“When the facts change, I change my mind. What do you do, sir?”  Keynes’ comments are very relevant to the fast changing world of banking where we do business today. Investors more than ever have to keep on their toes, keep themselves informed, and not be complacent.

Which are the world’s safest or best offshore banks? Where is the best country to open a bank account? Which is the best offshore tax haven? Is it still a good idea to open a bank account in Switzerland?

These are the type of questions I get on a daily basis as an offshore wealth management editor and consultant. For example, in recent months I have seen a lot of the fallout of the UBS scandal in the United States. Swiss banking giant UBS has closed thousands of  bank accounts based in their Swiss branches where American residents or citizens were involved as signatories – even accounts that had been open for decades. Many investors believe that Credit Suisse could be next on the hitlist and are beginning to think that ’small is beautiful’ when it comes to private banking.

The answer, as I always have to explain, is that there is no ‘best offshore bank’ nor even ‘best offshore banking country.’ A whole range of individual circumstances come in to play. Investors have many different motivations when looking for a new bank. Often these days, the level of service, privacy, and asset protection are far more important than the tax implications of a secret offshore bank account.

For example, your citizenship is very important. If you are a US citizen your options are more limited, as many offshore banks no longer accept US citizens as clients. Canadians or Australians for example will have fewer problems in this regard. But the traditional wisdom is that for the best level of privacy, choose a bank that does not have offices or branches in your home country.

If you are a citizen of a European Union country (including the United Kingdom of course) then the European Union Savings Tax Directive comes into play, and you might prefer to hold your offshore bank account in one of the tax-haven type banking countries that is not a signatory to this treaty. That rules out Switzerland, Andorra and the Cayman Islands for example – and brings into play other prominent financial capitals a little further afield, like Panama or Singapore.

But there are also other nuances to look out for besides citizenship and residency. What kind of services are you looking for? Do you want one with the best online trading technology or the one with the highest level of personal service? Generally, those two are polar opposites.  Traditional private banking is expensive. Whereas for online trading in the financial markets, maybe you don’t even need a bank account these days.

Most offshore banks offer debit and/or credit cards, and internet banking – two essentials for the modern expat bank account. But again from here, services vary widely. Will it be a Maestro ATM card or a an American Express Platinum? If you are mainly interested in cash withdrawals using an offshore card, then Maestro might be better. But other clients want the prestige and service level afforded to those Gold and Platinum level clients – not to mention perks like airline miles offered on HSBC’s Panama Platinum Mastercards (that can be very valuable if you are conducting serious business through your offshore company.)

Ultimately, then, there is no correct answer – the best offshore bank account for one person is completely different from the best account for somebody down the road. If you would like to read more about this, you will find 40 or so pages of easy to read advice in my Practical Offshore Banking Guide 2009. This report is available instantly for download in pdf format, and also includes contact details of ten offshore banks we can particularly recommend that are suitable for most of our readers.

The guide is FREE OF CHARGE if you are already a member of The Q Wealth Report. If you are not yet a member, you can sign up online right now for the price of a good lunch ($87 to be precise) and get instant access to this information, together with our no-quibble money back guarantee of satisfaction. Or, if you are not ready just yet but would like to stay in touch, sign up for our Q Bytes online newsletter and get a free five part course on offshore banking and asset protection.

by Peter Macfarlane for The Q Wealth Report

If you’ve been studying the offshore and asset protection arena for a little while, you might well have heard a lot of good things about the strong privacy benefits of the Panamanian Private Interest Foundation. As an asset protection and estate planning vehicle, it’s second to none.

Most of my consulting clients who choose this vehicle are seeking to create a legal structure that will reduce tax liabilities, protect their hard-earned assets from lawsuits or claims, and make sure that on death, their estates pass to their chosen beneficiaries without unnecessary legal disputes or fees.

The Panama foundation is based on the legendary Liechtenstein Foundation or Anstalt, the preferred wealth management choice of generations of continental Europeans. But it is not so well known or understood in the English speaking world. And these days, Panama offers better offshore secrecy and confidentiality than Liechtenstein.

You might well have Googled a few websites and read articles about Panama Foundations in rather confusing terms. Such articles are often written up either by internet marketers who have little idea about law, or by Panamanian lawyers who have little idea about Anglo-American common law and whose first language is not English.

But few people understand what kind of legal animal a Panama foundation really is. That’s probably a very good thing for those of us using them! The difficulty for many clients is of course deciding upon the best course of action or structure to use. But I am about to let you in on the secret… my new free report sets out to demystify the Panama Foundation, explain the concept in plain English, and explain the differences between a Foundation and a Trust of the Anglo-American variety.

