How did Spain achieve a position of dominance in the 16th century, and what were it's strengths and weaknesses as a nation?

Spain
loomed as the dominant power of Western Europe throughout the sixteenth century. A significant
part of its power is closely tied with its empire in the Americas and the vast amounts of
treasure that would be shipped back to Spain, but it is important to note that the New World
Empire amounted to at best around ten percent of the monarchy's income (Merriman, 173). While
still a significant contribution fully on its own, we'll have to look further afield than simply
the Americas to explain this global power.

One thing to keep in mind:
Empires in the Early Modern Period were not nation-states as we know them today, and Spain as it
looked in the sixteenth century was a very different entity than the modern day polity of Spain.
Perhaps most importantly, it was dynastic. The Spanish Empire was first and foremost the
imperial holdings, first of the Trast¡maras and later the Spanish Hapsburgs, and Spain itself
was created out of the union of the kingdoms of Aragon and Castile under...