‘The Biggest Threat We Face Might Be Economic Growth’: Merk

In contrast, the "ugly duckling" euro, as he calls it, has not taken the Fed's money printing approach.

Whereas the U.S. has expanded its balance sheet by close to 360% since August 2008, the European Central Bank's balance sheet has expanded about 50% over the same time period.

Moreover, "the cost of borrowing for weaker eurozone countries has been falling since August 2012," he writes; the contraction in the spread between Spanish 10-year bond yields over the German benchmark from well over 6% to about 2% today adds an important source of stimulus, he says.

Merk describes a number of efforts and ideas to weaken the value of the euro — which for structural and other reasons have been ineffective — which is further good news for euro currency investors.

The eurozone has been "healing," he says, noting that European flare-ups no longer trigger "contagion," as in previous crises involving Cyprus and Spain. A sign of the improvement is the healthy development of hedge funds buying Greek banks and Spanish real estate — risk investments that, if they go wrong, will damage wealthy private investors rather than major European banks as in the past.

The U.S., on the other hand, is saddled with a massive current account deficit, which, as he puts it, means it "needs to attract over 1 billion U.S. dollars every day to keep the currency from falling," in contrast to internally financed eurozone budget deficits.

That makes the U.S. vulnerable to bond vigilantes in the future, Merk warns.

"If [the] bond market acts up the U.S. dollar might come under more pressure than the euro has ever seen," he concludes, "and would force policy makers to impose reforms."