Should you set up a Corporation… or a Foundation? Or both? You will find the answers in my latest report specifically about Foundations. It’s called “Panama Foundations: Use and Benefits Manual” and subtitled ‘Panama Foundations and Trusts Demystified.’

Once again, this report is FREE OF CHARGE. I will explain below how you can obtain your copy.

But what exactly is a Foundation? A Panama Foundation combines some of the best parts of a trust, and the best parts of an IBC or Offshore Company into one legal entity. A Foundation is typically set up to passively hold assets like bank accounts, stocks and shares, and real estate.

The key thing is that, unlike corporations, Foundations do not have owners. They have beneficiaries instead (for example, your heirs). The interesting thing about this is that in most countries it legally sidesteps reporting requirements.

Even in the USA, there are ways you can structure a Panama Foundation to legally avoid IRS reporting requirements. Because US tax law doesn’t specifically recognize Foundations, it is quite flexible on this – you decide how to declare your Foundation. (This only applies to US taxpayers. Other nationalities have it much easier…)

In my report I also explain the ultimate asset protection strategy… by keeping the assets in another country on another continent, you are protected not just by strict Panamanian secrecy and asset protection laws, but by something even stronger… what somebody doesn’t know, they can’t tell. You can make sure that your Foundation are structured so there is absolutely no record held in Panama of what the assets are and where they are located.

This new report, free of charge to registered Q Wealth members covers five topics. You will learn:

• What is a Panama Foundation. What is the difference between a trust and a Foundation, and why is a Foundation often more secure and private than a trust?

• Panama Foundations for Estate and Inheritance Planning

• Panama Foundations as an Asset Protection tool

• Banking for Panama Foundations

• Taxation of Panama Foundations

As always, I’ve kept things simple. This report is written in plain English, designed to explain legal concepts in simple terms. It is not an in-depth legal textbook…. But it has been reviewed by both Panamanian and British lawyers.

This report on Panama Foundations could be yours free in the next five minutes or so. All I ask in return is that, if you’ve not already done so, you sign up as a full member of The Q Wealth Report. You will be granted instant access to the Members’ Only section where you will be able to download this report in pdf format. Of course, if you’re already a QWR member you’re ahead of the game – just log in as usual and you can download it right now.

Of course, this brand new report is only one of the many benefits you will receive as a Q Wealth member. We’re not just about Panama – we’re focused on protecting and creating wealth internationally. We do all the hard work, costly research and due diligence for you – to take you from the overload of the information age directly to where you need to be. As a publishing company, not an offshore services provider, we deliver impartial advice from a global perspective – not biased advice from a Central American perspective, which is what you might well find elsewhere. Need I say more?

As a member you’ll also have access, for example, to the Practical Offshore Banking Guide, the report on buying and holding Precious Metals offshore, a report on Due Diligence on High Yield Investment Programs, and much much more… including the free consultation benefit I mentioned above. You’ll also receive every quarter our flagship publication, The Q Wealth Report.

All this, for less than a good lawyer would probably charge just for talking to you and giving you a fraction of this information. $87 per year to be precise. And if you are not 100% satisfied, you can cancel your subscription at any time and request a full refund. No quibbles, no questions asked.

To sign up right now you just need a Visa, Mastercard, American Express, JCB or Discover card. (If you prefer you can also download a mail-in subscription form to pay by cheque or money order)

Sign up online right now at http://www.qwealthreport.com/signup.php

Kind regards,

Peter Macfarlane

Offshore Banking Consultant and Joint Q Wealth Editor

P.S. Don’t forget we also offer separately an absolutely free report on the Hidden Truths Behind Panama Banking and Corporations. You can obtain the Banking and Corporations report without any need to sign up even. If you haven’t got yours yet, get it at the link above.

When you decide to open an offshore bank or brokerage account, whether in Switzerland, Cayman, Belize, Panama or anywhere else… one of the most typical requirements is for a bank reference letter. Offshore bankers are generally required to ask for such letters in order to complete their due diligence file on you as a new account holder. This applies equally whether you are opening a personal or corporate account.

Yet, bank reference letters can be a big threat to your privacy. You are opening an offshore account mainly for privacy reasons, I would assume. You believe that your finances are your business and nobody else’s. You are concerned about threats to your banking privacy onshore, in the form of tax information exchange agreements, credit reference bureaux and the like. So in this blog posting, I am going to look at what you can do to ensure your privacy, and whether it is possible to open offshore bank accounts without reference letters?

