by Peter Macfarlane

I want to apologize for posting bad news at this time of year, when I truly hope that all our readers will get to spend some peaceful, stress-free, quality time with their families. In fact this bad news does not come as a great surprise to us, but we have just been made aware of it and I feel it is my duty to pass this on as soon as possible.

The ‘clear and present danger’ from this bad news is to Americans, but this matter is very much of global significance for two reasons: first, where America treads, other countries like the UK, Australia etc tend to follow. And second, this is all related to America’s most daring extra-territorial legislation ever, FATCA (the Foreign Account Tax Compliance Act) that aims, seriously, to draft all banks and other financial institutions in the rest of the world as unpaid spies and tax collectors.

There can be no doubt at this point that the US government is serious in its wish to know everything about everything you own, anywhere in the world. The only reasons they could legitimately need this information would be for capital or exchange controls, and the imposition of a wealth tax.

A wealth tax, for those who are not familiar with the term, is a kind of tax imposed in certain European countries – France being the most prominent example – where the tax is on the savings and capital of citizens, irrespective of income. It is not like income tax that you only pay on profits.  Wealth tax is a form of tax that has never been known in the US.

So what is this immediate cause for concern? The new reporting guidelines that we have just been made aware of.

REPORTING REQUIREMENTS BECOME MUCH MORE INTRUSIVE: INTRODUCING FORM 8938

The American IRS and Treasury Department have just published guidance notes regarding a new form, that will replace the old FBAR (Foreign Bank account Reporting) form TDF 90-22.1 that all Americans with foreign bank accounts are (one hopes) familiar with.

This is not an IRS form. Collecting the expanse of information requested in this form would clearly be outside the limits of the IRS’s constitutional remit, which is to ensure collection of taxes.

Neither is it a Treasury Department form like the old FBAR form. The Treasury Department’s remit is amongst other things to prevent money laundering, and it was under that guise that the FBAR form was required.

Form 8938 is a joint IRS and the Treasury Department that demands complete information on all of your foreign assets – no longer just offshore bank accounts.

The exact terminology used on the FBAR form and its accompanying notes often left open to debate what constituted a “financial account.” For example, it was never really clear whether gold bullion stored offshore in a vault constituted a “financial account.”

The notes accompanying form 8938, however, make it clear to us that the US government is no longer satisfied with taxpayers merely filing their taxes accurately and paying on time. They now want to know everything about everything you own, even if it is not taxable. The sheer scope of this invasion of privacy is just breathtaking. For readers with offshore assets, the old questions of definition have been rendered moot with form 8938.

There are some exceptions – for example for Americans living overseas, or for those with very small amounts overseas. If you want to read more on the exact details, we suggest you start with this article in Mountain Vision.

WHERE TO FROM HERE?

Are the concepts of offshore asset protection, offshore investing and offshore banking for Americans dead? Should Americans at this stage throw in the towel, give up the fight to protect what is rightfully theirs, keep all their assets at home in dollars and rely on the US government to ‘protect’ them?

I think you know my answer to that already. And if you have found this article and read this far, the chances are you agree with me.

As much as we like American values and what America originally stood for, it’s clear that the US government doesn’t have much faith and credit left anymore. The US is already bankrupt. Anyone who thinks politicians on either side have the capacity to ‘solve’ this is living in a fantasy.

Keeping your assets entirely in the US or in US dollars at this point would be equivalent to financial suicide. Diversification into hard assets, outside the grasp of a hungry US government, is the only way to protect your savings and business. There’s a lot of information on the best and safest ways to do this scattered around the Q Wealth site, with more specifics in the Members’ Area and in our quarterly Q Wealth Report.

At Q Wealth our focus is always on positive solutions. This one, we admit, is difficult to solve. We have said for a long time that we believe a point will be reached, at some point in the not too distant future, where compliance will be impossible. But, let’s stay positive… here are our thoughts.

