Deflation Is Europe's Greatest Threat


That process is starting on the asset side and there are opportunities in Europe. In the short term, the euro is on the topside but, in the next few months, that process will reverse because the European Central Bank (ECB) will be forced to expand monetary policy and, as it does, the euro should eventually weaken. We know all of the problems about the euro – essentially deflation, low growth – and the ECB is significantly behind the curve and will be forced to act. But the ECB’s ability to influence the euro is much, much lower than the Fed’s ability to influence the dollar, so the Fed will remain the main driver of euro-dollar.
My view:

The Euro is a vulnerable currency.  Despite the interventions of the past five years, it looks set for a reversal down.  If the EU economy doesn't perk up very soon, we could see QE again in Europe.

This environment could be bullish for gold.