It has been reported recently in the offshore media that requests for “Bank Reference Letters” are now subject to “Suspicious Transaction” reporting in the USA. The story goes that banks are refusing to issue reference letters because they would then have to file a suspicious transaction report.

Frankly, we have seen no evidence to support this claim. It’s worth noting that more and more entities are requesting bank reference letters. For example, these days buying a high value property quite often entails providing a bank reference to prove clean funds, clear of criminal origin. So requests for bank references are really on the increase and most requests probably have nothing whatsoever to do with offshore accounts. On the contrary, one would think the powers that be would like to encourage more use of bank references because they create a paper trail. But therein, of course, lies the problem!

One of my clients in the UK did tell me today that she had been asked to justify to the bank’s head office her request for an open reference letter addressed “To Whom it May Concern.” Most UK banks now blankly refuse to write references like this, though some still do.

Anyway, whatever the truth of the matter, I understand that many clients are reluctant to tell their bank at home about the business they are doing offshore, and a bank reference request might entail this. So many clients ask how they can open an offshore bank account, whether corporate or personal, without a bank reference.

The answer is that it is difficult, but certainly not impossible. Over the years I have built up excellent relationships with a number of top flight European, Latin American and Caribbean banks, and I do understand how they work. By dealing at a higher level, I get to talk to intelligent bankers who are prepared to get to know clients as individuals not as numbers (though they might still offer numbered accounts!) The benefits of these referrals and relationships I am happy to pass on to my readers.

Let’s make it clear, I am not saying that I deal with banks that will cut corners on due diligence. We only want to deal with honest individuals. I have plenty of experience of sniffing out scammers or crooks and they will not get in the door at any bank, at least not with my endorsement.

But if you are a true, honest, freedom-loving and privacy seeking individual with good intentions and clean funds, who is sick of government intrusion in your life, then I am prepared to help you to open accounts without bank references. We can do it properly and legally in reputable banks. I do know which banks have more flexible policies, especially where higher level personnel are involved in the account opening.

You will have to provide some kind of reference letters, but not necessarily from a bank. Commercial reference letters might be acceptable, or references from a lawyer or accountant. Other banks might accept copies of the last 3-6 months of your bank statements, in place of a reference. Or sometimes you are permitted to open a personal account without a reference, and then use that as the basis to open a corporate account if you wish soon after.

I am certainly not going to name specific banks here in public, only to have them deluged with scammers trying to open accounts and picked on in public by the anti-tax-haven people. Suffice to say that if you are holding off opening an offshore bank account because of worries about providing a reference, don’t wait any longer. Take a look at my Practical Offshore Banking Guide 2009. If you are already a Q Wealth Member, it is available free of charge for download instantly in pdf format. If you’re not yet a member you can sign up right now and get instant access.

Within the Guide, I would refer you specifically to the section about “What Can You Do if Not All the Documents Are Available.” You’ll find some guidance there. You’ll also find a list of various different offshore banks and brokerage houses all around the world we have successfully worked with, done due diligence on, and recommend. If you need additional help with bank referrals, remember that as a paid Q Wealth member you are entitled to a free e-mail consultation with Peter Macfarlane in order to get your structure up and running smoothly.

Full membership brings a host of other benefits too… including information on Secure, Non-Reportable Gold Investments for example. You will also be invited to exclusive Q Wealth Events… designed for present and future millionaires!

If however you would prefer just to try our services first of all without any cost, commitment or obligation, sign up now for our free five-part introductory course on Offshore Banking and Asset Protection.

When your government acts “above the law”, it is time for serious planning…

The following is reproduced with kind permission from Mountain Vision, the newsletter for clients of BFI Capital in Switzerland. The idea of privacy being a cornerstone of asset protection is very simple when you think about it. Long before banks even existed, people protected their assets by hiding them!

But sometimes we get so bogged down in legal details that we can’t see the wood for the trees. Legal protection is only as good as the legal system (and aren’t you trying to protect yourself against the legal systen?) This article discusses how you can achieve the goal of total privacy and confidentiality for asset protection purposes, while remaining compliant with the law in your country of residence. It discusses the use of physical precious metals such as gold bullion, and international life insurance and annuities of the type offered by BFI.

Anyone who understands anything about asset protection also understands the importance of privacy. It is primarily privacy that protects you from the intrusions of frivoluous lawsuits, greedy attorneys and other predators. Asset protection laws and structures are only the second line of defense. A good asset protection plan should aim at first avoiding exposure and visibility altogether.

