How To Benefit From the Euro Crisis

Our recent news articles have painted a grim outlook for both the UK and the Eurozone economies. A number of our clients are either self employed contractors or entrepreneurs in small businesses and have been enquiring as to how the they can benefit from the current recession in Europe. 

We have already mentioned in previous posts that the pending Euro crisis will bring opportunities, particularly in sourcing supplies from Europe should the markets crash. The Euro is likely to devalue against the Pound and could offer a range of opportunities to enterprising businesses. 

A number of businesses and individual investors are holding onto cash due to few opportunities being available to deliver a reasonable return on investment given the low interest rate environment at present. Growth opportunities in both the UK and Europe will be low for the forseeable future and the US economy is currently battling rising unemployment and may not generate sufficient growth in the near term. Investors are advised to explore opportunities in Emerging Markets as a means of achieving growth next year. Many companies are looking to expand their presence, particularly in China and Brazil where the economies are forecast to continue to grow over the next few years.

Finally, the pending Euro crisis and the strong possibility of a Greek exit together with further bailouts leads us to anticipate further quantitative easing, or money printing, by the European Central Bank. It is therefore our opinion that not only will this lead to a depreciation of the Euro, but this will lead to rise in the price of gold as European nations seek to move their funds and protect their investments. South Korea recently bought 16 tonnes of gold in July in order to diversify their investment portfolio (and possibly take advantage of a future rise in the demand for gold). China are also looking to invest in the gold market with the proposed acquisition of miner, African Barrick Gold. This may serve to reduce the global supply of gold and hence provide upward pressure on prices. Investors are advised to hold 5% of their investments in gold. You should consider buying gold if you haven’t bought some already. Gold is still languishing at the $1,600 mark and there is significant potential for upside.