THE WATER IS GETTING HOTTER

You’ve certainly heard the boiling frog analogy. If a frog is thrown straight into hot water, it will jump out to save itself. But if you put it in cold water and slowly turn up the heat, it will eventually boil to death.

You can see how this analogy fits with what is going on now. The heat has just been turned up a notch on all Americans who have assets worth protecting, or even the American dream of building up such assets one day.

At the same time, another notch I won’t get into much depth on here is SOPA, the Stop Online Piracy Act. This is effectively a mechanism for taking away freedom of expression on the internet, dressed up as a way to protect American consumers from all those horrible foreigners who would try to rip them off online. It is actually a law that would allow the US government to censor the internet, similar to China’s internet censorship mechanisms… it’s just a bit more subtle and it transfers the cost and compliance burden away from the government onto the shoulders of already-struggling private American businesses.

Yes, dear readers, the water is getting really, really hot! Some of America’s smartest frogs have already jumped out, obtained foreign citizenship and expatriated. That’s the only way of making a clean break and legally escaping all the hassles. But for most people, this option is still not practical.

Kevin Brekke writing in Mountain Vision says:

Whatever the IRS has in store for US taxpayers, the only way to fight back is to keep what you have. And to do that means complying with reporting requirements no matter how offensive, intrusive, maddening, or unjust they are. Penalties are now defined by the IRS as a revenue raising measure. The new mindset is clear: If we can´t tax them, we will penalize them.

Unfortunately, a new era for individual privacy is upon us. We must sacrifice our financial privacy for our financial security. We will accomplish this by staying compliant with reporting requirements and safeguarding our wealth from confiscation via seizure and penalties.

We will prevail by keeping our wealth outside the US and invested in assets that will protect and grow our wealth. That is the mission of today´s international investor.

We at Q Wealth would agree with this. As long as you can stay compliant you should, as penalties for non-compliance are substantial.

Fortunately, a lot of this is for show, designed to discourage people from protecting their assets overseas. There are still things you can do to protect yourself. And as a responsible individual, you not only can do these things, you should!

We regularly write about these solutions, and if you haven’t already done so, you should definitely sign up for our free weekly newsletter, Q Bytes, and read our free reports. If you like what you see, then just $87, the price of a good lunch, will get you a year’s membership to our Members’ Area, where you will find lots of exclusive, up to date offshore banking, asset protection and overseas investing information.

We also suggest that if you are really serious about protecting yourself, your family and your assets, you should definitely come to visit us at BFI’s Inner Circle Briefing at Atlantis, Paradise Island in the Bahamas at the end of January 2012. At the time of writing, there are still places available. For your invitation, contact the Q Wealth offices or contact BFI directly. Please mention Q Wealth in order to qualify for a discount on the normal registration fees.

by Peter Macfarlane

Yesterday, 30th November 2011, something very significant happened that I would like to inform you about. It was briefly reported in the mainstream media, but was not analyzed correctly.

Lots of people have asked me recently if the Euro was going to collapse. Yesterday the answer to this question became very clear to me. I can now confidently make predictions. Is the Euro going to collapse? The answer is both yes and no. Allow me to explain…

Regular readers will know that I frequently refer you to the big picture, telling you to forget about the noise of the daily ups and downs reported on TV and in the press. The big picture is very grim when viewed in conventional terms, though it also opens up the greatest wealth-creating opportunities in generations. We are living in a very exciting time with a real change in power taking place. More on this later and here at the Q Wealth site.

DICTATORSHIPS IN EUROPE, SUSPENSION OF CONSTITUTIONAL RIGHTS IN THE USA

Against my own advice to follow the big picture and avoid being distracted by day-to-day news, I got caught up in following the recent Euro crisis. Granted, it has certainly been quite spectacular.  Italy’s and Greece’s democratically elected governments have been replaced by technocrats.  The amazing thing is that most people don’t appreciate the severity of two EU governments effectively being replaced by dictatorships controlled from outside those countries. (Spain’s decisive change in government is more positive, the result of a landslide general election, and generally makes me more positive on Spain’s future.)

