subject to more investment risk and potential for volatility than a diversified fund because its portfolio may, at times, focus on a limited number of issuers. For a more complete discussion of these and other Fund risks please refer to the Funds' prospectuses.

This report was prepared by Merk Investments LLC, and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable. Merk Investments LLC makes no representation regarding the advisability of investing in the products herein. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute investment advice and is not intended as an endorsement of any specific investment. The information contained herein is general in nature and is provided solely for educational and informational purposes. The information provided does not constitute legal, financial or tax advice. You should obtain advice specific to your circumstances from your own legal, financial and tax advisors. As with any investment, past performance is no guarantee of future performance.

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