Why government should not encourage the theft of financial information

Criminal activity, including common theft, has always been profitable – but crucially has also always been frowned upon by governments, until fairly recently anyway. The more recent trend of stealing confidential bank information has become a thorn in the side of the private banking industry, and provided an opportunity that cash hungry governments have welcomed with open arms – and it is not too difficult to pull it off.

A global hunt for taxes and tax evaders has gathered pace and been high on the G20 agenda ever since the scale of the 2008 global crisis became apparent, with the OECD (Organization for Economic Co-operation and Development) being the organization at the forefront of a global crackdown on tax evasion. The OECD advocates the exchange of information between tax authorities to better equip them to tackle illegal tax evaders but the OECD’s tax standards call only for cooperation with foreign tax authorities if there is a particular and justifiable case, despite the fact that many believe automatic exchange of information to be the only really effective way to end pandemic tax evasion.

There is a question, however, as to the extent to which the authorities should have open access to our private banking details. Any individual would welcome cooperation to combat not just illegal tax evasion – but also money laundering, fraud and terrorism. However automatic information exchange would leave details of one’s finances and activities transparent for government agencies regardless of whether there is any suspicious activity or not.

This issue was forced onto the front pages with the reoccurrence of the story of the theft of client data from HSBC in Switzerland by former employee Herve Falciani (see picture) in 2008, which the bank, Europe’s largest, had previous stated had affected ‘less than 10 clients’. The revelation that up to 24,000 accounts had been affected certainly threw new light onto the story and threw the world of private banking into a state of panic.

It wasn’t certain exactly how Mr Falciani accessed and stole the data, and it was not an isolated incident – similar cases in places such as Liechtenstein have forced banks to take action, but more importantly, led to a disturbing new trend.

Falciani fled to France while under investigation, and handed the information to the French authorities, who indicated that they were prepared to use this information to look into financial activity of HSBC clients to aid its hunt for tax evaders. To add to this Germany’s Finance Minister, Wolfgang Schaeuble, raised the bar in the fight against tax evasion further, saying Berlin was prepared to not only accept and use, but also pay for stolen data on potential tax cheats at an unnamed Swiss bank.

The banks and governments on the receiving end have been united in criticizing the thefts and subsequent purchase and use of such information, with the Swiss government recently seeking the arrest of 3 German tax inspectors who paid $3.3 million for stolen bank information. It certainly strikes a blow to the concept of Swiss Privacy and confidentiality – and one starts to see disturbing trends developing if this becomes common practice.

One of the reasons for the increase in data theft and perceived lack of data security at banks is due to improved technology. When banking secrecy laws were first introduced in 1934 the banking world was one of hand-written ledgers and punch cards, security was simpler. Today we live in a world of CD-ROMs, pen-drives and smartphones, making the ability to copy or steal data easier. Banks have, of course, invested in security measures to counter this technology but a simple mobile phone with a camera can take a screen-shot photo which is practically impossible to avoid. The ability to steal data is not in question, but the reason why it is taking place is, unfortunately, easy to answer – personal gain.

“a simple mobile phone with a camera
camera can take a screen-shot photo
which is practically impossible to avoid”

So why is the theft of bank data such a problem? Well, let us start with a moral glance at the topic, something which the U.S., German, French and British governments will no doubt not even consider.

Under the current system, reputable institutions co-operate, and are required to, in relation to cases where suspected illegal activity is taking place – the basic premise being that there must be some basis for the accusation. If stolen data is used, anyone can be investigated, or have their assets frozen, at any time. It is important to realize that legal tax avoidance is one of many possible motives for placing money in an offshore account, confidentiality and locating assets in a politically and economically stable region are two alternative motives. The use of stolen data places everyone in the same ‘under suspicion’ category. The concept of innocent until proven guilty is truly dying.

This push for financial transparency really began with the enabling of the hastily drafted and approved USA PATRIOT Act and has been further strengthened by the unconstitutional and almost dictatorial FATCA act which is to come into effect at the start of 2013. These are two simple examples of governments eager to hide the fact that the global crisis was a result of over-lending and poor regulation and to recover as much money in tax as they can while destroying all forms of privacy.

Imagine an alternative scenario such as phone bugging. The government authorizes the concept of bugging phones or monitoring emails to search for suspected terrorism or illegal activity. I, for one, am grateful that this takes place, but when the concept is extended to monitoring ALL calls and emails – it starts to make me uneasy. If you have any doubts that this is ready to take place, you should read about the NDAA legislation being proposed by the Obama regime.

Maybe it is time to take an admirable look at the Swiss stance on the subject at hand? After all they are looking after the interests of their clients whilst promising to cooperate fully with the authorities. Are we ready to advocate the concept of paying criminals for data stolen from banks? In my mind it is a highly questionable position to take. The moment you create a market for this type of data is the moment that you actively encourage the theft of such data. This was a crime, last time I checked.

Let’s be quite clear about this, what started off as an opportunistic purchase became an incentive for theft and has reached the point where governments are now openly encouraging this theft by publicly stating that this type of theft brings no penalty, just a financial reward. Governments really seem to ignore the moral values by which most everyday citizens live their lives.

I fully support the attack on terrorism and the underground economy – but one has to ask where it will all end? Once the government is able to obtain information in this way, it presumably will not stop there. Structures and trust setups exist to add extra layers of security to protect private interests. It was a concept that many considered unnecessary for a long time. Government willingness to cooperate with the stolen data concept will certainly push people to look into the type of structure options available to them. Private Trust Banking, which adds an additional administrative layer to protect your financial privacy, as offered by Capital Conservator is one of very few ways still available to protect your financial details as big brother governments look to take away any privacy you (may?) still enjoy.

Contact us using for form below to learn more about protecting you financial privacy.

See more articles by David Finzer and Capital Conservator below:

Private Trust Banking – 21st Century Offshore Banking

Gold and the 2nd Great Depression

A Defense of Tax Havens

For potential business migrants to New Zealand there is a wealth of opportunity. However before embarking on the journey, migrants are wise to make enquiries regarding the New Zealand business environment, the opportunities for investment, the economy, and most importantly Immigration New Zealand’s business migration criteria. We shall discuss all these matters below and give valuable practical guidance for both potential business migrants and also for advisors in the field whether they are lawyers, investment consultants, accountants, government officers or immigration agents.

In order to understand the current opportunities for investing in New Zealand, one has to understand New Zealand’s past, present and future from both historical and economic perspectives.

NEW ZEALAND’S BUSINESS MIGRATION HISTORY

New Zealand has always been a migrant country. It’s past, present and future have been politically and economically shaped by migrants.

In general terms we can see that New Zealand was “settled” by predominatly English, Scottish and Irish migrants initially and this group predominantly made New Zealand a farming community and imported English traditions.

Subsequently a wave of Croatian, Dalmatian, Yugoslavs and Polish migration from Europe shaped New Zealand’s wine and fishing industries as well as small goods cheeses and meats.

Russian, Japanese and Chinese financing in joint venture with Maori industries shaped what are today some of New Zealand’s major industries, aquaculture and fisheries.

Wherever we look New Zealand’s growth industries and its new industries are shaped, formed and founded by new migrants with new ideas. Indeed, migrants are directly responsible for 33% of New Zealand’s economic growth in this five year period.

For some time, successive New Zealand governments gained significant votes from trying to stem migration and restrict investment. This has caused a reversal of migration and an outflow of skills, capital and labour. Recognizing this, the current Government have attempted to encourage migration by making it easier to invest and do business in New Zealand.

As we can see over the course of New Zealand’s business migration history, the industries that have developed and blossomed have changed over time. The New Zealand government’s primary concern is that new business migrants will engage in businesses that benefit New Zealand.

This means that business ideas and business plans need to address in detail how an operation will benefit New Zealand. Before addressing this issue in detail we will look at the general framework for the Long Term Business category.

LONG TERM BUSINESS CATEGORY

General Criteria

Before contemplating whether to make an application under this category, an applicant should look at whether they meet the general criteria for business migration.

These requirements can be briefly summarized as below:

a) Being of Good Character – An applicant should ideally have no criminal convictions or only minor convictions if they are to meet Immigration criteria [although there are provisions to have these requirements waived].

b) Being of Good Health – An applicant should not have medical conditions that will place an undue burden on New Zealand’s health system [although there are provisions to have these requirements waived].

c) Having the requisite level of English – note this varies depending on the category but generally level 4 IELTS will suffice which is quite easy to obtain. This can in some cases be avoided if the principal applicant can demonstrate that they have an English-speaking background, or qualifications obtained in English – (it is also to be noted that family can pre-purchase English lessons to meet criteria). In reality very few applicants explore this option whereas the exceptions to the IELTS score requirement are actually very wide and should be explored in depth.

Business Criteria

It is to be noted there are no maximum or minimum capital requirements for a business and hence business plans can be approved for even the smallest business ventures.

What many forget is that the long term business visa is simply an application to be permitted to be self employed in a business in New Zealand.

Essentially, this means that the visa is granted for involvement in a business that is not of “a passive or speculative nature” i.e. the applicant must be involved in the management of the business. On some occasions that does not necessarily mean he has to live in New Zealand during the whole course of the visa.

The matters that need to be addressed are:

a) Satisfactory evidence that there is access to sufficient capital to finance the proposal (and realistic financial forecasts). This means that the capital may be borrowed or part of a larger investment. The key is that there is proper research and evidence of the establishment and running costs and not just a speculative plan. That is why simply using an accountant for business projections does not work without serious research into the business by for example taking the running costs of similar businesses and using them as a base.

b) Has relevant business experience – this criteria is actually rather wide since the question is of relevant experience which can mean training, education or conduct of business generally in ten parts or active involvement in a business via management.

c) Can maintain themselves in New Zealand – many forget the importance of this criteria, sufficient funds need to be available to ensure that the applicant and their family can support themselves via accommodation, schooling etc whilst in New Zealand on a long term business visa. The living costs need to be addressed properly which will demonstrate that the applicant has sufficiently thought about them.

d) Knows about the business and the New Zealand business environment [and ‘genuinely interested in establishing a business in New Zealand”]. There are a number of good business plans and ideas that fail on this alone because the way the plan was drafted demonstrated that the person does not genuinely wish to set up a business but wishes simply to use this as an immigration vehicle. Setting up business simply for immigration is contrary to policy. Sufficient thought must be given that the business will genuinely be profitable and will be realistic. In this regard, engaging a market research consultant or firm able to analyse the viability of the business will significantly increase the prospect of success since it demonstrates that the applicant has thought about the venture seriously.

Benefit to New Zealand

The primary criterion for a Long Term Business application which cannot be stressed enough is that the main task of the immigration specialist is to determine whether the business will benefit New Zealand.

This is outlined in policy BC 4.15 as a business which promotes New Zealand’s economic growth through:

1. Introducing new, or enhancing existing technology, management or technical skills;
2. Introducing new or enhancing existing products or services;
3. Creating new or expanding existing export markets;
4. Creating employment;
5. Revitalizing an existing business.

It is interesting that beyond this policy there are few written guidelines as to what is or is not a benefit to New Zealand. However it should be noted that a proper business adviser first analyses the trade figures and statistics for a particular location – for example a milk bar or dairy may be of no benefit in Auckland where there are already a number of such businesses but would be beneficial in a small town where there are no such businesses.

Indeed like in China establishing a business in Shanghai may have no economic benefit to the city’s economy whereas the same business in Harbin may be considered eligible for government subsidies. The location of the business may determine its benefit in case of small to medium sized businesses involving retail, wholesale, hospitality or tourism.

Thus for example buying a run-down hotel in Auckland may bring little benefit to the economy whereas buying the only hotel in small town would revitalize the town.
In this regard surprisingly little attention is paid to New Zealand’s smaller town and cities which offer an opportunity not only for investment but the possibility of close relationships with city councils who would be willing to support any venture.

As an example opening a yum cha restaurant in Auckland may not be a benefit since there are so many such restaurants, however opening a restaurant in Taumaranui would pass the test.

Many do not look at these options because they wish to live in Auckland. However there is no requirement to live at the business address, since for example the owner may be more useful operating the business from Auckland and putting staff in place to run the business at the location.

How to choose a business project that meets immigration criteria

The question of benefit to New Zealand should be looked at as a dynamic rather than a static i.e. the economy changes and businesses which may have been valuable 20 years ago have reached saturation point now.

Generally and at the risk of generalization there are numerous areas or industries which would be regarded as beneficial as an example:

Any business which tends to promote New Zealand tourism especially in growing markets such as china would be favorably looked on. There are surprisingly few operators running fishing, hunting, an eco tourism ventures designed for the Chinese market or hotels catering to the Chinese. These would almost automatically represent a boom industry for the future.

New Zealand’s organic products and foods industry is growing as is the world’s organic market. There is huge potential to export New Zealand organic products to China. There are a number of available consultants in this field.

New Zealand has recently indicated that it will open up its aquaculture industry. The clam waters of New Zealand combined with the success story of the mussel industry suggest a strong indication that aquaculture in areas such as eel farms, prawn farms, fish farms, mussel and oyster farms for export will be both profitable and considered beneficial to New Zealand.

New Zealanders are known as innovators, there are a number of new inventions and technologies which have immense potential that can be sourced through various databases such as trade and enterprises as well as trade expos. Such innovative companies are always looking for joint venture partners and capital. They range from novel boat and yacht design and application to new software technologies. The set up of software industries deserves special note- most people think that such projects require vast capital but in New Zealand for example the multi-million ‘Trade Me’ site started out at a purchase price of around $8000. Linking New Zealand products with export software applications is certainly something which is an emerging industry in New Zealand.

Much of New Zealand is underdeveloped and the development of residential and commercial property is about to commence a further boom cycle, those investing in this will be encouraged to bring in new capital and skills.

An area which is booming is English language schools and the general education sector. Industries which train a foreign language (for example Chinese schools or Kindergartens) or are involved in the education sector will be welcomed.

All of the above may appear rather capital intensive but there is absolutely no barriers to establishing small businesses. Restaurants, nightclubs, hotels, small farms, and even dairy stores have all been approved in the past.

Finally, an area we specialize in (insolvent businesses) is an area which is rarely considered. The criteria of “revitalizing an existing business” are met by acquiring and making solvent an insolvent operation.

In this economic climate many businesses fail because of lack of capital, poor management, relationship breakdowns or other matters totally unconnected with the viability of the business. In such a situation the business can be purchased for a fraction of the set up cost. Indeed sometimes the former power or receiver will allow you to purchase the business without up-front capital.

The purchase of such a business meets the criteria of benefit if some employees can be trained and the business can be saved. Further in such business the hard work of set up, figures and business analysis has already been completed. Of course only viable businesses should be looked at and that is why you need a competent business lawyer and migration specialist to source and analyse the right business for you.

The importance of communication and presentation

One issue that should not be overlooked when preparing a Long Term Business application is the importance of communication and presentation. The INZ operational manual refers to the “streamlining” of business migrants. This means that Immigration is required by policy to process applications quickly and in priority to others as well as have them assessed by Immigration Business Specialists.

In addition, it is now policy that NZIS branch managers will provide liaison services for the business immigration specialists to facilitate contact with applicants.

This means that your application needs to be made from the perspective that it will be assessed by a competent specialist, quickly and efficiently. In such matters not only is the quality of your information and ideas a must but also you or your adviser should regularly communicate with your assessor. This communication allows you to develop or modify your business plan to meet or address the concerns or suggestions of your immigration adviser.

The mistake made by many is that, they see this as a one off application process, but that is not the intention of the policy which is not only to process applications but to facilitate interaction with the applicant.

Because immigration officers understand that establishment of a business in a foreign country is a lengthy and difficult process, such communication is in fact welcomed and often the immigration specialist should be seen more as a business consultant or partner rather than simply as an assessor.

A Final Note – Flexible Criteria

What many of those looking to migrate to New Zealand are rarely advised about is that the long term business visa criterion is extremely flexible allowing migrant a number of options including:

a) Forming a joint venture with an existing business by buying 25% or more;
b) Buying a franchise;
c) Buying a business which is currently insolvent and revitalising that business (this indeed represents a very cost effective entry into the market);
d) Buying an existing business or;
e) Establishing an completely new business;
f) Relocate your existing business to New Zealand.

If for example you relocate a business you will be eligible to bring some of your key employees with you.

As can be seen, the above criteria offer an extremely flexible immigration policy that allows up to a 3 years visa (with subsequent residency) what many advisors and applicants fail to appreciate is that even these flexible criteria may on occasion be waived.

In BC8 it is stated

“If an applicant fails to meet policy, business immigration specialists must weigh up all the circumstances of the case to see whether an exception to policy is justified. In doing this, they will take into account any circumstances that would warrant an exception”.

This means that in special circumstances, requirements such as the English language requirement can be waived. An example would be that for example the business does not require English since it may for example involve only export to China.

Business immigration criteria are necessarily complex and before a migrant applies for business migration it is strongly advised that they seek the advice of a suitably qualified professional. One thing is clear, New Zealand needs new business investment and the National government has stated that it will welcome investors in the business and entrepreneur categories. There is no time like now to apply for business migration to New Zealand.

To learn more about Entrepreneur or Investors immigration and how Equity Law can help you, contact us using the form below.

See more articles by Evgeny Orlov and Equity Law Barristers below:

Is New Zealand the Switzerland of the South Pacific?

Why Trust a New Zealand Trust

Introducing Strategic Metals

Strategic Metals, by definition, are the metals needed to initiate and complete economic and manufacturing goals and projects. These metals do not have household names but, they are found in nearly 80% of the products in and around your house. National Geographic referred to these metals in 2011 as “The Secret Ingredient of Almost Everything.”