What this DOES NOT mean is that you must break any laws. To the contrary, we recommend doing your offshore planning compliantly. However, in reading the newspapers, one could come to the conclusion that privacy is criminal. It is not. Governments around the world are running into fiscal problems, particularly the governments of Germany, the United Kingdom and America. Thus, they are setting off on an aggressive hunt for tax money, increasingly employing methods that are beyond legality.

When your government acts “above the law”, it is time for serious planning. In the absence of rule of law, the most fundamental prerequisite of a functioning free country is undermined. At that stage, protecting your freedom and your property within that country becomes a gamble. Privacy and property are in jeopardy and need to be protected OUTSIDE of your country.

Key principles of offshore privacy

This is the point where you enter the realm of offshore (i.e. international) wealth management and tax planning. A few principles in this context must be understood by all of our Mountaineers, no matter which jurisdiction they come from.

• The purpose of privacy is to protect the well-being and fortune of you and your family. Privacy does not necessarily require a numbered account though. It starts with your going about your affairs “quietly”, particularly in jurisdictions with a high level of litigation. It is important to keep a low profile if interested in avoiding unnecessary risk exposure.

• Privacy amongst tax authorities within a country that is fiscally bankrupt will generally not exist. Countries like those mentioned earlier have given up such privacy protection long ago. Banks, accountants, and other financial professionals have, to a large degree, become tax agents. The transparent citizen has become the norm.

• Safekeeping and investing assets offshore – in other words, outside of the borders of your country – per se is NOT illegal. What may be required though is regular reporting of those assets, depending on where and how your assets are deposited and managed abroad. Not declaring assets held overseas is what can get you into trouble.

• Making “offshore” (i.e. international) arrangements for the deposit and management of your assets does not mean that you can thereby leave the tax rules of your country of residence behind. They will generally apply elsewhere, too. Therefore, one should aim at implementing an offshore plan that achieves asset protection and privacy in compliance with the rules of one´s country of residence.

The ingredients of a solid plan

The ultimate objective of a solid international wealth management strategy should be to incorporate the benefits of overseas privacy while respecting the rules. The key elements of achieving that strategy are to implement a plan that provides for TAX DEFERMENT and NON-REPORTABILITY.

In most jurisdictions, there is no reporting required unless there is a taxable event. Thus, countries with a wealth tax, such as France or Switzerland, will require annual reporting of all assets. Most other countries, for example Germany, the UK, the United States, Spain or South Africa, do not have wealth taxes. Therefore, the employment of investment vehicles and structures that offer tax deferment will generally not be reportable.

The United States presents a bit of an exception here. Treasury Department Form 90-22.1 requires the reporting of all offshore accounts. The form was adjusted recently provoking widespread commentaries. One question that has been raised frequently was whether the new form requires the reportability of international life insurance policies and annuities. The answer, based on a legal opinion we’ve obtained from a top-notch international legal firm, is clearly NO. As long as the policy is tax-compliant, i.e. provides for compliant tax deferability, the state of non-reportability continues as in the past.

While other countries still have a number of strategies, including private placement life insurance and tailored annuities, the US is pretty much left with two strategies that offer compliant privacy and tax deferment:

1. physically stored precious metals without using a bank account
2. compliant life insurance “wrappers” and annuity policies.

Editor’s note: You can obtain a free subscription to Mountain Vision here. Don’t forget if you haven’t already done so to sign up also for our free Q Bytes newsletter from The Q Wealth Report.

Germany has always been something of a cash economy. Even as North America and the rest of Europe were ganging up against anyone with a wad of cash a decade ago, German auto dealers would accept nothing but cash for that new Mercedes or BMW, while travelers in Germany were amazed that hotels and train stations would not accept credit cards either. Things are changing, but the ‘Bundesrepublik Deutschland’ is certainly the largest ‘cash economy’ in Europe.

Perhaps it’s not surprising, therefore, that Frankfurt Airport in Germany is the testing ground for a sophisticated new type of vending machine that sells gold bullion for investment purposes. As regards the typical trade-off between money laundering regulations and privacy, a camera monitors the machine. Presumably anyone hogging the machine to purchase large quantities will be regarded as suspicious.

