(Kitco News)—The U.S. government is stepping out of the spotlight on the global stage to focus on domestic development, and while Europe is stepping up, investors can expect to see some volatility as the world adjusts to new global leadership, which will continue to support gold prices, according to one fund manager.
In an interview with Kitco News, Axel Merk, Chief Investment Officer and Founder of Merk Investments, said that the world is clearly changing, and new power dynamics are building as investors navigate a global trade war and a potential currency war as capital starts to flow back into Europe.
A rally in European stocks started Wednesday after Germany’s Chancellor-in-waiting, Friedrich Merz, announced a historic deal to increase spending on defense and infrastructure. Earlier in the week, the European Union outlined a plan to unlock almost €800bn for defense spending, and the UK government said last week it would raise its defense spending by £6bn a year, representing an increase to 2.5% of its GDP by 2027.
“Just a few days ago, everything in Europe was falling apart, but now European equities are skyrocketing on the expectation of massive stimulus spending,” he said.
Merk added that while Europe has room to increase its spending to boost its military and infrastructure, it doesn’t change the bigger picture — that global deficit spending continues to grow, which drives populism and uncertainty. […]
— Read More: www.kitco.com
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