Strategic, industrial or technical metals, as they are often referred to, are not the same as the group of metals referred to as rare earth metals. Rare earth metals, come in powder form, are found naturally in the earth, and therefore they are mined for directly. Strategic metals like the ones listed below, are the by-product of complicated ore refining.

Strategic Metal Applications

The following metals are important for their numerous important applications, limited availability, and increasing demand.

Gallium: Non-toxic mercury substitute, LED’s, Wafer, Electrical high frequency components, Integrated Circuits, Lasers, Solar cells for powering satellites etc., Alloying additive, Liquid Metal Heat Transfer compound, Fuel Cells, Pharmaceuticals

Hafnium: Nuclear Technology, New high capacity power plants, computer chips (Intel), super alloys, flash lamps with high luminous efficiency, Super alloy for turbines, filaments for lighting, electrodes, plasma cutting tools

Indium: Bearings in jet engines, flat screens, glass coating on touch screens, medical tech, solar tech, LED’s, apparatus engineering, displays for cell phones etc., transparent electronics, solders, special coatings, cryogenics

Tantalum: Small capacitors with very high capacity, capacitors for cell phones and automobiles, medical implants, fracture pin nails, screws and jaw prosthesis, chemical industry, super alloy for aircraft engines, nuclear power plants, surgical instruments

Tellurium: Alloying component for steel, cast iron, copper and lead alloys, alloying component for stainless steel, semi-conductors, photo diodes, thin film solar cells, optical storage ( CD, DVD, Blue Ray etc.,) Novel materials for data storage media such as ” phase change random access memory”, glass and ceramic paints, military armaments.

Tungsten: Armaments, light bulbs, counter balances, jet engines, radioactive shielding, rotor blades, guidance platforms, vibration governors, fly wheels, die cast tooling, gyro rotors.

Bismuth: Antiseptic ointments for burns, Antiseptic powder, coagulant powder, magnetic therapy, radiopaque medium, non-toxic substitute for lead, optical glasses, high quality coatings, emulsion paints, plastics and printing inks, shielding for nuclear reactors, lubricating grease, pyrotechnics.

Molybdenum: Alloying additive for increasing strength, corrosion and heat-resistance, thin-film transistors, aircraft parts, rocket parts, catalyst for sulfur removal, sealed electrical lines in halogen and high-pressure gas discharge lamps, radiopaque medium for x-rays, dietary supplement.

Chromium: Gas turbine blades, material die-plates and compression impact dies, decorative surface coatings, refractory material, instrument components in the chemical, medical, and food industry, dyes and pigments, curable surface coating for pistons and cylinders, leather production.

Cobalt: Super-alloys, increasing wear and heat resistance of alloyed and high-alloy steel, heat-resistant paint and pigments, drying additive for paint and varnish, radioisotopes, trace elements in medicine, alloy component for implants, turbine blades, and chemical equipment.

Zirconium: Cladding material for fuel elements, refractory ceramics, acid-resistant equipment components (e.g. pipes, nozzles and valves), material for vacuum equipment, electrolytes in solid oxide fuel cells, cubic zirconium, pigment in ceramics, nuclear reactors

Rhenium: Catalyst for high octane unleaded gasoline, stealth technology, jet engines, and missile propulsion.

Rare and Strategic Metal Supply and Demand Issues

The metals listed are critical because there is a relatively finite amount that can be produced each year, combined with ever-increasing demand. These metals, found in consumer, medical and engineering products are much sought after by the increasingly affluent emerging populations accounting for literally, hundreds of millions of people, in countries like China and India.

Hundreds of millions of souls are emerging from poverty and entering lower and middle-class status, and want all the products and gadgets that the West takes for granted. This increased demand for the products and metals therein, has resulted in significant increases in the values of the metals, but in true inelastic form, has not resulted in price increases in the products themselves. This is due to the significant margins that manufacturers enjoy on the production and sale of the products, and the very small amounts of the metals used in each product.

Compounding the natural supply and demand situation is a Chinese monopoly on the refined metals. The Chinese have assumed the responsibility of refining the world’s ores and rare metals to extract these metals. With that responsibility, China has observed an ever-increasing number of applications for the metals every year for the last 20 years, and they want to receive the true market value for the metals, and also need them for their own economic strategic growth plans.

With this monopoly, China has been able to impose an embargo planned over the next few years, beginning in 2010, that will make it increasingly difficult for other nations and manufacturing sectors to acquire the metals needed for their strategic plans. In response to this embargo, the USA, Japan, and EU have filed a formal WTO complaint against the Chinese to stop this embargo.

Most experts feel that this complaint will not release more strategic metals onto the market, even if the decision goes against China. China has several responses they can use to win the decision, or inevitably, not to comply to a WTO order to end the embargo. First of all, China can very effectively argue that many of the metals they are withholding are vital for NATO Defense and weapons as well as consumer products (Countries cannot go to the WTO over issues that relate to Military or Defense applications).

Secondly, and more importantly, China does not have to comply with WTO orders. In this case, it is the complaint nation’s obligation to use an economic weapon, such as an embargo, against China. This can go on and on, obviously, without ever forcing China to release rare, strategic metals to rest of the world.

Switzerland as a location to store strategic metals in private vaults

Many overseas planning experts recommend storing precious metals or valuables in private facilities rather than public or government entities. Switzerland is one of a few locations around the world that is a good location to do this. Swiss law, and the de-centralized Swiss government made up of Cantons, by its very nature, protects individuals from government intervention, or god forbid, confiscation. This fact, combined with the freedoms and protections, provided to private institutions in Switzerland, makes this a natural choice.

In conclusion

The dynamics surrounding the rare and strategic metals are not expected to change significantly over the next 10 years. The supply and demand issues in particular, are for the most part unavoidable.

Even if new mining operations attempt to remove the Chinese stranglehold on these metals, they will fall significantly short of meeting the increased demand, as emerging populations become more affluent and join the ranks of consumers.

Participating in an ownership program of these metals, coupled with overseas storage, similar to precious metals programs available today, is a viable consideration for anyone concerned with inflation and currency devaluation.

Please provide your contact information in the form provided below to see more information on metal ownership and storage programs now.

You are probably reading the title thinking I have lost my mind. Your thoughts are probably something like this; “He promotes offshore asset protection as a necessity in these tumultuous times. How can he rationally recommend asset protection structures in the US?”

While it is true, I do think offshore companies, offshore banking, offshore trusts and other options have an enormous amount of value for effective asset protection planning, there are several very good reasons to implement US domestic structures in your asset protection planning process.

Real Estate Investors. One of my most common categories of clients are real estate investors. More specifically, US real estate investors. In my experience, most real estate investors begin their asset portfolio one property at a time. They buy their first rental house, then another, then another.

Some begin in multifamily or commercial real estate investments, but regardless most start small and strategically add properties as budget and funding sources allow. During this process more real estate investors are narrowly focused on growing their business and less concerned with asset protection.

Unfortunately for real estate investors, asset protection should be one of their primary concerns because as your asset portfolio grows, so does the size of the bulls-eye on your back. Even more importantly than the size of the target is the ease with which future potential creditors can seize or lien your assets in the event of a judgment.

For me to recommend offshore structures for owning US domestic real estate assets would be ignorant and irresponsible. I am sure many people use offshore companies like LLC’s and IBC’s to own their US real estate, but it is just not the best way to go about proper structuring.

As this article is not meant to be a tax planning guide, suffice to say there are some negative tax consequences using offshore companies to hold title to US real estate.

There are a variety of ways to properly structure your real estate holdings for effective asset protection planning. Each investor’s situation is different so there is no ‘blanket’ approach, but the following is a list of tools we use for real estate asset protection planning:

• Wyoming or Nevada LLC’s
• Land trusts
• Friendly liens or equity stripping arrangements
• Asset protection trusts

For an investor with a portfolio of single family homes, utilizing land trusts for holding property title with one LLC as trustee and another LLC as beneficiary is an excellent option. This provides a cost effective asset protection structure that is easily scalable as you add properties to your asset portfolio.

Another option would be to use a Nevada Series LLC. With a properly structured operating agreement, you can have one LLC with each property held in a different series allowing you to segregate you risk.

For those of you that have more significant holdings like high value commercial property or several residential properties, it is an excellent idea to have a completely separate LLC as your property management company so that you can segregate the operational side of your business from your asset holdings.

I won’t go into too much depth here, but equity stripping is an excellent option for real estate investors to protect the asset value in your property and lower your profile risk. A property with little or no equity is not very attractive to a creditor since there is effectively no equity to attach.

Of course for those interested in making their asset protection plan bulletproof (or as close to that as possible), wrapping your LLC’s inside an asset protection trust may be the ultimate tool for your specific needs.

US Equity Traders and Investors. You may consider this to be counter-intuitive in the sense that moving liquid assets offshore is your one of the most effective ways to protect your wealth. With this, I still agree.

Regardless of what you think about the direction of the US from a political and economic perspective, some of the most efficient and effective trading markets and platforms are still US based. Sure, you can have your Interactive Brokers trading account in the name of your Seychelles Offshore IBC, but remember the assets themselves are still in the US.

For many traders and investors the best option is to do your trading through a properly structured Wyoming or Nevada LLC. These two states by far have the best asset protection laws giving you the utmost privacy and legal protections available from a US based entity.

I would still recommend keeping a portion of your liquid assets offshore, but for active traders based in the US or primarily trading the US markets, a Wyoming or Nevada LLC may make the most sense for your business.

US Based Internet Entrepreneurs. As before, I am a firm believer in utilizing offshore companies like a Seychelles Offshore IBC for online business, but if you are living and working in the US with a domestic customer base, this type of planning for your operating business is generally pointless.

For many internet entrepreneurs, a properly structured Delaware LLC provides you with the best asset protection, privacy and simplicity for operating your business.

Delaware has no sales tax and thus if your LLC is registered in Delaware you can get a sales tax exemption form from the state which will satisfy your vendors who require a identification number in order to be sales tax exempt. This minimizes your paperwork and reporting requirements allowing you to focus on the productive activities of your business.

Additionally, Delaware has notoriously excellent asset protection laws that have for decades protected the rights of LLC members from overly litigious claimants seeking to gain their wealth through legal action.

Non-US Nationals. The news outlets report daily on the current administration’s attack on offshore banking, offshore investments, and worldwide income. From reading these reports you would think privacy is dead in the US and taxation is overbearing making US entities less attractive than their offshore company counterparts.

For Americans, you would be 100% correct. But for non-US nationals, the US remains the largest and best offshore privacy and tax haven in the world.

This may come as shock to many of you reading this, but ironically there are a completely different set of privacy guidelines for non-US nationals than for American citizens and residents. For example, it is easy for a Russian to open a Delaware LLC in complete privacy and use that LLC to open a US bank account.

From this Delaware LLC, the Russian investor can open a trading account at any of the larger brokerages and trade just like you and I. The big difference is that the Russian has the ability to avoid all US taxation if done properly (**disclaimer – I am not a tax planner, nor do I play one on TV. See your professional tax planner for details**).

Also from this Delaware LLC, a French internet entrepreneur can operate his global operation tax free as long as he has no US customer base (**see above disclaimer**).

The point is for non-US nationals, utilizing a US based LLC may be your best, and often overlooked, option for safe and private offshore company and offshore banking operations.

To learn more about asset protection planning and to schedule a free consultation, please contact us using the form below.

See more articles by Bobby Casey with Global Wealth Protection below:

FATCA – Is 2012 the Last Year for Opening an Offshore Bank Account for Americans?

Mike the Good Ole Country Boy vs. Lester the Scoundrel

Protect your Real Estate Assets Like the Uber-Rich

I’m Mad as Hell…

I’m Buying Call Options on Entrepreneurship

Asset Protection in the 21st Century

What are You Doing to Protect Your Ass…ets?

Expat Hank Bails on America

A few weeks ago, 6 universities in Greece were forced to close after the Greek Bond Swap forced their funds held at the Bank of Greece to be converted to Greek Bonds, resulting in a reduction of their assets to ZERO. 17 Greek universities had operating accounts with 120 million Euros deposited at the Bank of Greece, and their funds were suddenly reduced to 33 million Euro after the Greek government forced them to convert their funds to Greek government bonds.

This is a clear message to the world that our broke governments will employ whatever unscrupulous, illegal, and unethical methods are necessary to maintain their outrageous spending beyond their logical limits. We have seen this same behavior pattern over and over again throughout history. When governments are bankrupt, if the laws do not permit their leaders to rape, steal, and pillage their people’s money, governments simply create the laws that do permit it.

Unfortunately, the sheep who remain until the end are the poor souls who get slaughtered, while the wise guys move their assets out in time to avoid the inevitable wrath of the governments thieving politicians.

Greece is not an isolated case. Most governments of the world are broke, including the US, and more than half of Europe, Japan, etc. – the list is too long to mention in this article. In the US, for example, Senator Harry Reid (of Nevada) recently pushed through a unanimous amendment to a Senate transportation bill that now allows the IRS to revoke the passports of US taxpayers who owe more than US$50,000 in taxes (at the tax levy or lien stage). The new US Foreign Account Tax Compliance Act (FATCA) is officially forcing US banks to withhold a 30% tax on all wire transfers sent abroad to non-US banks who don’t become “qualified intermediaries” with the IRS, essentially forcing offshore banks to become US tax collectors for the IRS – that law will become effective in 2013.

Americans freedoms are vanishing faster now than ever, all in the name of “national security”, while the US national debt soars to the highest levels in the history of any government in the world – an irreversible trend with no end in sight. Once China stops buying the soon to be defunct US treasury bonds, the US government will have no other option than to pillage the American people’s social security, private pension & retirement funds, universities, and other quasi-governmental organizations, by forcing them to convert their assets (dollars, equities, etc.) into US government bonds, to fund the massive and irreversible overspending of the US government. The American people will be robbed the same way the Greeks are getting robbed now.

When is enough, enough? It is now time for action. The point is that the most basic fundamental requirements of a free country are stripped without rule of law, and in that scenario, one must protect their freedoms and property through cross-jurisdiction diversification – in a nutshell: GET YOUR ASSETS OUT WHILE YOU CAN.

So, where do you start? Start by selecting a jurisdiction that is safe for your money. Panama is a great option, with over 100 banks to choose from, a safe & stable government, simplified tax structure (no tax on interest income), high growth economy, US dollar currency, and an ambitious infrastructure program including over $13 billion in current projects underway including the Panama Canal expansion, highways, ports, oil pipelines, hydro-electric and alternative energy plants, free trade zones, and much more.

Panama’s economy is the strongest in Latin America, with almost 10% annual growth over the last 5 years. The unemployment rate in Panama is at historic lows, and the country is very safe to visit or live, not to mention the weather is warm, tropical, and inviting year round.

Next, select a good bank or credit union to open an account at. Panama has over 150 credit unions, some over 50 years old, with excellent track records and solid financials. Credit unions in Panama are currently paying up to 4% interest on savings accounts, 8% on time deposits (CD’s), and up to 9% on retirement savings. Unlike banks that sometimes take high risks on large commercial loans (for real estate developments, etc), government employee credit unions in Panama are limited to making small consumer loans only to their members, who are government employees with stable jobs.

Unlike banks which have shareholders they must pay dividends to, credit unions are non-profit organizations exclusively established for savings and loans to their members, so their profits go back to their members in the form of interest on deposits. How do credit unions pay higher interest rates than banks? Because, government employee credit unions generally charge between 12% to 15% annual interest on consumer loans to their members. Loans require direct debits from members’ government salaries, and loan insurance covers any default in the event of job loss or death – thus, very low default rates have been the norm.

To open an account at a credit union in Panama, a professional introduction by a law firm is required, and the account opening process can take as little as 1 day. The documentation requirements to open an account include a photocopy of passport, second ID (such as drivers license), a financial reference letter (from your bank, broker, or credit union), and proof of address (such as utility bill).

Panama also offers a unique retiree resident visa, offering special discounts up to 25% for everything from hotels, restaurants, transportation & airlines, to medical services & medications – the only requirement is to prove that you have a lifetime pension income of US$1000 per month. The residency application process is simple and easy, if processed by a Panamanian lawyer.

For more information on opening your account at a Panama Credit Union or bank, or obtaining residency in Panama, please use the form below to contact Panama Offshore Legal Services.

See more articles by Jon Hanna and Panama Offshore Legal Services below:

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Despite what you hear from the government and the mainstream media, this is the most dangerous period in human history for your wealth.  There have been individual or even entire nations of people who have been wiped out in the past but never before has there been such risk to assets across the entire globe.

In the past, a few savvy Zimbabweans have converted their Zimbabwe dollars into US dollars to sidestep the complete annihilation of their currency and savings.  Or residents of the Weimar Republic were able to salvage their wealth and savings by stepping across the border and converting their marks into francs.

But what happens when the US dollar, the world’s reserve currency, and with it all fiat currencies collapse?  It’s not an if, it’s a when.  Anyone who has done even a modicum of research into the financial state of affairs of the western nation states knows that it is not only inevitable but imminent.  And those who have studied the history of currencies, specifically fiat currencies, knows that they all eventually reach their intrinsic value and rarely ever last more than forty years – an anniversary that passed on August 15, 2011 which marked forty years since the Nixon shock when the US Government was bankrupted by the Vietnam war and the gold backing was taken away from the dollar.

EVEN THE MAESTRO KNOWS

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation” – Alan Greenspan

Not many people have figured this out and have moved a significant portion of their savings and wealth into precious metals to avoid this confiscation.

The proof of the effectiveness of gold versus fiat currencies in this final stage of currency collapse is clear as day:

It’s a neck and neck horse race to the bottom for pieces of paper with pictures painted on them and forced upon people to be used as money.  No real money needs legal tender laws to make people use it.