In the same way, most people don’t seem to appreciate the significance of Senator John McCain introducing an amendment on Tuesday that allows the American army to arrest and intern American citizens forever without the right to trial. Call me old fashioned, but the mere fact that such a proposal could even be debated in the US Senate shocks me on one level… never mind the fact that it could actually pass. When I grew up, this was something we would have expected of the Soviet Union, not the USA. I think it was James Madison, the primary author of the US constitution, who said “If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy”.

On a practical level, however, this news of the suspension of basic civil rights in the USA doesn’t shock me at all. It reminds me why I vowed several years ago never to set foot on US territory again while the current system of US government (Democrat-Republican) remains, because I really don’t consider it safe. But I digress. I was supposed to be writing about economics. Back to the story.

All this theatre distracted me from my own insight. I can now confidently say that the Euro will not appear to collapse. It will continue to exist in some form or another. Why? Because the Federal Reserve will not let the euro collapse. To do so would trigger a dollar collapse. Yesteday’s news makes this very clear, and also exposes the usual suspects who play along with the US and Europe (regrettably including Switzerland, but notably not including Australia).

Here are some selected quotes from Bloomberg and The Street (here and here) published yesterday, that tell the story:

The Federal Reserve, Bank of Japan, European Central Bank, Swiss National Bank, Bank of Canada and Bank of England have joined together to make more dollars available at cheaper prices in an effort to ease liquidity strains in financial markets.

Central banks agreed to establish temporary bilateral currency swap arrangements “so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant,” the Fed said today in a press release, calling the agreement a “contingency measure.”

Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., called the bilateral arrangements “a novel step and a curious feature of today’s announcement” that “are apparently being set up as a backup plan in the event of a worsening in global financial conditions.”

So rather than European operations of Citigroup Inc. or Morgan Stanley seeking euros from the ECB, the Fed could contribute to euro liquidity by doling out loans to those institutions in the U.S.

Europe isn’t facing a liquidity crisis. The world is facing a structural solvency crisis in which businesses, governments and individuals have all borrowed money — and made promises — that cannot be repaid unless more money is printed (or, more specifically, until more credit is issued).

This actually strikes me as more than a little ‘curious.’ So now the Fed is going to start bailing out American banks with Euros???!!!

It doesn’t make a lot of sense… unless you go back to my original stealth devaluation premise, described in this Q Wealth article from November 2010 as well as earlier articles.

NO, THE EURO WILL NOT COLLAPSE

I take yesterday’s news as a clear signal that the euro is not going away any time soon. It will probably maintain approximately its current exchange rate against the dollar, give or take a few points. It is even likely to gain a bit, since this new multi-currency form of quantitative easing is clearly based on printing more dollars, not euros. So looked at from this point of view, I say the euro is not going to collapse.

One could certainly argue that America is bailing out Europe on one level. But I don’t really buy that either. America desperately needs to devalue the dollar as being the only hope of ever repaying debts. America is not in a better shape than Europe. The European crisis is nothing more than a distraction from a much bigger problem.

YES, THE EURO WILL COLLAPSE

On the other hand, in reality the euro already has collapsed, and it has a lot further to go. Looked at it from this point of view my answer is ‘yes, sure, the Euro will collapse.’ It’s just that the US and Canadian dollars, the yen, the pound sterling and the Swiss Franc are all going down the toilet too, in a co-ordinated global effort, at much the same speed. The central bankers are just hoping that the population won’t notice.

Of course, people are beginning to notice that something is wrong – very wrong. Grass roots citizen movements like the Tea Parties and the the ‘Occupy’ movements effectively share the same goal: to change a system of government that has become thoroughly corrupt, dysfunctional and despotic.

