Axel Merk: How Funding for the Junior Mining Sector is Under Threat

Tom Bodrovics welcomes back Axel Merk, CEO of Merk Investments, who manages investments worth $1.2 billion in gold and related assets. They discuss the ASA closed-end fund, which invests in precious metals mining, processing, or exploration companies, and is unique due to its longer-term focus compared to ETFs. Merk took over management in 2019 and transformed it into an investment vehicle for junior mining companies. This fund helps small development and exploration firms by providing capital during funding rounds and increasing their share prices, making them more attractive to larger investors.

Merk also talks about the potential impact of the Federal Reserve's monetary policies on gold mining and equities during economic downturns or periods of easing financial conditions. He shares his past predictions for a possible recession in 2023 but acknowledges recessions are unpredictable. Merk believes that gold miners provide value over the long term, despite risks, and stresses the importance of risk assessment.

Axel discusses Saba Capital Management's ongoing attempts to gain control over ASA Gold and Precious Metals Limited. If successful, this could negatively impact the mining industry due to potential cost-cutting measures or changes to the fund's mandate. Despite expressing support for ASA as a fund manager, Axel encourages constructive dialogue between all parties. Axel highlights ASA's unique features that make it difficult for activists like Saba to achieve their goals easily. The future implications include continued engagement with Saba or potential liquidation if they gain control, and the importance of shareholder votes in the outcome. Investors are encouraged to stay informed and vote in proxy contests.

Time Stamp References:
0:00 - Introduction
0:38 - ASA Closed End Fund
3:42 - Funding for Juniors
10:43 - The Monetary Environment
15:26 - Fed & Distorted Data
17:57 - Recent Moves in Gold
20:50 - Closed Vs. Open Funds
25:08 - Strategic Investments
26:42 - ASA Board Concerns
32:16 - SABA Contested Proxy
35:10 - A Call to Shareholders
37:30 - Friday Apr 26 Vote
41:06 - Future for the Fund?
44:33 - Wrap Up

Guest Links:
Twitter: https://twitter.com/AxelMerk
Website: https://www.merkinvestments.com/
Blog Post: https://www.merkinvestments.com/insights-and-reports/2024-03-18
Website: https://asaltd.com
LinkedIn: https://www.linkedin.com/in/axelmerk/detail/recent-activity/
Amazon Book: https://tinyurl.com/4ebpcaew

Axel Merk is the President and Chief Investment Officer of Merk Investments, manager of the Merk Funds.

Founder of the firm bearing his name, Merk is an expert on macro trends. He is a sought-after speaker, contributor, and author; Axel Merk's book, Sustainable Wealth, describes how the greater economic universe works, how it might affect your finances, and how to manage those finances to seek financial stability. Axel Merk holds a B.A. in Economics (magna cum laude) and an M.Sc. in Computer Science from Brown University.

Axel Merk founded Merk Investments in Switzerland in 1994; in 2001, he relocated the business to California. He has grown Merk Investments into an investment advisory firm offering investment funds and advisory services on liquid global markets, including domestic and international equities, fixed income, commodities, and currencies.

Axel lives in the San Francisco Bay Area with his wife and their four children. Furthermore, he is a marathon runner and a private pilot.