THE DEATH OF FINANCIAL PRIVACY

But, here is why it is the most dangerous time in human history for the preservation of wealth.

In the past you could flee to other jurisdictions when the local currency was in collapse.  But now there is no where to run.  And to make matters worse almost every western nation state is colluding with the other states to limit your ability to escape.

US citizens have it the worst of anyone.  The US Government has been closing as many doors as possible.  It has been years since a US citizen has been accepted in any other country as a stock brokerage client as the SEC has used the threat of their black helicopters to ensure that no one dare accept those with a US passport as a client.  And now, with the Foreign Account Tax Compliance Act, or FATCA passed in 2010 and some of its legislation coming into effect this year, it all but ensures that soon no bank anywhere in the world will accept US citizens as clients… it’s just too risky as even not reporting one client, even if it is by accident, gives the US Government the “right” to seize a large part of that banks business.

As well, most western nation states have begun information sharing agreements to track each other’s tax property across borders.  Financial privacy is dead.

Now, with almost every western nation state and their socialist systems beyond bankrupt and desperately reaching with its outstretched claws to take more of their citizens assets to keep the system alive a little longer there is almost nowhere to hide.

The US and almost every government on Earth is preparing for this and already checks everyone leaving almost every country to divulge whether they are taking more than $10,000 with them.  The US has even put cash sniffing dogs at many of their international airports and accosts you as you walk to the plane to make sure you do not leave with more than a pittance of money.  The next step will be to disallow you to take that money from the country altogether.

At that point many western countries will have no problem pushing through legislation to confiscate gold or at least tax it at some obscene level.  No one except “rich people” – the 1% – own gold as far as the public is concerned and the fascist media always likes to portray those who own precious metals as terrorists laundering money or deposed dictators fleeing from their countries.  You don’t think the public won’t cheer when gold is taxed at 90% of its value or confiscated?

GETTING YOUR GOLD OUT OF DODGE

So, even if you were smart enough to see this all coming and to divert a significant portion of your funds into precious metals you still could wind up losing everything.

That is why this is the most dangerous time in human history for your wealth.  Doug Casey recently stated:

“Generally, one simply must internationalize one’s assets. The biggest danger investors face, by far, is not market risk – huge as that will be – but political risk. The only way to insulate yourself from such risk is to diversify yourself politically and geographically.”

And herein lies the good news: International capital controls have yet to be put in place.  So, you still have time to arrange your affairs to geopolitically diversify your assets to guard against the risk of any one country confiscating this last vestige of monetary wealth.  How much time you have to do so is anyone’s guess… but time is definitely running short.

But your government trained and registered financial advisor isn’t likely to tell you about protecting yourself through the purchase of precious metals.  And he most certainly won’t have the knowledge to advise you on how to internationalize your precious metals.

That is why we have spent the last nine months putting together a complete compendium on internationalizing your precious metals called “Getting Your Gold Out Of Dodge“.  It has research and details on every facet of internationalizing your gold from listing gold vendors, storage options and transporters on every continent except Antarctica and even has dozens of anecdotes from TDV subscribers pertaining to entering and exiting numerous countries with your precious metals.

If you have the knowledge and do it right it can be as simple as a mouse click or an international flight.  If you do it wrong you can end up in jail in any number of countries as has happened to numerous people we interviewed.

We believe the fiat currency collapse will be fraught with risks but it will also offer once-in-a-millennia opportunities for those who manage to keep their wealth in tact through the transition.  Hotels could be purchased in the Weimar Republic (Germany) during their hyperinflation for one or two gold coins… the key will be having your gold and silver in a usable form and not having it confiscated until then.

We are pleased to provide “Getting Your Gold Out Of Dodge” to offer everyone the chance to not only survive but thrive through the years ahead.  Your government won’t tell you how to do it… and your financial advisor won’t either.  It’s up to you to do your own research and be one of the few with a store of wealth in which to rebuild the world’s economy post-fiat currency.  One of the best strategies for doing that is to own precious metals AND to keep them out of the reach of the western nation states as they and their manmade currencies become history.

See more articles by Jeff Berwick

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The US dollar has seen various changes of fortune over the last month. Fresh worries in the Eurozone have caused the Dollar to become a safe haven for worried investors, whereas across the English Channel the pound has strengthened. Around the world financial worries have affected global exchange rates and with China recently revealing that its growth has slowed people are beginning to wonder whether sustained growth anywhere is possible.

Dollar vs British Pound (USD v GBP)

At the beginning of March the pound was trading at 1.596. As the month progressed, more and more optimistic opinions of the British economy began to emerge. A combination of good PMI figures suggest that the UK is set to grow better than expected thanks to the fastest growth for manufacturing in 10months.

Later in the month a confirmation by the Bank of England that it would not contribute anymore Quantitative easing allowed the pound to breach the psychological barrier of the 1.6000 level for the first time in six months. The pound reached its highest peak of 1.613 on the 23rd of April suggesting that the upward trend is not about to slow just yet. If the Bank of England continues its policies of keeping inflation levels down and maintains that it will issue no further quantitative easing then the pound may remain favourable over the dollar.

The key things to keep an eye out for over the next month are:

• 25th April- The latest GBP Gross domestic product figures are released.
• May 2nd- The latest GBP purchasing manager index Construction (PMI) figures are released.

Next month the pound is expected to trade at 1.571.

Dollar vs Canadian dollar (USD v CAD)

At the beginning of March the US dollar was trading at 0.9887. A number of important reports were released by the Canadians including unemployment rates and consumer price index reports. On the 9th of April the Canadian government released its Business outlook and future sales report.

The strong results caused the US Dollar to rise to a four month high level of 1.0053. On the 17th of April the bank of Canada released a statement that it was planning on raising interest rates. The statement took markets by surprise and immediately sent the CAD higher — it closed up 0.96 of a cent at 100.99 cents US. Later this month the Canadians will be releasing a number of important reports that will no doubt affect the exchange rate.

The key things to keep an eye out for next month are:

• 30th April- CAD GDP report
• May 4th- CAD Ivey purchasing managers index

Dollar vs Australian Dollar (USD v AUD)

At the beginning of March the Australian Dollar was trading at 1.0789. The main event to affect the Aussie dollar was the release of the strong manufacturing data from the United States. The Royal bank of Australia was expected to keep the cash rate at 4.25 per cent which they maintained. Earlier in the month the pair had been relatively steady but once the RBA comments filtered through, the price action quickly headed south as traders began pricing in the odds of a rate cut next month.

The release of some better than expected employment figures caused the Aussie to rise slightly to 1.045. Its current rate is 1.028.

The key things to keep an eye out for next month are:

• 1st May- The bank of Australia revises its rate decision
• May 4th –The Australian bank issues a statement of its monetary policy.

Dollar vs Euro (USD v EUR)

At the beginning of March the Euro was trading at 1.333. In mid March greater confidence in the US labour market combined with tensions easing in the financial market allowed for a better outlook for the US economy. Further Quantitative Easing measures were not mentioned and this boosted the US Dollar as inflationary concerns were put on hold. The Euro then dropped to a rate of 1.300.

Throughout March and most of April the Euro was going up and down against the dollar like a yoyo. A series of concerns caused by the continuing euro crisis led to the Euro’s drop however the Euro found a degree of support in the region of 1.31 against the Dollar and strengthened during the Spanish bond auction on the 19th of April, amid a sense of optimism that investor demand would increase. As a result the Dollar is expected to fall to 1.290 against the Euro.

The key things to keep an eye out for next month are:

• 26th April – A number of important Eurozone data reports
• 2nd May – Release of German employment figures.

Dollar vs Hong Kong Dollar (HKD)

At the beginning of March the HKD was trading at 7.756. Because of the influence of the Yuan the HKD is tied to the data released by China. In mid March the HKD stood at 7.769 however, later in March China released information that it had experienced a slowdown of growth which had an impact on the HKD causing it to drop to a level of 7.756. The Euro crisis has also impacted on the HKD. The HKD is expected to remain steady at 7.761.

Dollar vs United Arab Emirates Dirham (AED)

Currently the UAE is trading in the region of 3.67400.The Dirham remains directly pegged to the US Dollar, so any relative strength, or weakness, in the USD is directly mirrored in Dirham movements.

Dollar vs Singapore Dollar (SGD)

At the beginning of March the SGD was trading at 1.249. Singapore’s inflation accelerated more than economists estimated in March, justifying the central bank’s decision to tighten monetary policy in April. The Singapore dollar is Asia’s best performer this year as investors believe the island will curb prices and tolerate a stronger currency.

The coming month will be fairly turbulent and unpredictable due to the impacts of the continuing Eurozone crisis. Elections in France and other EU nations are sure to cause unease on the markets worldwide despite an overall level of optimism that the worlds markets are improving.

Our USD currency report was provided by leading forex broker TorFX.

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There’s a major shift under way, one the US mainstream media has left largely untouched even though it will send the United States into an economic maelstrom and dramatically reduce the country’s importance in the world: the demise of the US dollar as the world’s reserve currency.

For decades the US dollar has been absolutely dominant in international trade, especially in the oil markets. This role has created immense demand for US dollars, and that international demand constitutes a huge part of the dollar’s valuation. Not only did the global-currency role add massive value to the dollar, it also created an almost endless pool of demand for US Treasuries as countries around the world sought to maintain stores of petrodollars. The availability of all this credit, denominated in a dollar supported by nothing less than the entirety of global trade, enabled the American federal government to borrow without limit and spend with abandon.

The dominance of the dollar gave the United States incredible power and influence around the world… but the times they are a-changing. As the world’s emerging economies gain ever more prominence, the US is losing hold of its position as the world’s superpower. Many on the long list of nations that dislike America are pondering ways to reduce American influence in their affairs. Ditching the dollar is a very good start.

In fact, they are doing more than pondering. Over the past few years China and other emerging powers such as Russia have been quietly making agreements to move away from the US dollar in international trade. Several major oil-producing nations have begun selling oil in currencies other than the dollar, and both the United Nations and the International Monetary Fund (IMF) have issued reports arguing for the need to create a new global reserve currency independent of the dollar.

The supremacy of the dollar is not nearly as solid as most Americans believe it to be. More generally, the United States is not the global superpower it once was. These trends are very much connected, as demonstrated by the world’s response to US sanctions against Iran.

US allies, including much of Europe and parts of Asia, fell into line quickly, reducing imports of Iranian oil. But a good number of Iran’s clients do not feel the need to toe America’s party line, and Iran certainly doesn’t feel any need to take orders from the US. Some countries have objected to America’s sanctions on Iran vocally, adamantly refusing to be ordered around. Others are being more discreet, choosing instead to simply trade with Iran through avenues that get around the sanctions.

It’s ironic. The United States fashioned its Iranian sanctions assuming that oil trades occur in US dollars. That assumption – an echo of the more general assumption that the US dollar will continue to dominate international trade – has given countries unfriendly to the US a great reason to continue their moves away from the dollar: if they don’t trade in dollars, America’s dollar-centric policies carry no weight! It’s a classic backfire: sanctions intended in part to illustrate the US’s continued world supremacy are in fact encouraging countries disillusioned with that very notion to continue their moves away from the US currency, a slow but steady trend that will eat away at its economic power until there is little left.

Let’s delve into both situations – the demise of the dollar’s dominance and the Iranian sanction shortcuts – in more detail.

Signs the Dollar Is Going the Way of the Dodo

The biggest oil-trading partners in the world, China and Saudi Arabia, are still using the petrodollar in their transactions. How long this will persist is a very important question. China imported 1.4 million barrels of oil a day from Saudi Arabia in February, a 39% increase from a year earlier, and the two countries have teamed up to build a massive oil refinery in Saudi Arabia. As the nations continue to pursue increased bilateral trade, at some point they will decide that involving US dollars in every transaction is unnecessary and expensive, and they will ditch the dollar.

When that happens, the tide will have truly turned against the dollar, as it was an agreement between President Nixon and King Faisal of Saudi Arabia in 1973 that originally created the petrodollar system. Nixon asked Faisal to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi oilfields from the Soviet Union and other potential aggressors, such as Iran and Iraq.

That agreement created the foundation for an incredibly strong US dollar. All of the world’s oil money started to flow through the US Federal Reserve, creating ever-growing demand for both US dollars and US debt. Every oil-importing nation in the world started converting its surplus funds into US dollars to be able to buy oil. Oil-exporting countries started spending their cash on Treasury securities. And slowly but surely the petrodollar system spread beyond oil to encompass almost every facet of global trade.

The value of the US dollar is based on this role as the conduit for global trade. If that role vanishes, much of the value in the dollar will evaporate. Massive inflation, high interest rates, and substantial increases in the cost of food, clothing, and gasoline will make the 2008 recession look like nothing more than a bump in the road. This will be a crater. The government will be unable to finance its debts. The house of cards, built on the assumption that the world would rely on US dollars forever, will come tumbling down.

It is a scary proposition, but don’t bury your head in the sand because countries around the world are already starting to ditch the dollar.

Russia and China are leading the charge. More than a year ago, the two nations made good on talks to move away from the dollar and have been using rubles and renminbi to trade with each other since. A few months ago the second-largest economy on earth – China – and the third-largest economy on the planet – Japan – followed suit, striking a deal to promote the use of their own currencies when trading with each other. The deal will allow firms to convert Chinese and Japanese currencies into each other directly, instead of using US dollars as the intermediary as has been the requirement for years. China is now discussing a similar plan with South Korea.

Similarly, a new agreement among the BRICS nations (Brazil, Russia, India, China, and South Africa) promotes the use of their national currencies when trading, instead of using the US dollar. China is also pursuing bilateral trades with Malaysia using the renminbi and ringgit. And Russia and Iran have agreed to use rubles as a means of currency in their trades.

Then there’s the entire continent of Africa. In 2009 China became Africa’s largest trading partner, eclipsing the United States, and now China is working to expand the use of Chinese currency in Africa instead of US dollars. Standard Bank, Africa’s largest financial institution, predicts that $100 billion worth of trade between China and Africa will be settled in renminbi by 2015. That’s more than the total bilateral trade between China and Africa in 2010.

The idea of moving away from the dollar is also finding support from major international agencies. The United Nations Conference on Trade and Development has stated that “the current system of currencies and capital rules that binds the world economy is not working properly and was largely responsible for the financial and economic crises.” The statement continued, saying “the dollar should be replaced with a global currency.” The International Monetary Fund agrees, recently arguing that the dollar should cede its role as global reserve currency to an international currency, which is in effect a basket of national currencies.

There is also a host of countries that have started using their own currencies to complete oil trades, a move that strikes right at the heart of US-dollar dominance. China and the United Arab Emirates have agreed to ditch the dollar and use their own currencies in oil transactions. The Chinese National Bank says this agreement is worth roughly $5.5 billion annually. India is buying oil from Iran with gold and rupees. China and Iran are working on a barter system to exchange Iranian oil for Chinese imported products.

Speaking of Bartering for Oil… How about Those Iranian Sanctions?

The United States and the European Union based their Iran sanctions on the financial system behind Iran’s oil trade. The country uses its central bank to run its oil business – the bank settles trades through the Belgium company Swift (Society for Worldwide Interbank Financial Telecommunication) and the trades are always in US dollars. Once they take full effect in July, US and EU sanctions against Iran will make transactions with the Iranian central bank illegal. When that occurs, this official avenue of trade will shut down. In fact, Iran was shut out of Swift a few weeks ago, so that road is already blockaded.

But the arrogance in the sanctions is the assumption that Iran can only use this one, dollar-based avenue. In reality, the Islamic Republic is considerably more agile than that; removing its ability to trade in the official manner is only encouraging the country to find imaginative new methods to sell its oil.

Since the sanctions were announced, Tehran’s official oil sales have certainly declined. Iran actually preemptively halted oil shipments to Germany, Spain, Greece, Britain, and France, which together had bought some 18% of Iran’s oil. But covert sales have curbed or perhaps even reversed the reduction in shipments. It is impossible to know the details, as buyers and sellers involved in skirting the sanctions are being very discreet, but the transactions are undoubtedly happening.

As mentioned above, Iran is selling oil to India for gold and rupees. China and Iran are working on a barter system to exchange Iranian oil for Chinese imported products. China and South Korea are also quietly buying Iranian oil with their own currencies.

The evidence? Millions of barrels of Iranian oil that were in storage in Iranian tankers a few weeks ago now seem to have disappeared. Officially, no one knows where the oil went. Was it rerouted? Has production been shut in? Is the oil being stored elsewhere?

Oil is fungible, which means one barrel of crude is interchangeable with another. Once it leaves its home country, it can be nearly impossible to know where a barrel of oil originated, if its handlers so desire. And it’s not just barrels that are hard to track – even though oil is carried on ships so large they are dubbed “supertankers” it is surprisingly difficult to keep tabs on every tanker full of Iranian oil.

And the Iranians are using every trick in the book to move their oil undetected. In the last week it became apparent that Tehran has ordered the captains of its oil tankers to switch off the black-box transponders used in the shipping industry to monitor vessel movements and oil transactions. As such, most of Iran’s 39-strong fleet of tankers is “off radar.” According to Reuters, only seven of Iran’s Very Large Crude Carriers (VLCCs) are still operating their onboard transponders, while only two of the country’s nine smaller Suezmax tankers are trackable.

Under international law ships are required to have a satellite tracking device on board when travelling at sea, but a ship’s master has the discretion to turn the device off on safety grounds, if he has permission from the ship’s home state. Some tankers turned off their trackers to avoid detection last year during the Libyan civil war in order to trade with the Gaddafi government.