DECISIVELY CLOSER TO ONE GLOBAL CURRENCY

Yesterday we moved decisively closer to one, global currency, with the governments of major western economies all making this concerted move. Let’s look at how the euro came into existence, and consider the parallels with what we are seeing today wit the US, Canada, Japan, Switzerland, UK and the EU… According to Wikipedia:

In 1971, US President Richard Nixon removed the gold backing from the US dollar, causing a collapse in the Bretton Woods system that managed to affect all of the world’s major currencies. The widespread currency floats and devaluations set back aspirations for European monetary union. However in March 1979 the European Monetary System (EMS) was created, fixing exchange rates onto the European Currency Unit (ECU), an accounting currency, in order to stabilise exchange rates and counter inflation. It also created the European Monetary Cooperation Fund (EMCF).

That last organization sounds suspiciously similar to the European Financial Stability Fund (EFSF). Anyway, time passed, and internal bickering in Europe continued. Fast forward to 1999.

The currency was introduced in non-physical form (traveller’s cheques, electronic transfers, banking, etc.) at midnight on 1 January 1999, when the national currencies of participating countries (the Eurozone) ceased to exist independently in that their exchange rates were locked at fixed rates against each other, effectively making them mere non-decimal subdivisions of the euro.

It was not until several years later that the euro as we now know it came into being. Still, a lot of people don’t want to give up the old currencies. As an aside, for example, I found this interesting:

Efforts to secure the return of German coins continue. In 2005, Deutsche Telekom modified 50,000 pay phones to take Deutsche Mark coins, at least on a temporary basis. Callers were allowed to use DM coins, at least initially, with the Mark pegged to equal one euro, almost twice the usual rate.

I suggest you take time to reflect on this precedent. I don’t have all the answers, but we do seem to be getting closer and closer to a situation where the US dollar, the euro, the pound and other currencies become ‘mere non-decimal subdivisions’ of a global currency unit. These things take time and are not immediately obvious. You should, however, be very scared by this prospect.

WHO ARE THESE CENTRAL BANKERS?

And who are these Central Bankers? Are they pawns of the Morgans, the Rothschilds, the Queen, the church, the Obamas, the corporatists, the globalists, creatures from Jekyll Island…?

I really don’t care. If someone tries to mug me on the street my instinct will be either to defend myself, or to make a pragmatic, fast decision that it’s smarter to comply with the attacker’s demands. But I certainly won’t be worrying about the pedigree of the attacker. The same applies here.

All I can say, is these people clearly have the support of all branches and forms of all major governments. That’s right, those nice people like Senator McCain who want the right to lock you in jail and throw away the key, without having to worry about trifling details like the facts of the case. “Facts,” says McCain, “are stubborn things.”

HOW LONG CAN YOU REMAIN LEGAL?

The time has certainly come – as if you are being mugged – to panic, then quickly and calmly to do whatever is necessary save yourself and your family. If you can’t physically move yourself directly out of danger fast, the safest course of action is to keep up all appearances of complying with the attacker’s demands. That way you can stealthily move assets and family members out of harm’s way.

Where possible, you should not just maintain the appearance of compliance. You should actually be compliant. That is still possible, just. In The Q Wealth Report, we frequently give you details of compliant offshore banking and investment structures.

However, you should keep in mind that one day soon, the time might come when it is impossible to remain compliant. Hidden currency and exchange controls like FATCA are hastening this day. When that day finally arrives, you will be forced to make possibly the most difficult decision of your life – do you break the law, or do you allow the government to pillage your assets? If you are not very careful, you might end up doing both.

PROTECTING YOURSELF WITH A SECOND CITIZENSHIP

There are ways to protect yourself. Obtaining a second foreign passport for you and your family is one of the best. This will give you the option of renouncing your existing citizenship later. It’s very relevant for US citizens now, but could also be relevant for citizens of other countries that, out of desperation, will try to follow the US lead and tax even their non-resident citizens on worldwide income. FATCA will put the information required to do this at their fingertips.