Operator TG Gold-Super-Markt plans to roll out 500 of the machines in airports and railway stations across Europe, including Germany, Austria, Switzerland and the UK. They are also offering worldwide franchise licenses. The sophisticated machines sell everything from small bars intended as gifts, such as a 1 gram bar for about €30, to larger ingots aimed more at investors – a 10 gram bar costs about €245 – or gold coins such as the Maple Leaf  or Kangaroo.

Demand for retail gold bullion (in other words, physical gold that you can hold and touch, rather than paper gold such as certificates and ETFs)  has of course shot up in the past year. An article in Britain’s Daily Telegraph states that demand reached an estimated 108 tonnes in 2008, up from 36 tonnes in 2007 and 28 tonnes in 2006.

Thomas Geissler, who owns TG Gold-Super-Markt, said: “German investors have always preferred to hold a lot of personal wealth in gold, for historical reasons. They have twice lost everything. Gold is a good thing to have in your pocket in uncertain times.”

Unfortunately, however, buying physical gold in these vending machines comes at quite a premium. Geissler claims that the premium over spot is less than charged by most banks, which may be true. But then ‘most banks’ are not specialists in gold. Those who are more serious about investing in gold bullion know which banks to go to to buy at substantially lower premiums. For example, nearly all banks in Vienna, Austria are now stocked up with gold coins that are available for cash purchasers at a much lower premium.

So, in summary, it’s a cute idea and next time we fly through Frankfurt Airport we will likely test it out ourselves. It’s ideal for encouraging impulse savings (that’s the opposite of impulse purchases!) But if it gets too successful – in other words if investors are treating this seriously rather than as a gimmick – we may well see some resistance from governments. After all, little more than ten years ago Austria had anonymous bank accounts (ATM Sparbuchs) that could be operated through similarly innovative technology. Five years ago you could buy prepaid Travel Cards and Mobile phone SIM chips anonymously for cash in Switzerland. But no longer…

If you want to know more about discreet ways to buy gold bullion offshore while protecting your privacy, you’ll want to check out Peter Macfarlane’s article about Precious Metal Investments: How to Buy and Hold Gold Bullion Offshore. We expect Gold to go through the roof (at least in dollar terms) quite soon. Very soon we expect it to break through the $1000 mark again. So don’t delay and miss out on these opportunities. Members of Q Wealth have full access to Gold Intelligence – in the form of the Gold Report and regular updates in each issue of The Q Wealth Report -  from Peter Macfarlane.

It probably won’t have escaped you that, although we are a global wealth building and wealth management newsletter with our roots in the United Kingdom,  in recent years we have developed a distinct Latin American bias. That is no accident.

It is in Latin America that we have found freedom, wealth, and privacy – in the form of governments that have no particular interest in keeping the residents of their countries under surveillance. They say power corrupts, absolute power corrupts absolutely. Well it seems to us that Latin American governments have power, but not absolute power – because their systems are less developed than those further north. So the fact that these governments don’t have the financial resources to employ high-tech methods of spying on their citizens is certainly a blessing.

The Republic of Panama stands out in Latin America as a major offshore tax haven and financial hub. Offshore bank accounts, IBCs (Panama Corporations), Private Interest Foundations and other similar privacy tools make for a business-friendly environment. The recently elected Martinelli government promises to continue with Panama’s liberal economy at least for the next five years (whether conservatives hold power after that will depend on whether Martinelli can deliver on his promises.)

But besides being a good place to incorporate or open bank accounts, Panama is a very liveable place. Sophisticated capital Panama City has some beautiful areas and, despite a real estate boom in recent years, remains relatively inexpensive. You can still get a good meal with a local beer for $5. But if you want to pay $100 for a top-class trendy sushi dinner, you can do that too. You have the choice.

Banking services in Panama are getting better too. Traditionally Panamanian banks have had a ‘take it or leave it’ approach to new business, and pressure from the US has made it particularly difficult for US citizens and residents to open bank accounts in Panama. One of my favorite articles about Panama banks is here. In the last year or so I have seen this changing, with more product differentiation and even something that’s never been seen before – Panamanian banks such as Multibank (the locally owned bank formerly known as Multi Credit Bank) and London-based international giant HSBC competing with each other agressively in the local market, trying also to steal away market share from more expat-oriented banks like Credicorp.

So these days, it is getting easier to open bank accounts, customer service is getting better (think shorter lines in bank branches), and probably most importantly for our global readership, internet banking and credit/debit card services are becoming much more developed.

One of my clients, for example, now has an airline miles credit card linked to his Panama company account and spends tens of thousands of dollars every month buying goods for resale all over the world. The goods move through the Colon Free Trade Zone and are sold on worldwide. The credit card works in US dollars without surcharges, allows 30-50 days interest free credit, and as a bonus my client can fly almost anywhere he wants to go for free, using the miles accumulated.