And Iran is about to gain even greater flexibility in disguising the locations of oil sales, as the National Iranian Tanker Company (NITC) is about to take delivery of the first of 12 new supertankers on order from China. The new tankers will add much-needed capacity to NITC’s fleet at a time when the number of maritime firms willing to transport Iranian crude has dwindled significantly, forcing Iran’s remaining buyers to rely on NITC tankers. Thankfully for NITC, the 12 new VLCCs – each capable of transporting two million barrels of crude – will significantly expand the company’s current fleet of 39 ships.

Sanctions or no sanctions, Iran is moving its oil. But even having your own, off-radar ships to transport oil bought in renminbi or rupees or won doesn’t mean all these tricks and maneuvers don’t have a cost.

Freight costs for each voyage add up to nearly $5 million, a sizeable hit for Tehran. Iran is often also shelling out millions of dollars in insurance for each oil shipment, because the majority of international shipments are insured through a European insurance consortium that is backing away from Iranian vessels because the EU sanctions will make such transactions illegal.

And since business is business, buyers are also demanding much better credit terms from the National Iranian Oil Company (NIOC) than normal. Traders are reporting agreements giving the buyer as much as six months to pay for each two-million-barrel cargo, a grace period that would cost Tehran as much as $10 million per shipment.

For Tehran to cover freight costs, insurance, and the cost of generous credit terms wipes out as much as 10 percent of the value of each supertanker load. Beyond that, customers are also negotiating better prices. For example, the flow of Iranian oil to China did slow in the first quarter of the year, but not because China endorsed the sanctions. Rather, Chinese refiner Sinopec reduced purchases to negotiate better prices with the National Iranian Oil Company. The country’s imports from Iran are expected to climb back to the 560,000 barrel-per-day level in April.

That trade, along with non-dollar-denominated deals with India, Turkey, Syria, and a long list of other friendly nations, will keep Iran’s finances afloat for a long time. The sanctions may be preventing Tehran from banking full value for each tanker of oil, but there is still a lot of Iranian oil money flowing.

The mainstream media is avoiding all discussion of the demise of the US dollar as the world’s reserve currency. Even fewer people are talking about how sanctions based on Iran’s supposed need to use the US dollar to sell its oil leave loopholes wide enough for VLCCs to sail right through.

Without acknowledging the elephant in the room, articles about Iranian tankers turning off their transponders or India using gold to buy Iranian oil invariably sound like plot developments in a spy thriller. Much more useful would be to convey the real message: The world doesn’t need to revolve around US dollars anymore and the longer the US tries to pretend that the dollar is still and will remain dominant, the more often its international actions will backfire.

[The end of dollar dominance is a very ominous sign for the US economy… especially since the federal government seems to be ignoring this enormous elephant. Ignore it at your peril – or get advice from over 30 financial experts that will help you thrive during the tumultuous times ahead. To learn more, contact us using the form below.]

The time of annual procrastination has arrived. My tax extension is in the mail. By now, I’ll make the bold assumption that most everyone has either shared intimate details of their lives with the IRS, or filed easiest of forms to delay the inevitable until October.

If you haven’t, please do so shortly after reading this message.

Knowing it’s too late to share wisdom on how to save taxes from 2011, let’s discuss what you can do this year to put yourself in a better position this time next year. Better yet, use a few of these and you’ll end up with a little extra cash in your pocket.

Refunds aren’t good

If you’re like me, the idea of a refund may sound appealing at first. There are dozens of stores that put on sales to acquire their share of the spending that occurs when a family receives their refunds. Suddenly big ticket items become more popular when the buyer feels ‘rich’ after receiving their refund.

Then you quickly need to think another level deeper.

A refund means you paid the IRS too much. You’ve trusted the most indebted nation in the world with thousands of dollars in hopes they’ll return it in April.

I truly hope that all of our readers will navigate the difficult economy and add to their income this year. Even if you double your income, you only need to pay estimated taxes on last year’s liability.

For example, if you had a $15,000 tax liability this year and you find a way to make $120,000 in 2012, you only need to pay $15,000 in taxes by December 31st, 2012.

If you’re a W-2 employee and you’ll receive a refund greater than $500 this year, call your HR department and see what options you have to reduce the withholding from each paycheck.

You’ll want to make sure you have the liquidity to pay the tax liability by April. In the meantime, take those funds and invest them in something that will pay a solid dividend. It’s an easy way to make sure the funds stay in your control.

Once you pay estimated taxes to the IRS, the burden of proof is on you to get the refund.

Beat the tax increases

Not only do I hope your income rises this year, I also encourage you to pull income into 2012 and defer deductible expenses into 2013.

The Bush tax cuts are back on the table again this year. They are set to expire at the end of this year. If nothing is done, tax rates will rise almost 20% for many tax brackets.

Of course, you haven’t heard anything about it from Washington DC. Nor will you until about November. It seems like long ago, but a very similar thing happened in 2010, an election year.

The political pundits in DC will spend the entire year focused on the campaign trail and nothing will be determined for 2013 tax rates until majority is determined in the House and Senate. Whether Democrat or Republican controlled, it will be very difficult for the extension to make it through.

As the on a dollar earned on January 1, 2013 has every indication of being taxed at a higher rate, try to earn it in 2012.

Try to sell your stocks with capital gains, earn your bonuses, put on a sale, or collect the extra payment in December rather than waiting.

Contrary to income, you’ll want to defer any deductible expenses to 2013. This will make sure your 2013 income is reduced, subjecting you to lower tax rates and a lower total liability.

Hold onto a losing stock, save your continuing education, conferences, or qualified work expenses an extra month or two and you’ll end up with more cash in your pocket.

Pay attention

Taxes and accountants are often obsessed with history. By doing so, you often end up receiving tax preparation services rather than tax planning services.

Take the planning into your own hands.

Changes in the tax code will no doubt be confusing, but even recognizing some of the larger trends will allow you to make better planning decisions. Simple understanding of the concepts will allow you to better manage your income when it counts…NOW. It’s too late if you think of these things when it’s time to file.

PS. Terry Coxon’s Unleash Your IRA enables people to plan investments for their IRA, rather than allow others to provide them a put them into a pre-selected menu of options.

Thousands have found the information valuable and taken action on more actively controlling their retirement accounts.

Use the form below to pick up your copy.

L: Doug, the Taxman cometh, at least for most US citizens who file their annual tax papers on April 15. We get a lot of letters from readers who know about your international lifestyle and wonder about the tax advantages they assume it confers. Is this something you care to talk about?

Doug: Yes; something wicked this way comes, indeed. But first, I have to say that as much as I can understand the guy who flew his airplane into an IRS building, as we once discussed, I do not encourage anyone to break the law. That’s not for ethical reasons – far from it – but strictly on practical grounds. The Taxman can and will come for you, no matter how great or small the amount of tax he expects to extract from you. The IRS can impound your assets, take your computers, freeze your accounts, and make life just about impossible for you, while you struggle to defend yourself against their claims and keep the rest of your life going. The number of IRS horror stories is beyond counting. As the state goes deeper into insolvency, its enforcement of tax laws will necessarily become more draconian. So you absolutely don’t want to become a target.

L: So… just bow down and lick the boots of our masters?

Doug: Of course not. People can and should do everything they can to pay as little in taxes as possible. This is an ethical imperative; we must starve the beast. It could even be seen as a patriotic duty – if one believes in such things – to deny revenue to the state any way possible, short of endangering yourself. Starving the beast may be the only way to force it back into its cage – we certainly can’t count on politicians to make the right choices – they’re minions of the state. They inevitably act to make it bigger and more powerful. It’s sad to see well-intentioned people supporting someone like Mitt Romney because they naïvely think he’ll reduce the size of the state and its taxes. The man has absolutely no ethical center; he’ll just try to change the government to suit his whims.

L: Can you expand on the ethical imperative aspect?

Doug: Yes. The first thing is to get a grip on who owns the moral high ground. The state, the media, teachers, pundits, corporations – the entire establishment, really – all emphasize the moral correctness of paying taxes. They call someone who doesn’t do so a “tax cheat.” As usual, they have things upside down.

Let’s start with a definition of “theft,” something I hold is immoral and destructive. Theft is to take someone’s property against his will, i.e., by force or fraud. There isn’t a clause in the definition that says, “unless the king or the state takes the property; then it’s no longer theft.” You have a right to defend yourself from theft, regardless of who the thief is or why he is stealing.

It’s much as if a mugger grabs you on the street. You have no moral obligation to give him your money. On the contrary, you have a moral obligation to deny him that money. Does it matter if the thief says he’s going to use it to feed himself? No. Does it matter if he says he’s going to feed a starving person he knows? No. Does it matter if he’s talked to other people in the neighborhood, and 51% of them think he should rob you to feed the starving guy? No. Does it matter if the thief sets himself up as the government? No. Now of course, this gets us into a discussion of the nature of government as an institution, which we’ve talked about before.

But my point here is that you can’t give the tax authorities the moral high ground. That’s important because decent people want to do the morally right thing. This is why sociopaths try to convince people that the wrong thing is the right thing.

If an armed mugger or a gang of muggers wanted my wallet on the street, would I give it to them? Yes, most likely, because I can’t stop them from taking it, and I don’t want them to kill me. But do they have a right to it? No. And every taxpayer should keep that analogy at the top of his mind.

L: I also believe that the initiation of the use of force (or fraud, which is a sort of indirect, disguised, form of force) is unethical. It doesn’t matter what the reason for it might be nor how many people might approve of the action. But some people claim that taxation is really voluntary – the price one pays for living in society… and if I’m not mistaken, the US government says the federal income tax is voluntary.

Doug: [Snorts] That is a widely promoted lie. It’s propaganda to help statists claim the moral high ground, confuse the argument, and intimidate people who aren’t critical thinkers. Just try not volunteering to pay it and see what happens. Taxation is force alloyed with fraud – a nasty combination. It’s theft, pure and simple. Most people basically admit this when they call taxation a “necessary evil,” somehow mentally evading confrontation with the fact that they are giving sanction to evil. But I question whether there can be such a thing as a “necessary evil.” Can anything evil really be necessary? Can anything necessary really be evil?

Entirely apart from that, if people really wanted anything the state uses its taxes for, they would, should, and could pay for it in the marketplace. Services the state now provides would be offered by entrepreneurs making a profit. I understand, and am somewhat sympathetic, to the argument that a “night-watchman” state is acceptable; but since the state always has a monopoly of force, it inevitably grows like a cancer, to the extent that the parasite overwhelms and kills the host. That’s where we are today.

I think a spade should be called a spade, theft should be recognized for what it is, and evil should be opposed, regardless of the excuses and justifications given for it. Ends do not justify means – and evil means lead to evil ends, as we see in the bloated, corrupt, dangerous governments we have all over the world.

L: That runs counter to the conventional wisdom, Doug. Evil or not, most people think taxation is part of the natural order of things, like rain or day and night. Death and taxes are seen as the two inevitable things in life, and you are a silly idealist – if not a dangerous madman – if you believe otherwise.

Doug: That saying about death and taxes is both evil and stupid; it’s a soul-destroying and mind-destroying perversion of reality. It’s evil, because it makes people reflexively accept the worst things in the world as permanent and inevitable. As for death, technology is actively advancing to vanquish it. Who knows how far medicine, biotech, and nanotech can delay the onset of death? And taxes are, at best, an artifact of a primitive feudal world; they’re actually no longer necessary in an advanced, free-market civilization.

People also once thought the world was flat, that bathing was unhealthy, and that there was such a thing as the divine right of kings. Many things “everyone knows” just aren’t so, and this is one of those. A government – for those “practical” people who think they need one – that stuck to the basic core functions of police and courts to defend people against force and fraud and a military to defend against invasion, would cost a tiny, tiny fraction of what today’s government costs, and that could be funded in any number of ways that essentially boil down to charging for services.

As it is now, the average US taxpayer probably works half of the year just to pay direct and indirect taxes. That doesn’t even count the cost of businesses destroyed by regulation and lives lost to slow approval of new treatments by regulators, or a million other ways governments burden, obstruct, and harass people.

L: I just looked, and Tax Freedom Day this year is April 17.

Doug: That means that all the work the average guy does until April 17 goes to pay for the government that failed to protect him on September 11, 2001, failed to protect him from the crash of 2008, and continues failing him every day. We pay for an organization bent on doing not just the wrong things, but the exact opposite of the right things in economics, foreign policy, and everything else we’ve talked about in all our conversations. It’s rather perverse that Emancipation Day – the day the first slaves in the US were freed in the District of Columbia in 1862 – is April 16. But what is a slave? He’s someone who is deprived by force of the fruits of his labor. Sound familiar? I disapprove of slavery, in any form – including its current form.

However, Tax Freedom Day is an incomplete way of looking at things. What’s the cost to business forced to install equipment to meet government regulations? That’s not paid as a tax, but it’s a serious burden. There’s something called Cost of Government Day that’s a somewhat more inclusive estimate of the burden the state imposes on the average guy…

L: I just looked for that too and don’t see that a date for 2012 has been announced yet; but Cost of Government Day for 2011 was August 12. According to that estimate, the average US taxpayer slaved away for about two-thirds of the year to pay for the state and got to keep only a third of the fruit of his labor for his own benefit and improvement.

Doug: That may be a more accurate way of looking at the burden of government the average guy has to bear, but it still doesn’t even begin to address what economists call “opportunity cost.” Basically, I don’t just look at what the state we have costs us in cash, but in terms of the innovation and growth we don’t have because of government policies, laws, and regulations. This covers everything from new medicines to all sorts of new technologies to different forms of social and business organizations to the cleaner intellectual atmosphere I think we’d have without government propaganda machines cluttering it up.

I don’t believe in utopia, but I do believe our world could be far freer, healthier, and happier than it is today – without any divine intervention, magic, or changes in the laws of physics. Just a different path, every bit as possible as the one we’ve taken to where we are today.

L: As in the alternative reality L. Neil Smith wrote about in his book The Probability Broach?

Doug: At least as far as the humans in that story go, yes, it’s a good illustration of how much more advanced the world might be, based on a different turn of events.

Back in this world, I think that without any major differences in technological development and without assuming that people would spontaneously become angels, the average standard of living worldwide would be much higher if… Well, there are lots of turning points, some of which we’ve discussed. Just in the 20^th century, things would be very different if America had stayed out of WWI, or had not ratified the 16^th Amendment to the Constitution, or had not elected FDR.

L: Okay, but those things did happen, and we live in the world we have today – the one you call a prison planet. How should people try to do what’s right in such a world without ending up in jail?

Doug: First, it’s important to think about what’s actually possible, because people will not even try to reach for what they are sure is impossible. The world needs idealists to challenge us all to aim higher… including idealists willing to go to jail for what they believe in, like Thoreau. But even he said that while he encouraged all people to disobey unjust laws, he wouldn’t ask those who support families to get themselves locked up and leave their families destitute.

So my take is as we started out saying: It is both ethically and practically imperative to starve the beast. The less cooperation of any sort we give the state – but especially the less money we give it – the less mischief it can get into. We’re unlikely to get politicians to vote for getting the state off our backs, out of our pocketbooks, out of our bedrooms, and out of other people’s countries as a matter of principle, but we could see the state get out of places it doesn’t belong simply for lack of funds. And if everybody treated minions of the state with the contempt they deserve, most of them would quit and be forced to find productive work. As Gandhi showed us, civil disobedience can not only be an ethical choice, but a very powerful force for change.

L: Any specific advice?

Doug: Get a good accountant, take every deduction you can, and look for ways to legally reduce your tax burden. For example, our readers should know that charitable contributions in the US get deducted after the alternative minimum tax wipes out your other deductions. That means that a substantial fraction of every dollar you give a registered 501(c)(3) nonprofit does not go to the federal government.

Now, as you know, I don’t believe in charity, at least not in the institutional sense, but wasting money on charities is far, far better than giving it to the government to use bombing innocents and creating enemies for generations to come. And if that charity happens to be something like the Institute for Justice, the Fully Informed Jury Association, or any of the other libertarian think tanks dedicated to reducing the size and scope of government, you get to help fight the beast and starve it at the same time.

L: I do my economics and entrepreneurship camps in Eastern Europe under the auspices of the International Society for Individual Liberty – of which I should disclose that I am a director. I have to admit that it pleases me greatly to see funds that would have gone into making bombs to drop on foreigners and hiring more goons in uniform to oppress people at home redirected to something I consider constructive.

But what about the international diversification question: can that help reduce your tax burden back home?

Doug: It’s different for different countries, and each individual should consult a tax specialist with the details of his or her own case, or proposed case. However, there is an exclusion for Americans who live abroad for a whole tax year – it was around $100,000 the last I looked. So there are very good tax reasons for Americans to live abroad. There are even better reasons for Canadians, Europeans, and almost everyone else to leave their native country – many can live 100% tax-free. I guess it’s just a sad testimony to the medieval-serf mentality that most people suffer from that few people take advantage of this. They’re born someplace, and they stay rooted there, like a plant. Oh well, everybody basically makes his own bed, reaps what he sows, and gets what he deserves…

However, as appealing as the “permanent tourist” idea is, I recommend international living first and foremost as a way to protect your assets. As we’ve discussed before, real estate in foreign countries cannot be repatriated or confiscated by the government that thinks of you as its milk cow. There is nothing illegal or nefarious about buying real estate abroad, and it could come in very handy if things get really chaotic back home, wherever that happens to be.

L: Okay… any investment implications to discuss?

Doug: Sure, but nothing new to our readers. Starving the state-beast is the right thing to do, ethically and practically, but I believe the state’s days are numbered anyway. The thing to be aware of is that the beast won’t go quietly, and in its death throes it can do a lot of harm. Still, like Nietzsche said, “That which is about to fall deserves to be pushed.”

