In the News: MarketWatch

Currency investing is prudent diversification, but not rocket science, portfolio manager Axel Merk tells MarketWatch

Merk says his funds are aimed at longer-term investors seeking non-correlated returns and inflation protection, not day traders trying to play hour-to-hour movements in the market.

AM: "We have ever-greater involvement of policymakers. They are throwing trillions of dollars around and when they do that markets are moving. The problem is that they are all moving in tandem and you don't get the kind of diversification you traditionally get [from other types of investments]. Where do you hide? In currencies, you have the opportunity to find ways to invest that have a low correlation to anything else you are doing."
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SM: There is a lot of talk about the Federal Reserve ending QE2 this summer. What happens to currencies when they pull the plug?

AM: "A year ago we heard that the mortgage-backed securities purchase program was ending and the Fed will tighten, but it didn't happen. Now we have talk about QE2 ending. Consumers want to downsize and the policymakers don't like that so they are throwing money at them. But it doesn't stick. It's not going to change. We don't have inflation yet and we need to have it to get these housing prices higher, which is why the Fed won't rest. And now we have more headwinds from the oil market. How on earth can the Fed raise rates? The path of least resistance is to print money and spend in the U.S [..]"