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October 25, 2005

Bernanke - On the Road to Disaster?
by Axel Merk

Ben Bernanke, current chairman of the administration's council of economic advisors, is President Bush's nominee to succeed Alan Greenspan as chairman of the Federal Reserve. We believe will see more fine tuning of monetary policy with potentially negative implications for the dollar. We have extensively commented on Bernanke for over a year:

• Bernanke is on record as a supporter of policy that seeks to manage the entire yield curve. See Is a Dollar Crisis Looming? (October 10, 2005); see also The Modern Command Economy: the 30-Year Bond is Returning (August 4, 2005)

• Bernanke is a supply side economist. See Greenspan: "We can guarantee Cash, but we cannot guarantee purchasing power!" (February 16, 2005)

• In my view, Bernanke uses communication seeking to manage expectations in lieu of transparency. See The Fed Embraces Public Perception in Place of Sound Monetary Policy (April 18, 2005)

• We comment on how Ben Bernanke is getting more influential in The Emperor's New Clothes (October 6, 2004), and forecast that he will succeed Greenspan in Fed May Not Stop Inflation (August 18, 2005)

• We believe Bernanke promoted the plan to hand out $2,000 to hurricane victims. It is an indication of more micro-management to come. See China Is Open for Business: Will China's growth eliminate inflation? (September 21, 2005)

• Let us not wrap up a discussion about "Helicopter Ben" without a reference to his infamous comments about throwing money out of helicopters. See China's Basket of Currencies (July 26, 2005).

Axel Merk
Axel Merk is Manager of the Merk Hard Currency Fund

The Merk Hard Currency Fund is a no-load mutual fund that invests in a basket of hard currencies from countries with strong monetary policies assembled to protect against the depreciation of the U.S. dollar relative to other currencies. The Fund may serve as a valuable diversification component as it seeks to protect against a decline in the dollar while potentially mitigating stock market, credit and interest risks - with the ease of investing in a mutual fund.

The Fund may be appropriate for you if you are pursuing a long-term goal with a hard currency component to your portfolio; are willing to tolerate the risks associated with investments in foreign currencies; or are looking for a way to potentially mitigate downside risk in or profit from a secular bear market. For more information on the Fund and to download a prospectus, please visit www.merkfund.com.

Investors should consider the investment objectives, risks and charges and expenses of the Merk Hard Currency Fund carefully before investing. This and other information is in the prospectus, a copy of which may be obtained by visiting the Funds website at www.merkfund.com or calling 866-MERK FUND. Please read the prospectus carefully before you invest.

The Fund primarily invests in foreign currencies and as such, changes in currency exchange rates will affect the value of what the Fund owns and the price of the Funds shares. Investing in foreign instruments bears a greater risk than investing in domestic instruments for reasons such as volatility of currency exchange rates and, in some cases, limited geographic focus, political and economic instability, and relatively illiquid markets. The Fund is subject to interest rate risk which is the risk that debt securities in the Fund's portfolio will decline in value because of increases in market interest rates. As a non-diversified fund, the Fund will be subject to more investment risk and potential for volatility than a diversified fund because its portfolio may, at times, focus on a limited number of issuers. The Fund may also invest in derivative securities which can be volatile and involve various types and degrees of risk. For a more complete discussion of these and other Fund risks please refer to the Fund's prospectus. Foreside Fund Services, LLC, distributor.

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