Axel Merk: Gold’s Surge, Dollar’s Blind Spot

(Money Metals News Service) On a recent episode of the Money Metals podcast, Money Metals’ Mike Maharrey interviews Axel Merk, president and CIO of Merk Investments. They cover the metals selloff, the recent silver squeeze, thin market liquidity, stress in private credit, and why the U.S. Dollar Index can mislead investors.

Merk’s refrain is simple: gold hasn’t changed. What shifts is our perception.

(Interview Starts Around 6:36 Mark)

About Axel Merk

Axel Merk is the president and CIO of Merk Investments, where he leads gold-focused and macro strategies and manages over $3 billion across physical gold and gold-miner public products. His hands-on work in product design and market operations gives him authority on ETF plumbing, vault logistics, liquidity mechanics, and investor flows.

Axel Merk specializes in the nexus of monetary policy, real yields, deficits, currency dynamics, and precious metals, translating policy signals into market implications. Merk shares timely, data-driven commentary via a free newsletter at MerkInvestments.com and on X as @AxelMerk.

A Selloff Inside a Bull Market

Merk frames the pullback as the kind of exploding volatility that often accompanies mature gold bull markets. With gold “over $4,000” during the run-up, swings naturally scale with the price level.

Speculators have returned after detours into meme stocks, SPACs, and crypto. Speculation increases volatility far more than it changes fundamentals.

Retail Isn’t Driving This

Contrary to typical blow-off tops, retail hasn’t been the engine. Merk sees retail selling, which has left wholesalers cutting back orders to mints because inventory flows in from consumers.

Physical ETF markets confirm orderly operations. Spreads are behaving, even after notable redemptions overnight into Oct. 23 that followed earlier contributions.

The Silver Squeeze Is Mostly Logistics

Silver, around $50 per ounce, moves in bulk, unlike gold near $4,000 per ounce. That makes shipments heavy, slow, and costly.

Vault managers are “tired” from rerouting metal, especially back to London. The plumbing is holding, though some players get squeezed.

Money Metals even shipped a pallet of silver bars to India amid a scramble for physical. The squeeze is often about trucks, pallets, and vault slots, not broken markets.

Liquidity Is Skin-Deep

What looks like deep liquidity is frequently arbitrage-driven and dependent on lead market makers. In stress, they can step aside, and spreads blow out.

Merk notes similar fragility in private credit. Leverage and public wrappers that give retail exposure to historically accredited-only assets can obscure risk.

In this context, metals volatility is healthy. It discourages leverage and shakes out weak hands.

From Bonds to Bullion

A quiet but powerful driver is safe-haven investors disillusioned with bonds reallocating to precious metals. Public and private debt markets dwarf the metals complex, so even small reallocations can move gold meaningfully.

Retail’s muted role, along with continued buying through parts of the selloff, suggests the move may not be over. Merk avoids price targets but stresses the structural shift.

Dollar-Centrism Can Mislead

U.S. discourse remains dollar-centric, but the Dollar Index is an outdated, static basket. The euro carries roughly a 56% weight, making DXY a USD/EUR proxy.

That setup can show “strength” against other fiat while masking fiat-wide weakness relative to gold. Merk expects fragmentation rather than a neat replacement reserve: less global intermediation, more domestic financing of U.S. deficits, higher business costs, and a tailwind for gold.

Debt, Policy, and a Lame-Duck Fed

The U.S. national debt just eclipsed $38 trillion, up from $37 trillion roughly two months prior. Compounding is on display.

Abroad, policy oddities abound. Japan floated a stimulus to fight inflation by subsidizing those hurt by it.

At home, Merk characterizes Chair Powell as a “lame duck” without firm intellectual leadership on the inflation anchor. Fed projections imply inflation above 2% in the medium term. In practice, monetary policy is hostage to fiscal policy.

Gold Is the Constant

Gold hasn’t changed. It competes with cash when investors fear cash won’t preserve purchasing power.

TIPS, real yields, and policy credibility shape that perception. Retail selling often reflects cash needs or inheritance rather than macro views.

Metal migrates to strong hands and to geographies where it is valued more. For long-term holders, ounces—not headlines—are the point.

Takeaways for Investors

Expect volatility as a feature of this phase. Watch real yields, deficit trends, and liquidity stress in ETF spreads and flows.

Treat DXY with caution and test purchasing power against hard assets. Recognize that logistics—especially in silver—can jar prices without signaling broken markets.

In a world of thin liquidity, rising deficits, and growing fragmentation, the strategic case for precious metals endures.

Where to Follow Axel Merk

Find Merk’s writing and product information at MerkInvestments.com, where a free newsletter is available. Follow him on X at @AxelMerk.