At the same time, Panama banking privacy is good, and the country is one of the few that still allows offshore corporations with bearer shares, much to the chagrin of the G20. But they can’t say too much because Panama has one huge strategic card to play – the canal – which the Chinese would happily buy up at any time. But that’s another story…

Further resources: Peter Macfarlane has authored an e-book entitled “EIGHT IMPORTANT THINGS YOU SHOULD KNOW ABOUT GOING OFFSHORE IN PANAMA THAT YOUR LAWYER MAY NOT TELL YOU!” You can obtaihn this ebook free, right here and now, simply by visiting our Panama Banking for Corporations and Foundations page. You’ll also find further information on banking in Panama together with a range of other worldwide financial centres in our Practical Offshore Banking Guide.

We all know that there are investment scams out there, both offshore and onshore. Almost every week we come across a new scam (and that is not counting the electronic e-gold money games and the like that are barely even worth mentioning). That is why we offer our Q Wealth Report paid-up members a free due diligence consultation within our area of expertise which includes international and offshore investing, as well as so-called High Yield Investment Programs (HYIPs). In fact, members also benefit from a free downloadable report called “HYIP-Hype”

In recent months we have been contacted many times by members enquiring about a company known as Hatfield Oak (website: hatfield-oak.com) or Hatfield Oak International. This website belongs to a financial services company based in Panama with the motto “Your Partner for Asset and Tax Planning, Corporate Structures, Payment Solutions and Investments.”

We don’t want to keep answering the same questions over and over again. The large volume of enquiries we have received about them has led us to publish some findings in public for the benefit of our members. The information below is gleaned only from public records in Panama and the company’s own website.

Please be clear that we are NOT accusing this company of any wrongdoing. However, we draw our members’ attention to the following:

• Hatfield Oak are apparently offering services very similar to a bank, though they are at pains to point out that they are a payment processing company. Their website suggests that they are licensed to provide financial services. We consider this to be an attempt to mislead. Yes, they do have a document that appears to be a license for third party payment processing (amongst other things like business consulting and courier services.) However this is NOT a financial type license. In Panama every business must have a commercial license, and this kind of license (that Hatfield Oak has) is the same type of license you need for say a grocery store or a hairdresser. Financial entities are regulated under a completely separate licensing system. You can verify this at the website of the Panama Financial Regulator (in Spanish only).
• Hatfield Oak apparently have a New Zealand financial company as well. It’s worth pointing out that this kind of financial company is not regulated like a bank in New Zealand either. That is why it is not called a bank. Neither is it permitted to carry on banking business in New Zealand.
• The company’s domain name is registered to Domains by Proxy Inc (an associate of Godaddy) This is very unusual procedure for a company offering financial services. More to the point, is that it places the domain and the business firmly within US jurisdiction.
• Their internal law office “Hatfield Corporate Law Firm” appears to be run by nominees.
• The company do not appear to have any valid contact information.

Hatfield Oak appears to be a private company offering certain services that cannot be considered a substitute for a proper offshore structure with a bank account.

Q Wealth Report members requiring further information are welcome to contact us. If you would like to learn more about a few pitfalls of doing business in Panama, please check out our article Panama Offshore Banking and Corporations: Hidden Truths Revealed

What a bizarre world we live in. Here at the Q Wealth Report we work hard to explain the world in a way that our readers can understand. But so many things are full of truth, lies, and irony all mixed up together that they defy logical analysis. Nevertheless we are going to try…

Russia’s Pravda, formerly the official organ of the Soviet Communist party, published a blistering attack on the United States last week. That would not seem so strange, except that the post-Communist periodical accused America of “descending into Marxism.”

One of the comments, for example, was that “the population was dumbed-down through a politicized and substandard education system based on pop culture.”

How very true. It was in the pages of our newsletter last year that Dr Richard Cawte warned against the dangers of television. In the constant race to produce more and more “content” for TV and internet, the quality has gone downhill so much. I even watched the BBC World News Channel the other day and the team was clearly half asleep. Fair enough since it was 4 a.m. in London. The point being do we really need people sitting there at 4am talking when they have nothing useful to talk about?

The writer of the Pravda article, it must be said, appears to be a victim of the propoganda machine himself. As we say in England, “the pot is calling the kettle black.” No doubt the communists who founded Pravda would be shocked at how much it has been dumbed down. I just took a look at their lead headline stories such as “Money Stuffed in Bra Saves Brazilian Woman’s Life” and “Men Become Impotent Because of Women’s Bare Legs.”