Look at the example of Uruguay. Uruguay long taxed its residents only on domestic income. But last year, they suddenly announced that forthwith, Uruguayan residents would also be taxed on income from overseas investments. To paraphrase the President, he said the only reason they hadn’t taxed overseas income before was that they didn’t have the means to do so. The signing of a series of tax information exchange agreements, ironically under the pressure of the OECD who considered Uruguay a tax haven, had changed this – now, with these treaties, they did have access to information on the overseas holdings of Uruguayans. So they started taxing.

The UK, Canada, France or Australia could turn around and do the same thing tomorrow – and in the current climate, rich tax exiles would undoubtedly be a politically popular target.

You’ll find more information on second passports here and in almost every issue of The Q Wealth Report.
BUY PHYSICAL GOLD

Gold already shot up yesterday on the news of the new multi-currency QE program. Physical gold stored in a safe, offshore jurisdiction is undoubtedly one safe store of value. As I said in my original stealth devaluation articles, those who look at gold as their base reference currency, rather than as a simple investment, will see the real crash of the euro, the dollar, the pound et al.

Don’t be fooled into buying things like the Gold ETF. Find out why in our Free Gold Report.

OFFSHORE BANK ACCOUNTS TO AVOID THE GLOBAL STEALTH-DEVAULATION CONSPIRACY

As bad as government-issued fiat money is, you’ll probably need to keep some in the short term at least. For this reason, we recommend opening a multi-currency bank account somewhere offshore (that is, outside your home country and its immediate sphere of influence). This way you can keep money out of the big currencies, in the money of nations that are not participating in the global stealth devaluation conspiracy.

This will give you access, for example, to offshore credit and debit cards that work across the board – always provided plastic payment cards continue to be accepted, bearing in mind that emergency currency controls could cut them off at any time.

Further information on the practicalities of how to open an offshore multi-currency bank account, including anonymous numbered accounts (yes – they still exist!) and offshore corporate bank accounts, is available in Q Wealth’s Practical Offshore Banking Guide. The 2011 edition is currently available for download in our Members’ Area, and will be replaced before the end of the year with the drastically updated 2012 edition.

READ Q WEALTH REPORT

There’s a lot more I could say about practical strategies for protecting your assets, but I’ll save that for the articles my colleagues and I write regularly in The Q Wealth Report and our series of exclusive special reports. You might also be interested in attending BFI’s Asset Protection event in the Bahamas in January, where a host of experts will be discussing this subject.

If you’re not ready to make a monetary commitment yet, please consider signing up for our free newsletter and/or free sample reports on important topics that are available at this site. Remember there is no obligation, you are free to unsubscribe at any time, and we will not pass your e-mail address to any third parties.

To conclude on a positive note, as I said at the beginning, the crisis we are just entering now will result in huge transfers of wealth, more than we have seen in our lifetimes. Those who keep their savings in fiat money will lose most of it. Those who invest their fiat money smartly and quickly, while it still buys things that are of value, stand to make almost obscene profits. Which side will you be on? Are you with us or with the government?

Our article ‘How to Open an Offshore Bank Account in Singapore’ continues to be one of the most popular articles on the Q Wealth blog – even though, as regular readers will know, some things have changed since it was written. So, here’s an interesting case study…

We now have an excellent banking contact in Singapore who is able to assist readers with opening bank accounts in Singapore for offshore companies (Nevis LLCs are particularly popular and efficient in this regard) Paid-up members are welcome to contact our office any time for a referral to our Singapore banking facilitator. It is possible, in some cases, to open your Singapore commercial bank account without even having to travel there, though visiting the bank in person is recommended.

However, you can also do it yourself, if you wish. For example, I received the following feedback the other day from a reader who had followed our advice and done just that. I thought it was particularly interesting given that he is a former US citizen who had renounced his nationality. I’ve redacted the name of the bank as most banks don’t like to have their name in print, but again, paid Q Wealth members can get a referral through o this bank.

