With the highly anticipated Federal Reserve meeting behind us, Europe's debt dilemma will once again take center stage and this time, the financial fate of many eurozone nations could hang in the balance.
Bailouts in question
On Sept. 7, Germany's top court will rule on the legality of the country's contribution to Europe's bailout efforts. According to SpiegelOnline, the court is unlikely to rule the bailouts totally unlawful, but it is likely to put in place some limitations.
A ruling that undermines Germany's involvement in the bailout efforts could have major consequences, considering Germany contributes a substantial portion of the bailout funds in the region. Many believe that without Germany's financial support, default is imminent for financially troubled countries in the eurozone.
Greece, a country with a borrowing rate at an astounding 40% on two-year government bonds, will likely be the first to default without the financial support of Germany. This could mean more market turmoil in the Dow (INDEX: ^DJI) over the coming weeks, particularly for companies with the greatest exposure to Greece.
Many familiar financial institutions will likely suffer from a potential Greek default. Bank of America
Not surprisingly, the National Bank of Greece
Precious metals investors could benefit the most from the potential financial fallout in Europe, as many investors will likely flee the euro in search of safety. The gold ETF iShares Gold Trust
The bottom line
Pay close attention to the decision handed down next week by Germany's top court. The ruling has the potential to move the markets even more than the recent Fed meeting and affect your portfolio in the process.