Nonetheless, some of his points are interesting and relevant. I particularly liked this one:

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

Certainly food for thought I would say.

Our attention was drawn to the said Pravda article by our friends over at MoneyMorning, who have recently been writing a lot of good stuff about the Russian economy. For example, contributing editor Martin Hutchinson sent over the following comments for our readers about why NOT to invest in Russia…

A country that was wealthy when oil was $140 per barrel became deeply impoverished when oil prices dropped all the way down to the $30 range. Those of us who had been alarmed by Russia’s increasing geopolitical and economic assertiveness indulged in a little schadenfreude, feeling that it couldn’t happen to a nicer bunch of guys.

Now, the table has turned again. At $68.87 a barrel, the price of oil is far higher than the price assumptions on which the majority of Russia’s oilfield-investment calculations were based.

Russia has effectively seized the assets of the British oil company BP PLC (NYSE ADR: BP).  Last week BP accepted the very unpleasant Mikhail Fridman as chairman of its joint venture TNK-BP, a sign that its attempt to control the investment into which it had put the majority of the capital was ended. In the long run, the forced expropriation of foreign investors will prevent the Russian oil sector from remaining truly competitive. But in the short run, the expropriated foreigners have found so much oil there that huge revenues are assured for at least a decade, provided the oil price remains reasonably high.

In other sectors, too, the free cash for those with political connections allows deals to be done. Opel, for example, General Motors Corp.’s (OTC: GMGMQ) European subsidiary, was sold not to the Italian company which had a strategic plan for it, nor to the Chinese company that could use it to enter the European market, but to Magma Group, a Canadian parts company controlled by Russian interests, with financing from the Russian state-controlled bank Sberbank Rossii OAO.

The result may not make much sense operationally, but it is another example of Russian interests controlling major strategic assets in Europe. Needless to say, the various gas and oil joint ventures undertaken by Gazprom OAO (OTC ADR: OGZPY) in Eastern Europe, the Mediterranean and North Africa are also extensions of Russian power.

The fact that Russia’s MICEX stock index is up 100% since early January (albeit still 40% below its December 2007 high) is not very relevant to the people who run Russia.

They appear to have two objectives: Using the capitalist system to make themselves and their colleagues very rich and projecting Russia’s power on the world stage – just as the former Soviet Union used to do.

To Prime Minister Putin, capitalism is an attractive discovery, because it works economically much better than Communism did, and thus allows Russia to regain more of its former power than would have been possible under the Soviet system.

In this sense, Putin and current Russian President Dmitri Medvedev have finally achieved the original goals of Mikhail Gorbachev’s reforms in the 1980s; the objective of those was certainly not to bring down the Soviet government or upset the system, but simply to get the economy working more efficiently towards the leadership’s objective of greater Soviet power. Minus the other ex-Soviet Republics, Russia has now achieved this objective – and it may not stay minus the other Republics for very long, if Russia’s rulers have their way.

Given the way the system is rigged against the outsider, Russia is not a particularly attractive place to invest. Clearly, there may from time to time be a good short-term bet that Russia’s rulers will overcome current difficulties. However, the world contains other good managers besides Putin, and some of those others have a genuine interest in shareholder value and determination to create more of it.

By all means, look for Russian companies in consumer sectors that are outside the grip of the oligarchs – but do not expect to do too well, because you may find your company has a new and very expensive sleeping partner. Probably the best vehicle is the Market Vectors Russia ETF (NYSE: RSX), which benefits from Russia’s still-low Price/Earnings Ratio of 7.2.

But remember this: Russia isn’t a great global growth market like China, India or Brazil. And without major changes, it never will be.

Editor’s note: Thanks to the U.S. Treasury, investors can now switch some of their savings over to what could be a superior “legal tender.” Called “Gold Dollars,” this govt.-approved money spends like regular dollars – but it’s backed by physical bars of 24-karat gold. Gold expert Peter Schiff has written a report about this historic development. Whether you convert $10 or $10 million of your savings, his 5-minute “Gold Dollar” strategy could automatically increase your savings by 100%… 300%… even 500% in the coming days. To get Schiff’s intelligence for free, please go here.