In the meantime, much higher taxes are on the way. More and more currency controls are coming. You may have heard that the US is contemplating a law denying issue or canceling the passport of anyone accused of owing more than $50,000 in taxes. I expect the transformation of what was once America into a police state to continue, and I expect other “developed” nations – especially Europe, Canada, and Australia – to follow suit. And this will happen whether or not the global economy exits the eye of the storm as I expect it to.

So you want to rig for stormy weather and invest for continuing crisis. Own gold for prudence, speculate on related stocks and others that may benefit from government profligacy, and as we’ve just been saying, diversify your assets and personal living arrangements internationally.

The day is coming when your local government may stop seeing you as a milk cow and start seeing you as a beef cow, and you want to have options before that day.

L: The Casey mantra. Any chance you’re wrong?

Doug: Anything’s possible. But we just asked ourselves that question in our conversation on the illusion of recovery, and I just don’t see a way out for the old economic order.

L: Okay, Doug. I hope our readers don’t tune us out for sounding like a broken record – I believe it’s vital that they do take action, preparing for more volatility in the markets ahead. And hedging one’s bets against social chaos may sound a bit extreme, but as an option, it sure is something that can help one sleep better at night.

Doug: I didn’t formulate the rules for this crazy game; I’m just trying to play it competently.

L: Right then. Until next week.

Doug: Next time.

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You’ve likely found yourself in a situation with a teenager, spouse, or friend beats around the bush. They’ll tell you everything you want to know except for directly addressing the question.

It happens everywhere and is maybe more prevalent in the oration of political nothings.

If you haven’t seen this already, there’s a great video I first saw from Casey Research. Aside from publicly courting several countries to win the prize of ‘closest ally’, there is a lesson to be learned here.

Often, it is what isn’t said that contains the most power.

As the tax code creeps to almost 6 figure page numbers, combined with IRS rulings and Tax Court rulings it’s becomes ironic that some of the best things still go left unsaid.

Another historical case has ruled in the favor of the self-directed IRA structure.

The case was Taproot v. Commissioner. When the final gavel slammed, the judged ruled that an IRA couldn’t be a shareholder in an S-corporation which was managed by the taxpayer.

That’s no surprise, considering S-corporation law doesn’t allow IRA’s to be shareholders.

If you’ve read Unleash Your IRA, you’ll see that it’s one of the three things you can’t own within your IRA.

Yes, three things that are not allowed. That’s it. The rest is fair game. Precious metals, real estate, private placements, foreign investments, etc can all be held within an IRA.

The limitation here was the S-corporation law, not the IRA law.

Given that the S-corporation couldn’t be a shareholder, the Tax Court concluded that the self-managed entity should be taxed as a regular corporation. A regular corporation with the taxpayer as the manager.

That sounds very familiar to me. It is almost the exact same structure we have set up for clients for the past two years.

The Tax Court’s actions have spoken louder than their words. Sure, Taproot may be a little frustrated with their loss, but the self-directed industry claims yet another validation of the investment freedom an IRA can utilize.

Since the early 70′s large banks and brokerages have pushed traditional investment schemes on account holders. Stocks, bonds, and savings. They have plenty to benefit from keeping you uneducated about the real options.

Smart money started pulling away from these limitations as far back as the 1980′s. They began using retirement funds to invest in rental properties earning good yields and hundreds of other asset classes that presented more control and better returns than the stock market.

It’s important that you look deeper than what the mainstream headlines may say, or your neighborhood broker doesn’t tell you about.

Building information will make you more aware of the limitations you’ve been told for years. If you’d like some eye-opening material, check out Unleash Your IRA by using the contact form below.

Since 2000, gold bugs have had been laughing at the yellow metal’s naysayers. Legendary investors including Warren Buffett and George Soros have taken turns criticizing gold, whether it be to say the precious metal is a bubble waiting to pop or to note gold really has no utility.

Even with an ample chorus of boo-birds weighing in, gold’s ascent since 2000 when it traded around $300 an ounce has been nothing short of staggering. While gold is getting hammered today, the spot price is still around $1,650 an ounce as of this writing, meaning the yellow metal has surged more than five-fold since 2000.

Since its debut in late 2004, the SPDR Gold Shares (GLD) has surged almost 260%, garnering $68.8 billion in assets under management along the way. That makes GLD the world’s second-largest ETF behind the SPDR S&P 500 (SPY). The iShares Gold Trust (IAU) is no shrinking violet, either. That fund has gained nearly 277% since its 2005 debut and has raked in almost $9.7 billion in AUM along the way.

All nice superlatives, but with the way gold has been acting lately, it begs the question: Is the party over? The answer might be “Not quite yet,” but there are reasons for concern.

Last week, metals consultancy GFMS said gold could top out at $2,000 an ounce next, marking an end to the yellow metal’s bull market. GFMS also noted supply and demand dynamics that would favor gold bears this year, saying there could be a gold surplus of $130 billion, Reuters reported.

Perhaps more concerning is the fact that gold has shown little signs of being a safe have this year. Year-to-date, GLD is up about 5.3% as gold prices have NOT been bolstered by Europe’s worsening sovereign debt crisis or the continued running of hot printing presses by global central banks. Italy, a major gold consumer, is officially in a recession and home to soaring sovereign bond yields.

And then there’s India. The world’s largest gold consumer put a lid on gold prices by proposing new taxes on gold imports and jewelry. Those proposals may be revoked, but the damage is done. Add to that, demand in China, the world’s second-largest gold consumer, has been seen as tepid this year.

Simply put, gold’s lack of industrial use should have at least kept the metal’s safe haven status in tact this year, insulating investors from the whims of a volatile global economy. That hasn’t been the case. Even with those problems, gold has been trading at a premium to platinum for a while now and on a historical basis, that’s not a good thing.

Then there is the case of gold’s ugly technicals. Looking at a weekly chart of gold’s run over the past three years, the yellow metal has done an amazing job of honoring its 200-day moving average, but it violated the key indicator late last year and did it again recently, indicating the path of least resistance may be lower and that a party that started in 2000 may be over.

To learn more about Benzinga and how to improve your trading results, contact us using the form below.

The gold mining industry is watching its production costs surge amid rising energy prices, inflation and increasing labor costs.

Barrick Gold (NYSE: ABX), the world’s largest primary gold producer, says its total cash operating cost could increase 13% to 22% in 2012. Meanwhile, Newmont Mining (NYSE: NEM), another key gold producer, expects to see a 6%-to-14% rise in costs applicable to gold sales.

The industry is hoping that rising gold prices will buoy the hike in production costs. An annual survey of industry predictions by the London Bullion Market Association forecasts gold could top $2,000 an ounce this year.

The outlook – made by 26 leading precious metals analysts from the world’s largest bullion-dealing banks and trading houses – underscores bullish speculation of gold prices in the broader market.

All but two forecasters predicted that gold would surpass $1,900 an ounce this year, while 73% of those surveyed believe gold will top $2,000 an ounce.

Even though the expectations for gold prices are high, many of the larger miners – including Barrick and Newmont – aren’t taking steps to significantly increase output in 2012. That’s partially because the gold industry has already ramped up overall output over the past few quarters, and could be currently operating at near capacity.
World Gold Production Hits Record High in 2011

Global gold production increased nearly 4% last year, reaching an all-time high. According to the World Gold Council, miners pulled 2,810 tonnes of gold from the ground last year – that’s nearly 100 million ounces, worth over $170 billion at current prices.

The surge in output was a clear response to rising gold prices, which approached $1,900 an ounce last year. But historic mine production levels did little to depress gold demand last year – particularly due to intense buying from the world’s central banks, which purchased the highest annual tonnage in nearly a half century.

Central Banks Snap Up 15.5 Million Ounces of Gold in 2011

Global reserve banks were net sellers for decades. But over the past several quarters, gold sales from central banks dried up. Meanwhile, the official sector in emerging markets is furiously buying the yellow metal to hedge the sovereign debt crisis in the United States and Europe.

Central banks were vigorously ramping up their gold reserves last year. In total, gold purchases from the official sector in 2011 swelled some 470% over the previous year.

Last year, the world’s central banks stuffed a total of 440 tonnes (15.5 million ounces) of gold in their vaults. The World Gold Council says this was the biggest bullion purchase from the official sector since 1964.

Experts believe it’s likely that central banks will continue buying gold, seeking diversification of their foreign exchange reserves. The World Gold Council reports:

“The trend in central bank buying is expected to continue given the lack of decisive action in dealing with the underlying issues in both Europe and the U.S., as well as low relative allocations to gold among emerging markets.”

For gold miners everywhere, renewed central bank interest in the metal bodes well, as global reserve banks have sufficient cash to make significant purchases. But for gold miners with plans to increase production, it’s even better news.

Yet, as I mentioned, many of the larger producers won’t significantly increase production, partially due to the uptick in production in recent quarters. Nevertheless, there’s a handful of significant miners that do have plans to increase output in 2012.

And I contend that as global limitations in output increase from major producers – and central banks become serious net gold buyers – mining firms with increasing production are better positioned to leverage rising gold prices.

With that in mind, I’ve pulled out three significant gold producers from the market that are expecting a significant increase in gold production in 2012.

Kinross Gold Corp. (NYSE: KGC)

Canadian-based Kinross Gold is one of the world’s top five gold producers. With operations that span four continents, the company produced 2.61 million ounces of gold last year, a 12% increase over the company’s output in 2010.

The boost in production helped fuel Kinross’ cash flow amid rising gold prices – firing revenue up 31% to nearly $4 billion last year.

For 2012, Kinross says that it expects to produce approximately 2.6 to 2.8 million gold equivalent ounces from its current operations.

Rising production costs have, however, cut into Kinross’ revenue over the past several quarters. Full-year production costs in 2011 averaged $596 per gold equivalent ounce, versus $506 per gold equivalent ounce for full-year 2010.

Kinross says production costs are expected to rise again in 2012 in the range of $670 to $715 per gold equivalent ounce. So the rise in production costs may offset rising revenue from increased production if the market sees weaker gold prices.

Kinross’ stock currently pays a semi-annual dividend. The company recently declared a dividend of US$0.08 per common share, payable on March 31, 2012 to shareholders of record at the close of business on March 23, 2012.

The company’s projects contain a total of 62.6 million ounces of gold reserves, plus an additional 43.7 million ounces of gold in the NI 43-101 measured, indicated and inferred resources.

Eldorado Gold Corp. (NYSE: EGO)

Eldorado Gold is a mid-tier gold mining company with significant production, development, and exploration stage properties and land positions in China, Brazil, Greece and Turkey. The company is noted as being the first North American company to successfully build and operate a gold mine in China. Production from Eldorado’s Tanjianshan Gold Mine in Western China commenced in 2007.

In 2011, Eldorado produced 659,000 ounces of gold – a 4% increase over the previous year. The company expects to ramp up gold production again this year to the tune of 730,000 to 775,000 ounces.

Rising production costs have also plagued Eldorado. Cash operating cost increased to $405 an ounce last year from $382 an ounce in 2010. The company says cash operating costs may rise again to $430 to $450 an ounce. Rising production costs may also cut into revenue from increasing output, save higher gold prices.

Eldorado’s stock also pays a semi-annual dividend. The company recently paid a dividend of C$0.09 per share on February 14, 2012. The next dividend payment information has not been announced yet.

Eldorado’s projects contain a total of 19.0 million ounces of gold reserves, plus an additional 31.5 million ounces of gold resources across all three NI 43-101 resource categories.

Yamana Gold Inc. (NYSE: AUY)

Yamana Gold is a significant gold mining, exploration and development company with projects in Brazil, Argentina, Chile, Mexico and Colombia.

Revenue exceeded $2.2 billion in 2011, as the company reached record production of 1.10 million gold equivalent ounces – a 5.3% increase over the previous year.

This year Yamana expects output to be in the range of 1.2 to 1.3 million gold equivalent ounces – a 13% increase over 2011.

Going forward, the company says production is expected to increase to 1.5 to 1.7 million gold equivalent ounces by 2013, and 1.75 million gold equivalent ounces by 2014.

Yamana’s co-product cash costs increased 5% last year to $463 per gold equivalent ounce. The company has not announced a guidance of operational costs across all of its projects for 2012 yet.

Yamana increased its dividend by 10% on February 22, 2012, making the company’s dividend yield one of highest in the industry. The firm recently declared a quarterly dividend of $0.055 per share, payable April 13, 2012 to shareholders on record at the close of business on March 30, 2012.

Yamana controls a total of 22.1 million ounces of gold reserves across 13 of the company’s projects, plus an additional 23.5 million ounces of gold resources in all three NI 43-101 categories.

The Point is…

Despite a record in mine output and prices last year, the demand for gold is seemingly unwavering, emphasized by large central bank purchases last year. And I believe, with the expected surge in production costs in 2012, gold mining companies with increasing production may greatly outperform those with flat or declining production.

Good investing,

Luke Burgess
Contributing Editor
Investment U

P.S. We’ve been uncovering the story of a small company that appears to be on the verge of mining up to 600,000 ounces of gold from the sea floor. Investors that get in now could see dramatic gains over the next few years as production ramps up. Gain immediate access using the contact form below.

After years of constant attacks from Obama, the OECD and the G20 during which ‘Tax Havens’ have been blamed for everything from causing the credit crisis to being the base for criminal activity, it is time to re-consider and think about what tax havens really are, and why they are necessary.

The Bourne Identity – many of you have seen it. And you may remember a scene where he walks into a bank in Switzerland, a lavish place with impeccably dressed, wealthy people. Bourne writes a number on a scrap of paper, places his hand on a scanner and is given access. No names are given or needed, the safe box is given to him in a private booth where he proceeds to analyse his numerous fake passports, millions of dollars in cash and a pistol. All anonymous, no questions asked….

All nonsense of course, but sadly the image held by many including, it would seem, many important politicians if we are to believe every word that comes out of their mouths whenever the subject of tax havens is brought up. Maybe it is prudent to clarify that numbered Swiss accounts do not exist and indeed never have. Tax havens do not allow you to deposit suitcases full of money with no questions asked. They are all regulated and have KYC procedures which are internationally approved and they all report criminal activity if detected. We should begin by looking at what tax havens are, and why they are under attack.

It is worth noting that no universally agreed definition of ‘tax haven’ actually exists and, in fact, they are known by many different names including secrecy havens and low tax jurisdictions amongst others. Maybe a simple starting point would be to say that a tax haven is any jurisdiction, anywhere, that has preferential rules for foreign investors – in so much as taxes are lower.

When we get to specifics as to what constitutes preferential, low tax, privacy, Swiss banking secrecy etc. – this is where the confusion starts, but it is not unreasonable to assume that with the world economy in crisis, many (formally) powerful economies around the world are in need of a boost and recovering taxes by launching an unprecedented and wholly inadvisable assault on tax havens is the way many of them seem to be interested in proceeding.

The waves of attacks are coming from a coalition of the G20 countries with the bureaucracy being handled by the OECD and is being masterminded by Obama and the U.S. government (from which a large number of politicians have successfully utilized the benefits of tax havens for years and recently were exposed as owing hundreds of thousands in unpaid back taxes…). So why are these attacks taking place and how is it being done?

The first question divides opinion. The official line is that the offshore industry is worth trillions, and the missing taxation is what is needed to fix the crisis. The governments sell the line that tax haven activity is criminal, it always involves tax evasion (the words tax avoidance seen to be disappearing from their vocabulary) and that this activity from the super-rich is preventing recovery. Amazingly many members of congress, along with the French President Nicolas Sarkozy amongst others, have even attempted to blame tax havens for being responsible for the global crisis and are appealing to our morals to do what must be done to punish the individuals that utilize these tax planning tools and desire financial privacy.

We need to be quite clear that tax havens were not responsible for the global crisis. The situation is complex but drastic over-lending, the explosion of the sub-prime mortgage market, poor financial decision making and even poorer regulation in the entire financial industry as well as the government inactivity which allowed this t happen are the real causes. You would do well to remember that big business always gets preferential treatment from governments, and the appearance of a scapegoat is extremely convenient for them. If you doubt this you may wish to investigate why companies such as Google, Microsoft and Facebook all have their administration offices in traditional tax haven locations, why nothing is done and why these huge financial companies are always amongst the biggest contributors in presidential campaigns.

So how can the existence of tax havens be defended if they do, in fact, allow individuals to pay less tax than they would have to in their own country? Maybe it is best to dispense with the idea that tax havens stunt economic growth…..

The only way to encourage growth is to encourage activity and that is not done with high taxation. U.S. companies are forced to move or base themselves elsewhere due to high corporate taxation and income is already taxed before it is invested, taxing again as capital gain simply discourages growth. Businesses and individuals discouraged from working or being innovative in the marketplace may simply choose to work and save less, which will not fix the problem. ‘Ending’ tax havens, which isn’t going to happen, at least not any time soon, would simply result in higher tax rates around the world, thus reducing economic growth and making the world poorer.

The problem for high tax jurisdictions is a simple one, competition. It is entirely reasonable that innovative individuals and efficient companies do not want to give an extraordinary sum to governments when there are cheaper, and entirely legal, alternatives elsewhere. Let us be clear about this, tax planning is NOT illegal, tax avoidance is not illegal. If you simply do not declare taxes, that is against the law and that is why governments fear Swiss Banking Secrecy so much. Swiss secrecy was originally introduced to help protect the wealth of Jews fleeing from the terror of the holocaust, and isn’t financial privacy, like all privacy, an entirely justifiable human right?

One of the problems has arisen in several high profile cases such as UBS amongst others, where large banks have admitted to deliberately help people evade tax. This has been seized upon, rather gleefully, as an excuse to launch a full scale attack on the entire offshore industry. However this is more the exception than the rule. Tax avoidance, also known as tax planning, is an entirely legal process which allows individuals and businesses to manage their assets and take advantage of entirely legal structures to legally reduce the amount of tax they pay by choosing where they keep and invest their resources.

