Feb 27, 2019 Guest(s): Axel Merk
The Fed Funds Rate is still below neutral, and investors can expect one or two more rate hikes this year, but this won't deter gold's slow march forward, said Axel Merk, president and CIO of Merk Investments.
"The price of gold has been moving higher even if rates have been moving higher. And it's either the folks investing in gold are looking beyond the hump when rates are eventually going to go down, and eventually they will, real interest rates haven't really gone higher, inflationary pressures are moving a little bit higher; and at the end of the spectrum, of course, people buy gold for diversification and as rates go higher," Merk told Kitco News on the sidelines of the BMO Global Metals & Mining Conference.
Merk added that gold has historically been a good diversifier when risk assets don't do so well, and volatility typically increases as rates rise and drive up risk premia in assets.