NEW YORK (TheStreet) -- China released some critical information about their economy on Thursday that caught the attention of many Central Bank watchers.In the release of the HSBC ( HBC) Flash Purchasing Managers Index, the earliest indicator of China's industrial activity fell to 48.7 in May from a final reading of 49.3 in April. It marked the seventh consecutive month that the HSBC PMI has been below 50, indicating economic contraction, a.k.a. economic slowdown. What really caught my eye was how it was reported in a CNBC news story. The story started off by saying that ongoing, "weakness in China's economic data, as well as growing risks of a Greek exit from the euro zone, will drive Beijing to launch aggressive stimulus measures in order to prevent a further deterioration of growth in the world's second-largest economy." For weeks now I've been sensing the growing possibility of a coordinated monetary stimulus effort by the central banks of the U.S., Europe and China. Speaking of China and its current economic cooling, the article revealed that: "All signs point to the fact that the slowdown is not letting up as fast as authorities had expected, partly because of challenging external conditions and partly because of the fact their tightening last year was too effective," Donna Kwok, HSBC, Greater China economist, told CNBC Asia's "Cash Flow." "We are going to have to see more active support being directed directly to consumer and business rather than through the monetary system via the banks," Kwok added. The article also cited some specifics concerning the kind of monetary actions that are needed as well as likely: "Dariusz Kowalczyk, senior economist and strategist, Asia ex-Japan, at Credit Agricole, said the weak HSBC Flash PMI data strengthen the case for easing and he expects more fiscal stimulus. "While Kowalczyk believes monetary policy is unlikely to be used as aggressively, he expects a push towards quantitative easing through "pressuring" banks to lend more via further reductions in the reserve requirement ratio." If quantitative easing is required in China's robust economy, can you imagine how much more it's needed in the stagnant economies of Europe and the U.S.?
So here's the plan on how to profit from the reaction to the eventual monetary stimulation and massive injections of capital (and increased monetary velocity) that is coming sooner than later.Begin with assets that will go up as a result of the weakening of the paper currencies. It's not rocket science, but whenever we've had Federal Reserve style quantitative easing, the symbols of wealth preservation went up sharply in value. Here's a 5-year chart of the SPDR Gold Share ETF ( GLD). You can see where economic stimuli and Quantitative Easing (QE) began in late 2008. QE1 was announced at the end of August 2010 and QE2 kicked in the spring of 2011. Each time it fueled gold's ascension higher and higher.