"The Dollar Is Going to Suffer": Axel Merk Makes the Bull Case for the Euro

"The Greek tragedy is going to continue [and] there will be some ups and some down," says Axel Merk, founder and president of Merk Investments and author of Sustainable Wealth.

But Merk breaks with the conventional view about what the Greek saga - and concerns about Europe's other so-called PIIGS - means for the single currency.

A longtime bull on the euro, Merk believes the currency is emerging from this crisis stronger, rather than weaker -- especially relative to the dollar. "People should have much more confidence in the euro to stomach any shock that would come from Greece," he says.

There's a critical difference in how debt crises are handled in the EU vs. the U.S., Merk says: In the EU, countries are forced to take severe austerity measures when confronted by a debt crisis. Here, the Fed just prints more money.

That, in a nutshell, explains why the fund manager is long-term bullish on the euro and believes its recent decline vs. the dollar represents a "great buying opportunity." Putting his money where his mouth is, Merk is overweight European currencies in the Merk Hard Currency Fund, a roughly $445 million fund that is top-ranked in its category by Morningstar for the past 1- and 3-year periods.

With sovereign debt issues "throughout the world," Merk believes there will be a "less stable environment" for all currencies going forward. Because the European Central Bank is "less capable" than the Fed of monetizing its debt, the euro zone will "perceived to be safer" in coming years, he predicts. To support his point, Merk notes the ECB has been more aggressive in ending the extraordinary liquidity programs put in place during the 2008 crisis vs. the Fed, which has mainly just talked about phasing them out.

"Ultimately, people can print money much [easier] in the U.S. than elsewhere in the world and the U.S. dollar is going to suffer because of that," he says.