“Thought you might be interested to hear that my mother and I (the Q-Wealth subscription is in my mother’s name)  traveled to Singapore earlier this month to open individual savings accounts at [name of Singapore bank].  What was interesting was that we were never asked for bank references or bank statements or utility bills. [Name of Singapore bank] did indeed claim we would need those when I inquired via email prior to the trip, but when we walked into a random office in Singapore without an appointment all we were asked for were our passports and drivers licenses.  I had only my Dominican Republic passport since I renounced US citizenship a year ago, but I still was able to use my US drivers license as proof of address (the young lady never asked for my Dominican cedula nor any other Dominican ID).

Incidentally, although I renounced eleven months ago and my name was promptly published in the Federal Register (my legal name is now the Spanish version of my birth name), I am still  waiting for my CLN.  But the same embassy that had processed my renunciation has granted me a 10-year H1B visa despite the CLN not yet existing. Go figure.”

So as you see, this reader followed the best course to free himself of his home country tax obligations and diversify internationally. He acquired a second citizenship, changed his name, renounced his US citizenship, obtained a US tourist visa, and opened a bank account in Singapore…. all on his own and without encountering resistance. He did this totally legally and transparently, following the relevant regulations, and remains on excellent terms with the government of his home country, so he can visit as and when he pleases. Life is really not that difficult! It’s a good thing Q Wealth is here to help you by giving you practical advice and information on such matters.

If you are not yet read our numerous free reports explaining how you can break free from taxes and government regulations, I recommend you surf around our site and read these reports to get an idea of the Q Wealth philosophy.

by Peter Macfarlane

Following on from my detailed article in Q Wealth Report issue 58 covering the best ways to open an offshore bank account in Hong Kong, I’ve received some questions and clarifications from readers that I decided to answer here on the blog. I hope this information will be useful to you.

What banks do you recommend in Hong Kong?

HSBC Group is clearly dominant in Hong Kong. HSBC (HongKong and Shanghai Banking Corp) is the biggest player in the market, and Hang Seng Bank, majority owned by HSBC, is the second largest. For commercial banking for your small offshore company, or a simple personal savings type account, you will likely end up at one of these two banks. If you prefer to be with a smaller, private bank with less international exposure, read on below.

There are other large commercial banks in Hong Kong, such as Bank of China, DBS and Standard Chartered. In our experience, they are a lot less willing than HSBC to open accounts for non-residents of HK.

Why? You would think these banks would be hungry for business, right? There’s a simple reason, an unwritten rule that explains this. You have to look at it from the banks’ point of view. There is just so much money flowing out of China into these banks right now that they literally have more money than they know what to do with. With their traditionally conservative lending policies they cannot lend all these deposits out in the relatively small local market. Interest rates on the international markets are miserly, not to mention the counterparty risk of dealing with big western banks, something Asian bankers are acutely aware of.

If you already had too much money to manage, and lots of pressure to generate high returns without risking it, would you want to the additional hassle of managing lots of small deposit accounts from westerners that you can’t really make money on anyhow?

HSBC does not have this problem as they can shift excess liquidity within the group. Local HK banks cannot.

How does offshore banking in Hong Kong differ from the rest of the world?

If you’re accustomed to private banking in Europe (Switzerland for example), you’ll know that most banks don’t like to see too much activity on the account. Transactions in and out are generally discouraged, through the use of high fees and explicit warnings from private bankers! They want money to come in and stay in, and be managed by the bank, preferably on a discretionary basis with high fees.

In Asia it’s the opposite. Hong Kong banks, perhaps because of the city-state’s long history as a trading outpost, is different. HSBC in Hong Kong, for example, is not really interested in opening personal savings accounts for non-residents. When opening corporate accounts they want to see a connection with Asia and they want to see evidence of a real, active business. The benefit is that their transaction fees on wire transfers are much lower than in Switzerland, so for active business this is ideal.

What if I don’t want to use HSBC?

