Taking issue with an earlier assertion on CNBC's "Fast Money" that Fed Chairman Ben Bernanke was "the only thing that matters," Merk pointed to another factor across the pond.
"There is somebody on the other side of the Bernanke trade, which is the European Central Bank. The Europeans, despite everything that's happened in Cyprus, have been mopping up liquidity," he said. "The Americans, the Brits, the Japanese, all printing money like crazy."
(Read More: Cyprus Leaves Russia Empty-Handed, Talks Collapse)
Merk said that the market continued to show signs of strength because of the isolated nature of the issues facing Cypriot banks.
"What people have realized is Cyprus is not contagious. We had a treasury auction in Spain last week that went great," he said. "If people were pricing in the remote chance of contagion, we would be very different than where we are today."
Merk said that the euro was attractive.
"I definitely want to buy the euro on dips," he said, adding that U.S. investments were certainly another option – with a caveat: "The challenge is it's expensive. The challenge is you're chasing something that's pushed up artificially."
Merk didn't express concern that Cyprus was looking to exit the euro.
"It's not rational to leave the euro. It's not healthy to leave the euro. But I think the events of last week have shown there are many irrational things happening over there in Cyprus," he said.
"The point is that Cypriot banks have very little outstanding debt other than owing depositors money, which means the contagion is very limited."
The nature of the currency, he added, was relatively unimportant when debt such as Germany's was still a viable option.
"Who knows whether the euro's going to be around in 10 years? But when I hold a German T-bill, I don't really care about those little details," he said. "I want to hold German debt. I don't want to hold Cypriot debt."
Trader disclosure: On March 22, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Tim Seymour is long puts AAPL; Tim Seymour is long puts BAC; Tim Seymour is long puts INTC; Tim Seymour is long puts SBUX; Guy Adami owns C; Guy Adami owns GS; Guy Adami owns INTC; Guy Adami owns MSFT; Guy Adami owns NUE; Guy Adami owns AGU; Guy Adami owns BTU; "My wife, Linda Snow, works at Merck"; Brian Kelly is long S&P Futures; Brian Kelly is long Gold Futures; Brian Kelly is long Euro Futures; Steve Grasso; Steve Grasso positions: AAPL; ASTM; GOOG; HPQ; LF; LNG; MHY; MU; NVIV; P; PXD; S; GDX; VLO; CUBA; GERN; HSPO; MU; NEM; NYX; BEAM; HAS; XRX; ZNGA; ALU; ARI; AWI; BC; BDE; CCJ; CL; CLX; COP; CROX; CUTR; DENN; DHI; ESC; FINL; FRC; GBX; GY; HAYN; HWD; IRM; KKR; LAMR; LUK; MA; MOVE; MPEL; NBR; NRF; OEH; ORI; PBH; POT; PXD; RAS; RDEN; RENT; RSO; RWT; SFI; SNA; ST; STSA; UA; UHAL; USG; VRNT; WRLS.