The government does not know what it is doing, but it's doing a lot of it, portfolio manager Axel Merk tells Reuters.

"'The government does not know what it is doing, but it's doing a lot of it. It's just a matter of time before the Federal Reserve comes in to inflate the system,' said Axel Merk, portfolio manager of California-based Merk Mutual Funds, which have more than $310 million of assets."

"'It (gold) is moving more toward the mainstream. There are retail investors, but it is also becoming part of the asset allocation of larger fund managers having a portion in gold. That also shows me that we are far away from the top of the gold market,' Merk said."