The attacks on the offshore tax haven industry has been brutal, taking the form of utilizing stolen data (and, incredibly, even paying for it, encouraging theft), forcing the signing of TIEAs (Tax Information Exchange Agreements) in order to promote full financial transparency, as well as heavy financial sanctions to any financial institution which will not cooperate with the government in question. Legislation such as The Patriot Act, the soon to be introduced FATCA, as well as the unpopular and temporarily abandoned PIPA and SOPA is evidence of the U.S government’s relentless drive to give itself the power to attack whoever it wants, whenever it wants. If you still agree with the U.S. government’s stance that is fine, just bear in mind that the U.S. taxes citizens who do not live or who have never lived in the country, there are cases of individuals who have never worked in the U.S. being hit with a tax bill in a country they have never worked. When you do not have the right to vote there, what gives them the right to tax you? It is also often, and conveniently?, forgotten that the U.S. does not tax most of the dividend, interest and capital gains’ earnings of overseas investors in the U.S., as they welcome the billions of dollars entering their economy. States such as Delaware make the U.S. the world’s largest tax haven.

Moving on from the economic standpoint – it is important to consider that there is a moral aspect to this all, and a moral defence of tax havens is just as compelling as the economic views. Your government wastes money (more than we may ever know…), taxes are too high but chances of oppression are actually relatively low – although that seems to be changing. In many countries around the world, individuals are subject to corrupt governments, religious, ethnic or racial persecution and many to economic abuse. Let us remember again that Swiss Banking Secrecy as a concept was born as a means of being a refuge for Jews under the persecution of Hitler.

Let us consider residents of Argentina, with a string of the most incompetent governments in history. In 1998 the government caused a complete economic disaster through incompetence, corruption and greed and those patriotic citizens who did the ‘right’ thing and kept their money in Argentina found, after the currency collapsed, that access to their funds had been denied and in many cases their wealth dramatically cut. By doing the ‘right thing’ many individuals were thrust into poverty and a desperate situation – how many of them wish now that they had considered an offshore alternative?

Consider high net worth residents of Columbia or Mexico who live with the fear of kidnapping? Their families are often exposed by corrupt officials selling them out and who can blame them if they choose to take their wealth elsewhere in order to protect their future and their family? Do they not deserve the right to the privacy that legislation such as FATCA is looking to strip away?

The U.S. government, amongst others, is attempting to sell the offshore industry as simply a world for tax cheats without considering a number of truly valid reasons for placing you assets in a tax haven country. This situation is obviously related to governments and big businesses trying to cover up their role in the economic meltdown and tax havens have become a convenient scapegoat and it seems there are two alternatives: Actually fix the problem or create a global network of tax police and destroy the free market.

Privacy and confidentiality are becoming more and more difficult and the big banks such as HSBC are simply not the answer any more. The larger and more international a financial institution is, the easier it is for governments to place pressure on them. If you want true financial privacy, you can no longer rely on jurisdictions such as Panama and Switzerland. The modern day solution is to utilize private trust banking institutions, such as Capital Conservator, which operate by creating additional layers of protection between you and your assets. We need to be clear that there are a number of people who look to evade taxes, launder money etc. – but there are, as we have seen, legitimate reasons and rights to utilize an offshore tax haven. Nowadays it is becoming more and more difficult.

The sad things are that these attacks are happening and that so many people believe the government lines as to why they are taking place.

To learn more about Capital Conservator and how we can implement your customized asset protection plan, contact us using the form below.

Capital Conservator

Many people pick an asset protection jurisdiction or “offshore” asset protection vehicle in the same manner as they would buy a burger. They look at the menu, see the fastest and cheapest solution and don’t worry about the result as long as it meets their needs.

We all know what happens to people who don’t think about what they eat and survive on a diet of junk food. Well, it is the same in the asset protection industry. Simply buying an offshore company with a do-it-yourself bank account online may be okay for a while and indeed it may be okay even in the long run but when establishing an offshore company the first thing you need to ask yourself is why.

If the answer is you need something cheap and nasty which will be opened for a single transaction and then will no longer be needed then the best place to do so is the Internet. Choose the cahepest possible jurisdiction because in essence you don’t care about the product or its quality. However this is not asset protection but simply opening up an account.

If on the other hand, you want to protect your assets not only in the short term but in the long term you should look very closely at the following:

1. A jurisdiction where the laws are clear and predictable and where the agents/lawyers are accountable and professional.
2. Laws which allow you to legally avoid claims by creditors, disgruntled spouses, official assignees and others after your hard earned money.
3. A jurisdiction which is respected and not blacklisted and which has well established asset protection laws.

There are several such jurisdictions in the world but New Zealand is one of the best in terms of value for money and stability of its legal and political system.

The multitude of reasons for choosing New Zealand as jurisdiction can be summarized as follows:

• Firstly, New Zealand is a highly politically stable country with a small population. Its legal and trust profession is highly regulated and controlled; this means that generally if you choose a New Zealand trustee company or incorporator that is actually in New Zealand it is likely to be reputable and more importantly accountable. In some jurisdictions {I will not name them} this is not always the case where your incorporator may even be located there and finding the nominee director or shareholder or even contacting the office may become a problem.
• Further New Zealand is very particular about privacy having well established privacy laws which protect information. Your agent for a trust has to keep your financial information but there are no trust registration requirements. This makes your New Zealand Non-resident Trust more confidential than many other similar products.
• New Zealand Trust laws mean that a “properly” established trust structure cannot be set aside by anyone. That means if a professional has drafted your trust and has been appointed as a trustee it is almost impossible for anyone void it. Thus, for example if your assets are in trust and you personally go bankrupt the official assignee or any of your creditors have absolutely no chance to attack the trust assets (even if they find out that you are the beneficiary).
• The advantages of New Zealand as an offshore jurisdiction include the fact that it is highly regarded by the OECD, is not blacklisted and consequently not considered as tax haven. New Zealand has been voted as having the world’s lowest corruption index and one of the easiest countries to do business in. It is politically neutral and therefore its structures are not eyed with suspicion by any country as well asset held in a New Zealand Offshore trust with properly prepared accounts will satisfy most of the foreign banks as to the source of funds requirements.
• The further advantage of a New Zealand non-resident trust is that it can hold the shareholding in other structures such as Hong Kong, Panama etc which can then remit profits back to the trust. Extensive network of 37 Double Taxation Treaties means that withholding tax can be minimized.
• Further as New Zealand trust do not tax wordwide income if the trust has a non-New Zealand resident settlors. This means your assets and income are tax free and held for generations.

For the above reasons holding property, shares, commodities (silver and gold) or funds should always involve establishing trust as part of the asset protection plan. Without a trust your assets are simply not protected because they are still considered by your creditors as yours. And they are actually yours. Whereas a New Zealand Offshore Trust is recognized as a structure which removes the “legal” ownership of the asset from the settlor and beneficiaries. This means that if anyone sues you, and you have gifted the assets to a trust, they cannot attack the assets because simply speaking they are owned by another owner (your trust).

New Zealand is one of the few countries in the world to legally recognise this; and as long as your trust is established long before you have any problems with creditors your assets are safe forever. A conventional offshore company does not give that protection.

Conclusion:

In todays complex world anyone who has money or assets is a target. In litigious societies such as United States even the most honest businessmen can be sued and made bankrupt. With the ever increasing liability of company directors even being a director of a business exposes you to limitless risks if your company fails. Instances of multimillionaires being stripped of a lifetime of hard earned assest because their company failed due to no fault of their won abound in a world where receivers, creditors and even spouses hunt their rich like prey. The New Zealand Offshore Trust has withstood the test of time as being one of the most reliable tools in one of the most reliable jurisdictions.

To learn more about setting up a New Zealand Offshore Trust and how Equity Law can help protect your assets, contact us using the form below.

Appendix

by Brandon Rowe
Publisher, World Money Analyst

Did you know that between the 1998 Russian crisis and May 2008, the Russian RTS stock index experienced a 6,300% gain – from a low of 39 to a peak of 2,500?

For the patient, long-term investor, it could have possibly been the most profitable investment of his career.

• It’s one that would have brought a better return than any other major index in the world during that time – including that of the higher profile “BIC”s.
• It’s one that offered a higher return than almost any other major stock in the Western world over that decade.
• It even outperformed one of the greatest bull markets in the 2000s – the commodity boom.

And yet, it’s one that was passed by most Western investors without even a second glance.

Of course, there were a few select (and not just the politically-connected oligarchs) who saw the opportunity and took advantage of it to generate a sizeable fortune for themselves with a minimum of effort.

They bought when fear was high and sold when greed was great.

Indeed, such a contrarian play was responsible for the first fortune of one of the most well-known investors of the 20th century:

In 1939, just as the Second World War landed on Europe’s doorsteps, a 26-year-old American investor borrowed the then princely sum of approximately $10,000 ($170,000 in today’s dollars) in order to invest approximately $100 each in 104 Old World companies. After holding those stocks for an average of just four years, he effectively quadrupled his money, netting himself a small fortune.

His name? Sir John Templeton.

Among other exploits, Templeton was one of the first to recognize post-war Japan’s rise to prominence and used this insight to invest early, make a fortune and get out before that bubble crashed in the early 90s.

He famously (and in classic contrarian fashion) shorted the dot-coms shortly after their peak and made $86 million when that bubble imploded.

He was also amazingly adept at boosting his overall returns by structuring his business to limit tax as much as possible, establishing his famous funds in Canada during the 50s when that country did not tax capital gains.

Arguably, he could be called the world’s first modern global investor.

It’s a position he encouraged all investors to take on: that of seeing the world as one big opportunity, rather than constraining themselves to one small part of it.

And it was from this global perspective, that, in June 2005—3 years before his death—he wrote what is now called “Templeton’s Last Testament”. In it, he shares his thoughts on the state of the global economy of the time, beginning with the lines:

Financial Chaos – probably in many nations in the next five years. The word chaos is chosen to express likelihood of reduced profit margin at the same time as acceleration in cost of living.

Increasingly often, people ask my opinion on what is likely to happen financially. I am now thinking that the dangers are more numerous and larger than ever before in my lifetime. Quite likely, in the early months of 2005, the peak of prosperity is behind us.

It was his belief that things were likely to get difficult and that the traditions and “known facts” of the previous century weren’t so certain after all.

He goes on:

In the past century, protection could be obtained by keeping your net worth in cash or government bonds. Now, the surplus capacities are so great that most currencies and bonds are likely to continue losing their purchasing power.

No doubt. For decades prior, government bonds and cash were a good way to build up some considerable net worth given enough time. But more recently, ever since most Western governments started aggressively manipulating their central bank’s interest rate in an effort to stimulate the domestic economy, savers have been punished while debtors rewarded.

In many places of the developed world, investing in cash and bonds will now yield a negative real return.

He then went on to predict what was likely to cause the crash and what would be done about it – almost exactly as it actually happened in the fall of 2008:

Accelerating competition is likely to cause profit margins to continue to decrease and even become negative in various industries. Over tenfold more persons hopelessly indebted leads to multiplying bankruptcies not only for them but for many businesses that extend credit without collateral. Voters are likely to enact rescue subsidies, which transfer the debts to governments, such as Fannie May and Freddie Mac.

He did, however, see hope on the horizon as technology developed, the pace of research went ever quicker, and efficiencies increased. He finished his letter with recommendations on how best to survive the turmoil from a financial point of view, so as to fully benefit once the world recovered, summed up in this final paragraph:

Not yet have I found any better method to prosper during the future financial chaos, which is likely to last many years, than to keep your net worth in shares of those corporations that have proven to have the widest profit margins and the most rapidly increasing profits. Earning power is likely to continue to be valuable, especially if diversified among many nations.

Simple advice from a poor boy from Tennessee who used a keen sense of judgment to build a billion-dollar fortune for himself.

Indeed, some of the best guides to success in the future can be by following examples from the past and Templeton’s philosophy of international diversification through international investing is definitely a good one.

Great Opportunities from Around the World

In fact, Templeton’s philosophy of seeking out deep-value contrarian plays no matter where they are is one that can yield surprisingly exciting opportunities:

• A “River of Cash” paying a 12% dividend but trading at just 3 times earnings. Even though the business is strong, this “PIIGS” stock dropped in concert with other Eurozone equities, creating a great buying opportunity for those with a little patience to wait till the European crisis ends (which it will).
• A Swiss holding company run by a duo of legendary value investors that pays a solid 4.3% dividend and currently sells at an exceptional 40% discount to NAV.
• A South American telecom selling for a P/E of just 6 and paying an 8.6% dividend yield. (Actually, you can do even better by buying shares in a holding company whose sole function is to hold shares in the telecom – but trades at a further 35% discount)

These examples were pulled from the pages of our own World Money Analyst. However, any open-minded investor can find these himself given enough time and a bit of training. No doubt, there are many more such opportunities out there just waiting to be discovered.

5 Steps to Start Investing Internationally

But, the question, how does one get started?

If you have never traded outside your home market before, it can be a little overwhelming. Fundamentally, though, it comes down to taking one step as a time.

Step One: Determine what percentage of your portfolio will be devoted to international investments and put together a brief plan. This will depend on your own situation and risk tolerance. Generally speaking, some markets are naturally more volatile than others (Russia compared with Switzerland, for example) and it’s best to take such factors into consideration before you embark on any investment program.

It is highly recommended that you limit the particularly speculative plays to a small part of your portfolio or, better yet, only use money that you can afford to lose. While the returns can be extraordinary, they do carry a higher level of risk (which can be mitigated by buying when undervalued, but not eliminated).

Step Two: Learn to spot the good opportunities. Just like in your domestic market, you need to spend some time educating yourself as to what constitutes a real winner in any specific market.

You might also consider following the suggestions of people experienced in the markets in which you are interested. There are a number of services out there including our aforementioned World Money Analyst.

Step Three: Find an international broker. There are many out there, and a few good ones that will trade multiple global exchanges within one account (Chicago-based discount broker International Brokers, for example, offers access to 26 different markets). For specialty investments, you might need to find a trusted broker on the ground as well.

Step Four: Get your feet wet. Start with a small investment and limit highly speculative plays until you are comfortable with the process.

Step Five: Once you are comfortable, gradually expand your holdings of international investments according to the plan you developed in the first step of this process.

Ultimately, success in international investing will require you—as with any investment—to educate yourself and be cautious at first. But, that doesn’t mean it’s not worth doing. To quote Sir John Templeton once more:

“…If you search worldwide, you will find more bargains and better bargains than by studying only one nation…”

And so you shall. In fact, now, more than ever.

[Brandon Rowe is the publisher of World Money Analyst, a new global investment newsletter that lets readers learn and profit from a group of successful, geographically diverse investors and analysts who discover and report on undervalued opportunities in different markets each and every month. A limited-time Charter Subscriber offer is available - the first issue is free with 90% off the first year's subscription rate and a full money-back guarantee.]

Yes, you read that title correctly – 9% fixed interest is what you could be earning on your retirement savings. No, it’s not a mutual fund. It’s not a hedge fund. It’s not a bond fund. There are no market fluctuations that make you lose sleep at night. Forget about the scum bags on Wall Street drumming up the next derivative-bond-stock-funny money concoction to trick you into putting your hard earned retirement savings in their broke investment banks. There are no management fees, and no stock brokers’ commissions.

Fixed income investments enable you to plan your future down to the minute, how much you need to invest, and how long you need to invest for, to be able to retire with enough money to maintain your lifestyle. For example, at 9% compounded interest:

• US$100,000 grows to US$245,000 in 10 years, to US$604,000 in 20 years, to US$1.48 million in 30 years.
• US$200,000 grows to US$491,000 in 10 years, to US$1.2 million in 20 years, to US$2.97 million in 30 years.
• US$500,000 grows to US$1.22 million in 10 years, US$3.02 million in 20 years, to US$7.43 million in 30 years.

You get the idea. Compounded fixed income investments are the solution to retirement planning – the key is finding good fixed income investments, with sufficient interest to enable you to reach your retirement goals. The problem is that most fixed income investments pay next to zero interest rates.

What most people don’t know is that outside of the US there are solid financial institutions in US Dollarized economies, such as Panama, where the robust economy is booming despite the global economic crisis. The banks and credit unions of Panama are considered a “safe haven” for most South and Central Americans – something most North Americans and Europeans don’t realize.

Panama’s economy is booming, with double digit growth in 2011, thanks to the aggressive infrastructure investment agenda of the Panamanian President Martinelli – over $13 billion in aggregate spending, which is roughly 50% of the entire Panamanian economy. In the US, that would be the equivalent of President Obama spending $8 Trillion dollars on infrastructure – sure would have been better for America’s economy than spending it on bailing out Wall Street’s broke banks.

Nevertheless, US$13 billion is the most Panama has ever spent on infrastructure during any one presidential term (5 years). Widening of the Panama Canal, highways, oil pipelines, hydro & wind power generation projects, shipping ports, tax free trade zones, and other large projects are driving the unemployment rate in Panama to the lowest levels in history – truly an example to the rest of the world. Not to mention, Panama’s tourism industry now represents a cool 6% of GDP and growing. Multi-national companies, franchises, and other entrepreneurs are flocking to Panama like never before to jump on the growth wave that Panama has enjoyed now for the last 10 years, with expected growth to continue well into the 2020’s.

