Last week, the German courts ruled in favor of supporting the
European Stability Mechanism (ESM). This clears the way for a
permanent bailout fund of some 500 billion euros to support
countries in the EU.
"This is a good day for Germany and it is a good day for
Europe," German Chancellor, Angela Merkel, said. "Today, Germany
once again sends a strong signal to Europe and beyond: Germany is
resolutely fulfilling its responsibilities as the biggest economy
and trusted partner in Europe."
It's a good first step, to be sure. But it was also a
After all, Germany is the lynchpin of the EU. It boasts the
strongest financial profile, the most robust economy, the highest
productivity, the most exports and one of the wealthiest
Its top-dog position also means that it has the most to lose in
the event of an EU collapse.
And we're not just talking about Ireland and Greece anymore.
With Italy and Spain (two of the largest countries in the world) in
trouble, too, a large chunk of the eurozone is now treading
So by endorsing the ESM, Germany's trying to protect its own
jobs and export-driven economy. And you can bet that Germany (and
the rest of the EU) will continue to do whatever it takes to keep
the situation under control.
In the end, though, the ESM's not going to be enough to stave
off the crisis Europe's facing. Not by a long shot…
The Turmoil Won't End With the ESM
Consider that unemployment in Spain is at 25%… Greece has failed
economically… Portugal's on the brink… Italy's relieved that the
yield on its 10-year bonds is now "only" four times higher than
Germany's… and austerity measures are pushing economies further
into the red.
Indeed, the crisis is far from over. That means you can expect
new developments from the EU in the near future. More specifically,
after the bailout,
won't be far behind.
Yep, the word first made popular by the Bush administration -
used to describe all initiatives to boost employment and economic
output - will soon find its way into the EU's lexicon.
And we all know that stimulus eventually leads to one thing:
printing more money!
Take the United States, for example. We have the best-oiled
printing presses in the world - and $16 trillion in debt to prove
The eurozone is heading in that direction whether it likes it or
The good news is, you only need to focus on one sector in order
to profit from the trend: gold.
Investors Already Can't Get Enough
By far, the biggest beneficiary of the upcoming
(yet-to-be-announced) stimulus will be hard assets.
Just consider what's already happening in the United States.
Although we haven't officially entered inflationary times yet,
investors realize that we could be getting close. And the new round
of quantitative easing only increases fears of inflation even more.
So investors are boosting their positions in gold to protect their
This has pushed the price of gold to all-time highs.
On such merits, once stimulus is introduced to the EU, gold
should only continue its upward trajectory in the long term, as
Bottom line: If you're looking for a way to profit from the
crisis (and upcoming stimulus) in Europe, consider loading up on
gold stocks. You might want to start with this particularly
undervalued company I recently recommended to
for more information.