The bailout of General Motors is another nail in the coffin of the US dollar. But still, most people haven’t even noticed the real ’stealth’ devaluation being imposed by the United States government. And yet all of us, Americans or not, are affected by this in a big way, due to the dollar’s status as a reserve currency (and also due to China’s effective control of the dollar, that I have previously touched on…)

Is the dollar “collapsing” or merely “declining”? I believe it is collapsing, but some people might misunderstand this. The dollar is not just going to crash one day, or even one week. It’s an ongoing thing, that started many years ago but has substantially speeded up in the last five years or so (yes, even during the times when the US economy was supposedly booming, that too was based on scams by the financial services sector)

Geithner, Bernanke, Obama and the whole crew are involved in a constant battle to patch over the dollar collapse.  Yet in spite of their attempts, the cracks have widened. The greenback continues its inexorable march downward. This week’s events at G.M. have accelerated the collapse a little more. And I believe that the collapse of the dollar will continue to accelerate with time. What will happen when it hits the bottom is anybody’s guess, but I certainly want to be well prepared when it happens. You should be too. And the Q Wealth website is about helping you do just that – protecting your assets from this stealth devaluation.

The US is not going to crash like Mexico did in 1995, or like Argentina and Brazil have done since with overnight currency devaluations. Neither will go bankrupt in one day like Iceland. The US government still has way too much influence and political power for that to happen. It’s a stealth devaluation because your portfolio will appear to be going higher. You will have more dollars. The stock market will be up. But in real terms, you are losing money faster than ever before. This is what some people have a hard time getting their head around – but it’s very important. The government will try to persuade you that things are going well, when really they are not. Bottom line? It’s a scam being perpetrated on you by government. If you care about protecting your assets and creating new wealth, you have to understand this.

So where can you actually put your money to protect against the stealth devaluation and collapse of the dollar? What about other currencies? Well, necessity dictates that we need to use currencies like dollars, euros and pounds to carry on business. And common investing sense dictates that you should diversify assets, so at least having a proportion of euros is better than having all dollars. It’s a start.

But unfortunately none of these currencies look good. Every other major central bank is participating in the very same scam, meaning that their currencies are equally doomed. So it would not be safe to assume that buying, say, euros, will give you any serious protection against the loss of your assets.

My number one mantra to clients is diversification, diversification and diversification. If you have a portfolio above six figures, it should be in different currencies, in different banks, on different continents. Opening overseas personal accounts, while having no tax consequences, can certainly help asset protection…the geographic diversification protects against the threat called government, while the mere fact that the assets are offshore significantly reduces the risk of you being sued in the first place, especially if you live in a litigious place like the USA or increasingly the UK.

Generally, private international banks are also a whole lot more flexible and service minded too. They offer Swiss-style wealth management banking facilities. For example, I noticed the other day that one of my European private offshore banks (not in Switzerland in this case) had quietly added gold ounces to the list of currencies I could hold in my multi-currency checking account. I guess that means I can even write cheques denominated in gold ounces, though I haven’t tried that yet. I see some of the larger European clearing banks like RAIFFEISEN ZENTRALBANK OESTERREICH AG in Austria are now maintaining gold correspondent accounts for their institutional clients. Interesting, huh?

Which are the best offshore banks for this kind of wealth management? For the answer to that question you need to be a member of The Q Wealth Report. Download the Practical Offshore Banking Guide (available instantly as soon as your payment is approved) and you will find ten of them for starters, with impartial comments on each… together with the form for a free e-mail consultation if you would like to discuss your individual circumstances with me directly.

Gold, probably is number one on my list of recommendations as a hedge against dollar decline. There are ways you should buy gold, and ways you shouldn’t. One way you should not invest in gold is by following typical mainstream advice and investing in ETFs, the most famous of which is GLD the SPDR Gold ETF. Ther are significant concerns about whether you could really get your gold out, or even your money back in dollars (which is not what you would want anyway at that stage) in the case of an economic meltdown.

For example, what do you think of this quote directly from the GLD prospectus?

The Trust’s gold may be subject to loss, damage, theft or restriction on access.

There is a risk that part or all of the Trust’s gold could be lost, damaged or stolen. Access to the Trust’s gold could also be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Any of these events may adversely affect the operations of the Trust and, consequently, an investment in the Shares.

The Trust may not have adequate sources of recovery if its gold is lost, damaged, stolen or destroyed and recovery may be limited, even in the event of fraud, to the market value of the gold at the time the fraud is discovered.

If you would like to know about better ways to invest in Gold offshore, you need my Gold Report – How to Buy and Hide Gold Bullion Offshore which is likewise available free of charge for immediate download to our paid up members.

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