With Panama’s healthy economy, the financial institutions naturally have higher liquidity, and there are more Panamanians consuming, meaning the banks and credit unions are making more profits on consumer loans. Panama credit unions are non-profit, licensed, registered, and regulated cooperatives for “savings and loans” type financial institutions, where members are limited to employees of specific employment sectors such as medical, construction, police, etc. The particular credit union we are referring to in this article is among the top 10 in the country, catering to the employees of the largest government institution in Panama, with a solid track record of over 40 years now.

The credit union invests exclusively in loans to their members, with direct debits from the members / employees (government) salaries, and an insurance policy to cover the loans in the event of death or job loss. As credit unions are non-profit and tax free organizations, the profits go back to the depositors in the form of deposit interest, which is how they are able to pay more competitive interest rates than banks.
Credit unions have much lower exposure to economic cycles, high debt obligations, or international interest rate fluctuations than banks do, because Credit Unions are limited to borrowing up to only four times their paid-in capital, whereas banks are permitted to borrow up to 10 times their capital. In addition, credit unions are limited to investing only in consumer loans to their members, unlike banks who have the flexibility to invest in sometimes high risk bonds, and other high risk commercial loans creating excessive exposure for the bank.

Panama credit unions offer up to 4% compounded interest for savings accounts, as high as 8% (non-compounded) interest on Certificates of Deposit, and a fixed 9% compounded interest on retirement savings accounts. All accounts are in US Dollars, interest is tax-free in Panama, and there are no income reporting requirements to the Panamanian government (However, US citizens must voluntarily report the interest to the IRS).

The Credit Unions can afford to pay higher interest rates on deposits since they charge 1.2% interest per month on the consumer loans to their members (that’s 14.4% interest per year). Credit Union members generally use these higher interest loans the way you would use a credit card. The credit union pre-qualifies the member based on their government position, salary, and debt-to-income level, and offers them the equivalent to a revolving line of credit that they can use for personal loans for purchases such as home appliances, home improvements, vehicles, etc.

Panama credit unions generally restrict membership exclusively to Panamanian residents who are employees of specific industries, however, through this particular credit union, foreigners (non-Panamanians) are permitted to make deposits in savings accounts, CD’s, and retirement savings accounts, through a special professional introduction. Accounts are opened in one day, and require standard due diligence documentation (passport, second ID, financial reference, etc.).

For more information or to open an account today, contact us using the form below.

The most commonly asked question I receive on a weekly basis always involves the issue of obtaining a second passport. Clearly there is a strong desire to have a second passport not only in the fringe marketplace but also in mainstream culture. It seems the natives are restless.

Nearly every day we get an inquiry as to how to obtain a second passport, but the most common question is always, “Why?”

The twin towers bombings from 2001 and the global economic crisis have exposed cracks in the foundations of western countries. People’s perceptions are changing especially in regards to peoples safety, privacy, and liberty. We are no longer willing to entrust our life and our freedom to the vagaries of any one government. Most of us no longer trust government as being a modality that is capable of creating liberty.

The world is going global and more and more of us are discovering that we can make better livings abroad and that the possession of a 2nd Passport increases our degree of freedom, our latitude of movement and protects the money we earn from unfair taxation.

From a safety standpoint, even the most casual knowledge of history shows that a second passport can easily save your life. Those that need one in a desperate hour may have wished they had made the effort to acquire one when the opportunity was upon them.

For you American readers, there could conceivably come a day when obtaining a second passport becomes impossible. With all the new protectionist and privacy laws been thrust upon the American people, the door may soon be shut effectively locking you inside your home country with no option of moving. It has happened before in other countries and it can certainly happen in America.

On a positive note, there are huge opportunities to be gained by having a second passport. Up until the past few years, America has been the land of opportunity where entrepreneurship and investments have flourished. Globalization and technology have opened up the doors to the world and for the first time in America’s history it is now easier to make more money outside of America than inside.

The new expats are going to smaller countries with faster growth rates. They are also migrating towards pristine and peaceful nations where real estate is still a bargain. They are working globally as telecommuters and they are using the internet to make a living in cyberspace. There is a huge uprising of border-less entrepreneurship – and border-less is where you want to be.

A second passport gives us a continuing second option like a global insurance policy allowing us to make use of various countries for the better attributes while avoiding the less than ideal qualities. In reality it provides you with a better and unified set of options not available to Americans with only one passport.

When the doors of opportunity are shut or freedom is restricted in one country through various means like exchange controls or emergency emigration legislation to stop the outflow of intelligence or capital, your second passport is literally your ‘passport’ to freedom. There will be a breaking point in America and other nations where they feel control is rapidly deteriorating and measures will be taken to reign in the nations’ subjects.

Do you want to live free? Or will you be content as a slave to the state with 50% of your productive earnings going towards the nanny state legislation designed to keep you under control? What are we really talking about here? We are talking about freedom; the ability to move ourselves and our family as well as our financial and physical assets to a jurisdiction we feel is better suited to our future success. Is that wrong to want the best for ourselves and our families? Is it a crime to want to survive and prosper? Do you love your family enough to ensure their freedom?

Below are 7 reasons you will soon wish you had a second passport:

• Exchange controls inside the United States are now eminent, it is only a matter of time.
• The United States Government in order to prevent massive capital displacement will slam exchange controls in place suddenly and without warning, those that have not taken preventive measures will be trapped along with their assets.
• The United States government will place ‘emergency emigration legislation’ in place overnight in order to prevent a massive out-flux of emigrants seeking lower taxes and better jobs abroad.  They will have a different name for it, something like “Save the Children Campaign” and they will only be acting to prevent you from moving abroad to save your children from harm.  The name won’t matter. The result will be the same. Without a second passport your chances of escaping will be nil.
• Countless Americans are now leaving America. As pointed out in the book Escape From America, the State Department is not releasing the actual numbers. If you’ve read Escape From America and you still want to remain in America then getting a second passport is the one sure insurance policy you can get that you won’t lose everything or become trapped when the doors are suddenly closed. Too many Americans are waking up to these issues for it to remain a secret. When it becomes common knowledge, only common people with common brains will be unprepared.
• With a second passport,  your basic human right of travel is almost unrestricted and will remain so.
• With only one passport you will find that you are not allowed to work or settle in another country and that you will not be able to make the shift to a border-less economy or lifestyle.
• Your finances and your life are going to become more and more threatened by your country’s political instability from race riots to run away taxation. A second passport is a second option, one that remains eternally present in a dresser drawer. Something you can count on when the chips are down. You can do as you please and act as you please, because you always have more than one option and no master.

Should I even mention the tax benefits available? Or how not to get caught in Big Brother’s tax net? In recent years, many countries have been altering their tax code thus making financial privacy difficult at best. However, if you have more than one nationality you can reduce and even legally eliminate your tax burden. Most high-tax countries exempt foreigners who live there for less than 6 months in a given year and some even have multi-year exemptions like Sweden. Once you obtain your second passport you can live tax free in these high-tax countries as a foreigner.

Certainly we have all heard the stories from “Lifestyles of the Rich and Famous”. By having a second passport you can enjoy that type of lifestyle once only the secret of multimillionaires. Don’t you think they all have a second passport? It has always been my experience that if you want to live like the multimillionaires, you need to emulate their choices.

Today there is no need to run afoul of the law or even be a multimillionaire to acquire that coveted second passport. There are multiple was to obtain one now as many smaller countries have programs in place to attract educated workers and capital.

Do you want to learn the truth behind second passport deals? Each country has its own citizenship rules – some welcome individuals with ancestral or cultural history while others recognize your religious connections. Some are available for buying real estate while others only require your residency for a certain period of time.

The quickest and easiest way to acquire citizenship is through state contributions, or investment in the state. Or simply put, purchasing citizenship. These are considered programs for individuals who act as financial benefactors or special investors.

There are other ways for acquiring second passports as well in a variety of ways. To learn more about the differences between various programs, you can read the article below:

White, Grey, and Black Passports: What’s the Difference?

If you are interested in learning how to legally obtain citizenship and a second passport in less than one year without spending your life’s savings, please contact us using the form below.

Attas: James, let’s talk about buying physical gold. What does one need to consider?

Turk: There are only two ways to buy physical gold. Buy it and store it yourself, or buy it and have someone store it for you, which is what GoldMoney does. So clearly the key word here is storage. It is an essential part of the process when you own physical metal.

Attas: Shouldn’t I just buy “paper” gold, like an ETF, so I don’t have to worry about storage?

Turk: You first have to ask yourself, why you are buying gold? Are you a professional trader or speculator who just wants exposure to the gold price? In that case, an ETF, futures contract, option or any other paper-gold product may suit your needs. But if like most people you are buying gold because its unique attributes make it a safe haven, then you need physical gold.

There is a fundamental difference here. Paper-gold is a financial asset, and physical gold is a tangible asset.

Consequently, the key point is that paper-gold has counterparty risk. In other words, its value is based on someone’s or some firm’s promise and in the end, depends upon the strength of their balance sheet. Your paper-gold therefore is only as good as the financial capacity and also the willingness of the counterparty to make good on their promise when you ask them to.

Physical gold is completely different. Being a tangible asset, its value is not based on any promise, but rather, on its usefulness.

Attas: Okay, I see the difference, which clearly is important. But when I buy gold with GoldMoney, I don’t have it in my possession. So isn’t that paper-gold?

No, it isn’t. The issue here is title, not possession.

To explain this point, which is critically important, consider what happens when you deposit money in your bank. The ownership – or title – of those dollars transfers from you to the bank. You leave the bank with its evidence of their debt – their liability – to you. It could be a Certificate of Deposit, a savings book, or your checking account statement, depending upon what type of deposit you made.

GoldMoney is fundamentally different. Your Holding records the asset you own. Title of your gold does not transfer from you to GoldMoney, which is simply storing physical metal you own. You may not have direct possession of your gold when using GoldMoney, but you always have title to it. In addition, you can take delivery of your gold in handy units of 100 grams or one kilo (1,000) gram bars.

More to the point, the bank can take the dollars in your account and lend them to whomever they want. But GoldMoney cannot do that with the metal in your Holding. What’s more, if GoldMoney were to go out of business for any reason, your gold would not be affected.

Attas: So you have counterparty risk when you have money deposited in a bank because the bank now owns your money, which it owes to you. You not only gave up possession of the money when you made the deposit, but ownership too. In contrast, with GoldMoney, you give up possession but not ownership, right?

Turk: Exactly, and as a consequence, there is no counterparty risk in GoldMoney. But you do have performance risk. It is the risk that we are safeguarding your gold just as we represent in our Customer Agreement and state on our website. This risk is mitigated by our industry-leading governance procedures, the most important of which are the bi-monthly audits by two specialist firms that are completely independent of GoldMoney.

Attas: Why are the audits important? Can’t you just post the bar details on your website?

Turk: Well, you can post the details of gold bars like the bar number, weight and refinery name. In fact, we do that. But simply posting records on the website is not an audit, which actually requires visual inspection and verification of the metal in the vault as well as the books and records of GoldMoney and the vault operator to confirm that everything is in proper order.

More importantly, simply posting bar details does not provide any third-party verification, which is essential. The audits that are conducted in GoldMoney by two different independent third-parties provide our customers with assurances of integrity that their metal is really there in the vault and is safe. No one else matches what we do.

Attas: If I store gold at home, I don’t need an audit.

Turk: True, and perhaps that is one of the advantages of storing gold yourself. And having your gold immediately at hand is another advantage, but you also have to consider the disadvantages of home storage too.

For example, you run the risk of theft, the cost of insurance is expensive – if you can even get it – and your liquidity is impaired because you have to return the coins to a dealer to exchange them for national currency, which is a bother and takes time. You may even need to pay to get your gold refined to verify the gold content before the dealer accepts it, which is particularly true when you are selling 10-ounce bars or kilobars. And how do you know that those bars you bought are not gold-plated tungsten?

Attas: Okay, so there are advantages and disadvantages of storing your gold yourself, but the same is true when you have someone store your gold for you. Can you list some of these?

Turk: The only disadvantage is that you do not have your gold at hand, but there are a lot of advantages. Every company is different, so I’ll only explain what the advantages are when you use GoldMoney.

Your gold is stored for you in a secure, specialized bullion vault and insured. These vaults are located in London, Zurich and Hong Kong. You can choose which vault or vaults to use, thus enabling you to get good geographic and political diversification of your gold.

What’s more, you can sell metal 24/7 and have the proceeds wired the same day to your bank account anywhere in the world, so you have exceptional liquidity. We also do some other things that are important.

Every gold bar in GoldMoney is checked with ultrasound equipment provided by GE Technologies to test for foreign material and defects. We use the same technology that assures personal safety in the medical and aviation industries to verify the integrity of our customers’ gold bullion.

Furthermore, you can take delivery of your gold in convenient units of 100 grams or one kilo (1,000) gram bars.

But I think the single most important advantage is the independent third-party verification provided through regular audits by two auditing firms – including one of the Big-4 – that confirms the weight of metal being stored in the vaults equals the quantity of metal owned by our customers and recorded in their Holding. These audits are available to our customers when they log into their Holding. In short, GoldMoney avoids the bother and takes the worry out of owning physical gold.

Attas: So in summary, whether you store at home or with GoldMoney, each alternative has advantages and disadvantages. Every individual has to weigh up the pros and cons and decide which alternative, or perhaps whether both alternatives, best suits his or her needs.

Turk: Yes, I agree.

Attas: Let’s focus more closely on the types of storage arrangements. What is “allocated storage” and “unallocated storage”? What’s the difference between them?

Turk: These terms are often confused, but there is an easy way to remember them. It is the difference between a tangible asset and financial asset. More to the point, gold in allocated storage is physical metal, while anything unallocated is paper-gold. The same thing applies to “pool” accounts, which is another term for unallocated gold.

Make sure that your storage arrangements are always allocated. When stored in this way, you know it is physical gold you own – gold that is simply being stored for you. You retain title to your gold.

Attas: Does that mean that the bars of gold in allocated storage are specifically identified to their owners?

Turk: It can be, but there is more to it. For example, all of the gold in GoldMoney is allocated, but only some of it is “identified”, which is another term that is often confused.

If any customer owns enough gold to equal the weight of a bar in storage, he or she can choose to identify it as their bar. No one else can take delivery of a bar registered to a customer. The rest of the gold in allocated storage is “undivided”, which means that every customer has title to the weight of gold recorded in their Holding, but is not identified to a specific bar.

This arrangement is practical because all gold is fungible, meaning it is not distinguishable by different grades. In other words, gold mined 2000 years ago by the Romans is no different from gold mined last week in Nevada.

There is one related point. GoldMoney follows standard industry practice and bases all transactions on “fine weight”. In this way, the other minerals in a gold bar are ignored.

By the way, in GoldMoney you can redeem – take delivery of your physical gold – at any time in bars as small as 100 grams, which are about 3 troy ounces.

Attas: What are the security measures implemented by the vaults? (e.g. location, walls, guards)

Turk: As you can imagine, they are very rigorous. I’ve been in several different vaults over the years, and all of the major vault operators work to a high standard, which explains why you never hear about robberies of vaults. Thefts occur when valuable assets are not stored in a secure vault.

GoldMoney uses, for example, vaults owned and operated by Via Mat International Ltd., a long-established and highly regarded Swiss company, and G4S, a leading international security firm. The other major provider for gold storage is Brinks, a US company. Many banks also have vaults, but I don’t recommend using them for storage.

Attas: Why Not?

Turk: Banks are in the business of lending, not storing. So I would worry whether my gold has been loaned out. I therefore always recommend using non-bank vaults. These companies are in the business of storing, so you don’t need to worry about whether your gold has been loaned.

My misgivings I think are warranted. I could give you lots of examples, but here’s just one. A couple of years ago a big New York bank was sued by its customers who claimed that their metal in allocated storage had been loaned out, even though the bank continued to charge storage fees to these customers. The case was settled out of court, meaning the bank didn’t admit to any wrongdoing. But why take the chance? Just use a non-bank vault, but there is an important point that needs to be mentioned.

The biggest and best non-bank vault companies generally only work with commercial customers. Most of them are not geared to handle retail customers with just small amounts of metal to store. So to get the safe storage these companies offer, you may need to work through an intermediary, like GoldMoney, which has the requisite commercial relationship with non-bank vaults.

Attas: Anything wrong with just using a safe deposit box at a bank? Or what about a non-bank safe deposit box?

Turk: I generally don’t recommend bank safe deposit boxes. The reason is that banks are regulated, and many governments in countries where property rights and the rule of law are not sacrosanct might force the bank to confiscate customer assets. That is, after all, what happened in the 1933 gold confiscation in the United States.

I generally don’t recommend non-bank safe deposit boxes either. In London a few years ago, the UK government raided one of these private companies because the company was supposedly not following anti-money laundering laws. I understand that a lot of private property was confiscated and never returned to their rightful owners, which brings up an important point.

Property rights were safe when the rule of law was followed. Sadly, in many countries today the rule of law is being abused, which means that you need to be very careful how and where you store your gold..

Attas: So you mean I should store gold in a country where I don’t live, or perhaps in several countries?

Turk: There is safety in diversification. So I recommend diversifying your gold in as many ways as practical for you. One way to do that is to store gold in different non-bank vaults in different countries.

Attas: Is allocated storage expensive?

Turk: It can be, but it doesn’t have to be. Some companies see it as a major profit center, and therefore charges high fees. I’ve seen some vaults charge as high as 2% per annum to store gold, which I think is scandalous. GoldMoney charges only 0.15% to 0.18% per annum, with larger Holdings getting the lower fee. When you stop to think about it, the storage fee you pay GoldMoney for storing, auditing and insuring you gold might be less than the checking account fee you pay your bank.

Attas: Why does silver storage cost more than gold?

Turk: There are a couple of reasons. First, it takes a much larger volume of silver to equal the same dollar value of gold. In fact, it is 49-times greater volume, which is the current gold/silver ratio.

