Axel Merk, Apr 27th 2007

We published an analysis on “Dollar Myths” in which we criticized spending habits in Washington:

"Interestingly, nobody seemed to focus on the fact that there is an unconventional solution to foreigners holding too much of our debt: live within your means and do not issue debt. Such an old fashioned concept would indeed strengthen the dollar. Unfortunately, none of the presidential candidates at either side of the aisle seem to have heard of this notion."

We missed that there is indeed a presidential candidate who believes in the old fashioned view to “live within your means.” Our apologies go to Congressman Ron Paul, who threw his hat in the ring on March 12, 2007, announcing his candidacy for the Republican presidential nomination. Ron Paul is the one member of Congress who is a true fiscal conservative. As a member of the House Committee of Financial Services, he does not hesitate to speak out against inflationary policies. On his campaign website, Ron Paul 2008, he writes:

“Real conservatives have always supported low taxes and low spending.

But today, too many politicians and lobbyists are spending America into ruin. We are nine trillion dollars in debt as a nation… If we don’t cut spending now, higher taxes and economic disaster will be in their future – and yours.

In addition, the Federal Reserve, our central bank, fosters runaway debt by increasing the money supply – making each dollar in your pocket worth less.”

It is not our role to endorse a presidential candidate, especially not this early in the process. We don’t agree with all of his views, but highly respect his no-nonsense approach to fiscal and monetary policy issues. We encourage everyone to familiarize themselves with the fiscal views of Congressman Ron Paul. He is living proof that it is possible to be a fiscally conservative politician with integrity.

If you have not read our analysis on “Dollar Myths”, please do so by clicking here. We manage the Merk Hard Currency Fund, a fund that seeks to profit from a potential decline in the dollar. To learn more about the Fund, or to subscribe to our free newsletter, please visit www.merkfunds.com.

Axel Merk
Manager of the Merk Hard Currency Fund, www.merkfunds.com.

The Merk Hard Currency Fund is a no-load mutual fund that invests in a basket of hard currencies from countries with strong monetary policies assembled to protect against the depreciation of the U.S. dollar relative to other currencies. The Fund may serve as a valuable diversification component as it seeks to protect against a decline in the dollar while potentially mitigating stock market, credit and interest risks—with the ease of investing in a mutual fund.

The Fund may be appropriate for you if you are pursuing a long-term goal with a hard 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 Fund and to download a prospectus, please visit www.merkfunds.com.

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

The Fund primarily invests in foreign currencies and as such, changes in currency exchange rates will affect the value of what the Fund owns and the price of the Fund’s 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 Fund is subject to interest rate risk which is the risk that debt securities in the Fund’s portfolio will decline in value because of increases in market interest rates. As a non-diversified fund, the 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. The Fund may also invest in derivative securities which can be volatile and involve various types and degrees of risk. For a more complete discussion of these and other Fund risks please refer to the Fund’s prospectus.

The views in this article were those of Axel Merk as of the newsletter's publication date and may not reflect his views at any time thereafter. These views and opinions should not be construed as investment advice nor considered as an offer to sell or a solicitation of an offer to buy shares of any securities mentioned herein. Mr. Merk is the founder and president of Merk Investments LLC and is the portfolio manager for the Merk Hard Currency Fund. Foreside Fund Services, LLC, distributor.