The other reason is that many countries, particularly in Europe, charge a Value Added Tax on silver, but not on gold. In the UK, for example, the VAT is 20%, which makes physical silver purchases there prohibitive. It therefore is necessary to store silver in a bonded warehouse so that the government knows it will receive the VAT if the customer were to take possession of his or her physical metal. This arrangement involves extra costs not incurred with gold because gold is not subject to VAT.

Attas: Can I go into a vault where I store my metal?  

Turk: Unfortunately, no. As I noted, most vaults are not equipped to deal with retail customers. More importantly, there are security issues. Also, if a vault were to allow visitors, it is likely their insurance costs would rise significantly, and these costs would then need to be passed back to their customers. GoldMoney though solves this problem in two ways.

First, auditors go to the vault on your behalf to verify that your gold is being safeguarded. Second, GoldMoney customers can see a video of the inside of the top-security vault in Switzerland where their gold is stored. Via Mat gave us special permission to film this vault. The video though is only available to GoldMoney customers when they are logged into their Holding.

Attas: What if the government targets those using “offshore” accounts?

Turk: You don’t have an account in GoldMoney; you have a Holding. We use this term in our Customer Agreement and on our website purposefully to explain your relationship with GoldMoney because it highlights the difference between a financial asset in an account as opposed to a tangible asset that you own, which we are storing for you.

This difference is meaningful because accounts are liabilities of a financial institution, like a bank, but a Holding simply records your ownership of an asset. In other words, we are talking about the fundamental difference between assets and liabilities.

There is another point to make here. GoldMoney is a European company that operates in Europe. It is not therefore, under US jurisdiction, which is an important point because of the US gold confiscation in 1933 and the subsequent prohibition of gold ownership until 1974. Because of this confiscation, few people are willing to store their gold in the US, thinking that because it happened once, another gold confiscation can easily happen again. What few people realize is that only the gold owned by US citizens in the United States was confiscated. They could continue legally owning gold outside the United States. Of course, if gold is confiscated again, the rules may change. But regardless, based on the historical record, the safe choice is not to store in the United States.

Attas: This has been very helpful, James. I am sure our readers will find much of this information to be very useful.

Turk: Thank you, Jason, for the opportunity to speak with you about storing physical metal, which is an often overlooked but very important matter.

An International Man lives and does business wherever he finds conditions most advantageous, regardless of arbitrary borders. He’s diversified globally, with passports from multiple countries, assets in several jurisdictions and his residence in yet another. He doesn’t depend absolutely on any country and regards all of them as competitors for his capital and expertise.

Living as an international man used to be just an interesting possibility. But few Americans opted for it, since the US used to reward those who settled in and put down roots. In fact, it rewarded them better than any other country in the world, so there was nothing pressing about becoming an international man.

Things change, however, and being rooted like a plant, at least if you have a choice, is a suboptimal strategy for surviving and prospering. Throughout history, almost every place has at some point become dangerous for those who were stuck there. It may be America’s turn.

For those who can take up the life of an international man, it’s no longer just an interesting lifestyle decision. It has become, at a minimum, an asset saver, and it could be a life saver. That said, I understand the hesitation you may feel about taking action; pulling up one’s roots (or at least grafting some of them to a new location) can be almost as traumatic to a man as to a vegetable.

As any intelligent observer surveys the world’s economic and political landscape, he has to be disturbed – even dismayed and a bit frightened – by the gravity and number of problems that mark the horizon. We’re confronted by economic depression, looming financial chaos, serious currency inflation, onerous taxation, crippling regulation, developing police states and, worst of all, the prospect of a major war. It seems almost unbelievable that we are talking of the US – which historically has been the land of the free.

How did we get here? An argument can be made that miscalculation, accident, inattention and the like are why things go bad. Those elements do have a role, but it is minor. Potential catastrophe across the board can’t be the result of happenstance. When things go wrong on a grand scale, it’s not just bad luck or inadvertence. It’s because of serious character flaws in one or many – or even all – of the players.

So is there a root cause of all the problems I’ve cited? If we can find it, it may tell us how we personally can best respond to the problems.

In this article, I’m going to argue that the US government, in particular, is being overrun by the wrong kind of person. It’s a trend that’s been in motion for many years but has now reached a point of no return. In other words, a type of moral rot has become so prevalent that it’s institutional in nature. There is not going to be, therefore, any serious change in the direction in which the US is headed until a genuine crisis topples the existing order. Until then, the trend will accelerate.

The reason is that a certain class of people – sociopaths – are now fully in control of major American institutions. Their beliefs and attitudes are insinuated throughout the economic, political, intellectual and psychological/spiritual fabric of the US.

What does this mean to the individual? It depends on your character. Are you the kind of person who supports “my country right or wrong,” as did most Germans in the 1930s and 1940s, or the kind who dodges the duty to be a helpmate to murderers? The type of passenger who goes down with the ship or the type who puts on his vest and looks for a life boat? The type of individual who supports the merchants who offer the fairest deal or the type who is gulled by splashy TV commercials?

What the ascendancy of sociopaths means isn’t an academic question. Throughout history, the question has been a matter of life and death. That’s one reason America grew; every American (or any ex-colonial) has forebears who confronted the issue and decided to uproot themselves to go somewhere with better prospects. The losers were those who delayed thinking about the question until the last minute.

I have often described myself, and those I prefer to associate with, as gamma rats. You may recall the ethologist’s characterization of the social interaction of rats as being between a few alpha rats and many beta rats, the alpha rats being dominant and the beta rats submissive. In addition, a small percentage are gamma rats that stake out prime territory and mates, like the alphas, but are not interested in dominating the betas. The people most inclined to leave for the wide world outside and seek fortune elsewhere are typically gamma personalities.

You may be thinking that what happened in places like Nazi Germany, the Soviet Union, Mao’s China, Pol Pot’s Cambodia and scores of other countries in recent history could not, for some reason, happen in the US. Actually, there’s no reason it won’t at this point. All the institutions that made America exceptional – including a belief in capitalism, individualism, self-reliance and the restraints of the Constitution – are now only historical artifacts.

On the other hand, the distribution of sociopaths is completely uniform across both space and time. Per capita, there were no more evil people in Stalin’s Russia, Hitler’s Germany, Mao’s China, Amin’s Uganda, Ceausescu’s Romania or Pol Pot’s Cambodia than there are today in the US. All you need is favorable conditions for them to bloom, much as mushrooms do after a rainstorm.

Conditions for them in the US are becoming quite favorable. Have you ever wondered where the 50,000 people employed by the TSA to inspect and degrade you came from? Most of them are middle-aged. Did they have jobs before they started doing something that any normal person would consider demeaning? Most did, but they were attracted to – not repelled by – a job where they wear a costume and abuse their fellow citizens all day.

Few of them can imagine that they’re shepherding in a police state as they play their roles in security theater. (A reinforced door on the pilots’ cabin is probably all that’s actually needed, although the most effective solution would be to hold each airline responsible for its own security and for the harm done if it fails to protect passengers and third parties.) But the 50,000 newly employed are exactly the same type of people who joined the Gestapo – eager to help in the project of controlling everyone. Nobody was drafted into the Gestapo.

What’s going on here is an instance of Pareto’s Law. That’s the 80-20 rule that tells us, for example, that 80% of your sales come from 20% of your salesmen or that 20% of the population are responsible for 80% of the crime.

As I see it, 80% of people are basically decent; their basic instincts are to live by the Boy Scout virtues. 20% of people, however, are what you might call potential trouble sources, inclined toward doing the wrong thing when the opportunity presents itself. They might now be shoe clerks, mailmen or waitresses – they seem perfectly benign in normal times. They play baseball on weekends and pet the family dog. However, given the chance, they will sign up for the Gestapo, the Stasi, the KGB, the TSA, Homeland Security or whatever. Many are well intentioned but likely to favor force as the solution to any problem.

But it doesn’t end there, because 20% of that 20% are really bad actors. They are drawn to government and other positions where they can work their will on other people and, because they’re enthusiastic about government, they rise to leadership positions. They remake the culture of the organizations they run in their own image. Gradually, non-sociopaths can no longer stand being there. They leave. Soon the whole barrel is full of bad apples. That’s what’s happening today in the US.

It’s a pity that Bush, when he was in office, made such a big deal of evil. He discredited the concept. He made Boobus americanus think it only existed in a distant axis, in places like North Korea, Iraq and Iran – which were and still are irrelevant backwaters and arbitrarily chosen enemies. Bush trivialized the concept of evil and made it seem banal because he was such a fool. All the while real evil, very immediate and powerful, was growing right around him, and he lacked the awareness to see he was fertilizing it by turning the US into a national security state after 9/11.

Now, I believe, it’s out of control. The US is already in a truly major depression and on the edge of financial chaos and a currency meltdown. The sociopaths in government will react by redoubling the pace toward a police state domestically and starting a major war abroad. To me, this is completely predictable. It’s what sociopaths do.

There are seven characteristics I can think of that define a sociopath, although I’m sure the list could be extended.

1. Sociopaths completely lack a conscience or any capacity for real regret about hurting people. Although they pretend the opposite.
2. Sociopaths put their own desires and wants on a totally different level from those of other people. Their wants are incommensurate. They truly believe their ends justify their means. Although they pretend the opposite.
3. Sociopaths consider themselves superior to everyone else, because they aren’t burdened by the emotions and ethics others have – they’re above all that. They’re arrogant. Although they pretend the opposite.
4. Sociopaths never accept the slightest responsibility for anything that goes wrong, even though they’re responsible for almost everything that goes wrong. You’ll never hear a sincere apology from them.
5. Sociopaths have a lopsided notion of property rights. What’s theirs is theirs, and what’s yours is theirs too. They therefore defend currency inflation and taxation as good things.
6. Sociopaths usually pick the wrong target to attack. If they lose their wallet, they kick the dog. If 16 Saudis fly planes into buildings, they attack Afghanistan.
7. Sociopaths traffic in disturbing news, they love to pass on destructive rumors and they’ll falsify information to damage others.

The fact that they’re chronic, extremely convincing and even enthusiastic liars, who often believe their own lies, means they aren’t easy to spot, because normal people naturally assume another person is telling the truth. They rarely have handlebar mustaches or chortle like Snidely Whiplash. Instead, they cultivate a social veneer or a mask of sanity that diverts suspicion. You can rely on them to be “politically correct” in public. How could a congressman or senator who avidly supports charities possibly be a bad guy? They’re expert at using facades to disguise reality, and they feel no guilt about it.

Political elites are primarily, and sometimes exclusively, composed of sociopaths. It’s not just that they aren’t normal human beings. They’re barely even human, a separate subspecies, differentiated by their psychological qualities. A normal human can mate with them spiritually and psychologically about as fruitfully as a modern human could mate physically with a Neanderthal; it can be done, but the results won’t be good.

It’s a serious problem when a society becomes highly politicized, as is now the case in the US and Europe. In normal times, a sociopath stays under the radar. Perhaps he’ll commit a common crime when he thinks he can get away with it, but social mores keep him reined in. However, once the government changes its emphasis from protecting citizens from force to initiating force with laws and taxes, those social mores break down. Peer pressure, social approbation and moral opprobrium, the forces that keep a healthy society orderly, are replaced by regulations enforced by cops and funded by taxes. Sociopaths sense this, start coming out of the woodwork and are drawn to the State and its bureaucracies and regulatory agencies, where they can get licensed and paid to do what they’ve always wanted to do.

It’s very simple, really. There are two ways people can relate to each other: voluntarily or coercively. The government is pure coercion, and sociopaths are drawn to its power and force.

The majority of Americans will accept the situation for two reasons: One, they have no philosophical anchor to keep them from being washed up onto the rocks. They no longer have any real core beliefs, and most of their opinions – e.g., “We need national health care,” “Our brave troops should fight evil over there so we don’t have to fight it over here,” “The rich should pay their fair share” – are reactive and comforting. The whole point of spin doctors is to produce comforting sound bites that elude testing against reality. And, two, they’ve become too pampered and comfortable, a nation of overfed losers, mooches and coasters who like the status quo without wondering how long it can possibly last.

It’s nonsensical to blather about the Land of the Free and Home of the Brave when reality TV and Walmart riots are much closer to the truth. The majority of Americans are, of course, where the rot originates – the presidential candidates are spending millions taking their pulse in surveys and polls and then regurgitating to them what they seem to want to hear. Once a country buys into the idea that an above-average, privileged lifestyle is everyone’s minimum due, when the fortunate few can lobby for special deals to rake something off the table as they squeeze wealth out of others by force, that country is on the decline. Lobbying and taxation rather than production and innovation have never been able to sustain prosperity. The wealth being squeezed took centuries to produce, but it is not inexhaustible.

In that light, it was interesting to hear Mitt Romney, the presumptive Republican nominee, speak about the lower, middle and upper classes recently. Romney is an empty suit, only marginally better than the last Republican nominee, the hostile and mildly demented John McCain. In any event, Romney is right about the poor, in a way – there is a “safety net,” now holding 50 million people on Medicaid and 46 million on food stamps, among many other supposed benefits. And he’s right about the rich; there’s no need to worry about them at the moment – at least until the revolution starts. He claims to worry about the middle class, not that his worries will do anything to help them. But he’s right that the middle class is where the problem lies. It’s just a different kind of problem than he thinks.

People generally fall into an economic class because of their psychology and their values. Each of the three classes has a characteristic psychological profile. For the lower class, it’s apathy. They have nothing, they’re ground down and they don’t really care. They’re not in the game, and they aren’t going to do anything; they’re resigned to their fate. For the upper class, it’s greed and arrogance. They have everything, and they think they deserve it – whether they do or not. The middle class – at least in today’s world – is run by fear. Fear that they’re only a paycheck away from falling into the lower class. Fear that they can’t pay their debts or borrow more. Fear that they don’t have a realistic prospect of improving themselves.

The problem is that fear is a negative, dangerous and potentially explosive emotion. It can easily morph into anger and violence. Exactly where it will lead is unpredictable, but it’s not a good place. One thing that exacerbates the situation is that all three classes now rely on the government, albeit in different ways. Bankruptcy of the government will affect them all drastically.

With sociopaths in charge, we could very well see the Milgram experiment reenacted on a national scale. In the experiment, you may recall, researchers asked members of the public to torture subjects (who, unbeknownst to the people being recruited, were paid actors) with electric shocks, all the way up to what they believed were lethal doses. Most of them did as asked, after being assured that it was “alright” and “necessary” by men in authority. The men in authority today are mostly sociopaths.

WHAT TO DO

One practical issue worth thinking about is how you, as someone with libertarian values, will manage in a future increasingly controlled by sociopaths. My guess is poorly, unless you take action to insulate yourself. That’s because of the way almost all creatures are programmed by nature. There’s one imperative common to all of them: Survive! People obviously want to do that as individuals. And as families. In fact, they want all the groups that they’re members of to survive, simply because (everything else being equal) it should help them to survive as individuals. So individual Marines want the Marine Corps to survive. Individual Rotarians want the Rotary Club to prosper. Individual Catholics leap to the defense of the Church of Rome.

That’s why individual Germans during World War II were, as has been asserted, “willing executioners” – they were supporting the Reich for the same reasons the Marines, the Rotarians and the Catholics support their groups. Except more so, because the Reich was under attack from all sides. So of course they followed orders and turned in their neighbors who seemed less than enthusiastic. Failing to support the Reich – even if they knew it had some rather unsavory aspects – seemed an invitation to invading armies to come and rape their daughters, steal their property and probably kill them. So of course the Germans closed ranks around their leaders, even though everyone at the top was a sociopath. You can expect Americans to do the same.

Americans have done so before, when the country was far less degraded. During the War Between the States, even saying something against the war was a criminal offense. The same was true during World War I. In World War II, the Japanese were all put in concentration camps on groundless, racially based suspicions of disloyalty. During the early years of the Cold War, McCarthyism was rampant. The examples are legion among humans, and the US was never an exception. It’s even true among chickens. If a bird has a feather out of place, the others will peck at it, eventually killing it. That out-of-place feather is deemed a badge of otherness announcing that its owner isn’t part of the group. Chicken Autre must die.

Libertarians, who tend to be more intelligent, better informed and very definitely more independent than average, are going to be in a touchy situation as the crisis deepens. Most aren’t going to buy into the groupthink that inevitably accompanies war and other major crises. As such, they’ll be seen as unreliable, even traitors. As Bush said, “If you’re not with us, you’re against us.” And, he might have added, “the Constitution be damned.” But of course that document is no longer even given lip service; it’s now a completely dead letter.

It’s very hard for an individualist to keep his mouth shut when he sees these things going on. But he’d better keep quiet, as even HL Mencken wisely did during both world wars. In today’s world, just keeping quiet won’t be enough; the national security state has an extensive, and growing, file on everybody. They believe they know exactly what your beliefs, desires, fears and associations are, or may be. What we’re now facing is likely to be more dangerous than past crises. If you’re wise, you’ll relocate someplace where you’re something of an outsider and, by virtue of that fact, are allowed a measure of eccentric opinion. That’s why I spend an increasing amount of time in Latin America. In truth, however, security is going to be hard to find anywhere in the years to come. The most you can hope for is to tilt the odds in your favor.

The best way to do that is by diversifying your assets internationally. Allocating your wealth into real assets. Linking up with sound, like-minded people who share your values. And staying alert for the high-potential speculations that inevitably arise during chaotic times.

[Another puzzle piece that sadly fits in place for the fall of the US is its astounding debt crisis. Those with the foresight to take advantage of the shifting trends it triggers can not just survive, but thrive during the challenging times ahead. To learn ways to protect your wealth from the growing onslaught of debt, contact us using the form below.]