Many of our clients are looking for diversification and they want to avoid the kind of international money-market exposure that big international banks have. The solution would logically be to look for smaller private banks. However, there are no home-grown Hong Kong private banking institutions. You are then left dealing with the branches of European or Asian banks. This is is a far from ideal situation in my view, because:

• You are getting the international exposure you are trying to avoid anyway – you are probably looking at HK banks as a way of avoiding European exposure

• The minimum opening deposits at these banks are hefty, in the range of $1 million to $5 million USD

• Private banks don’t typically accept US citizens as clients, even though the HK commercial banks still do

• If the above three points are not a problem for you, then you still typically need a referral from the head office. These are not banks you can walk into cold off the street.

I would say if you are looking to open an account at a smaller private bank in Asia, Singapore might be a better choice for you. There you will find sophisticated home-grown private banking operations like Bank of Singapore and DBS Private Banking. Needless to say, Q Wealth can recommend paid up members free of charge to experts in both jurisdictions who can help you with your international banking requirements.

Can I open an account without going to Hong Kong?

This is a question we get asked all the time. I already covered it in more depth the original Q Wealth article. Suffice to say the answer is yes, but don’t expect it to be easy going. If you can get to Hong Kong in person, that is recommended. If you have your heart set on a Hong Kong bank account but cannot go there, our local facilitators can assist you. They will do an interview with you by Skype, then on the basis of that they will produce a written business plan, and present your application to the Hong Kong bank along with notarized corporate documents.  The process can take some weeks when you do it this way.

Can I open an account for my Nevis/Marshall Islands/Cook Islands company?

Yes, absolutely, and this is my recommended way to go. Many local providers will try to encourage you to set up a Hong Kong company, but this is not recommended as the annual work and costs involved in compliance are not insignificant. For example, notwithstanding the fact that your income will remain tax free provided you have no HK business, you must still file annual audited accounts and tax returns.

Using an offshore company adds a welcome extra level of privacy and asset protection at a relatively low cost, and Hong Kong banks are completely used to opening accounts for foreign or offshore corporations.

Is there a minimum deposit to open a Corporate Bank Account in Hong Kong?

There is, but it’s very little if you go for one of the commercial banks. A few thousand Hong Kong dollars should get you in.

Are all accounts multi-currency?

Yes, with a few minor exceptions, all Hong Kong bank accounts are multi-currency. This means you have just one account number, but when you log in to your internet banking, you’ll see separate balances for each currency. For example you might have some HK dollars, some Singapore dollars, some US dollars, some Euros etc. You can also hold Chinese Yuan Renminbi in your HK multi-currency bank account, and you can also hold virtual ounces of gold.

Talking of Gold, can I buy Gold in Hong Kong?

Yes, absolutely, Hong Kong is one of the best places in the world to buy and hold gold bullion coins. In fact, if that’s your main objective, you may not even need a bank account as there are also a number of private safe storage facilities in Hong Kong. We are happy to point readers in the right directions.

Conclusion

If you are looking to increase exposure to Asia and decrease your exposure to the western markets, Hong Kong is a first class jurisdiction in which to open an offshore bank account. It isalso be an ideal banking base for a trading company. The stability and rule of law is excellent. The only downside is the lack of choice of banks at the lower levels.

If you are interested in learning more about this topic, please refer to QWR Issue 58 available in the Members Area for the full article. If you are not yet ready to subscribe but would like to keep in touch with our news, why not sign up for our free weekly e-mail newsletter, Q Bytes?

‘FIAT MONEY IS ON THE WAY OUT – NO QUESTION ABOUT IT!’ says Peter Macfarlane. Note: this is a snyopsis of an article sent out this past weekend to Q Bytes readers. If you would like to join the free subscription list for Q Bytes, click here.

I’m just back from Singapore, where I attended a very interesting presentation on FATCA given by a major American law firm, intended for private bankers. More on that in future articles, suffice to say that there are no conclusions we can rely on until the IRS publishes the next set of guidelines, that have been promised for next month. So I’ll probably hold off on commenting until then.

Never mind Asia or America, though – the focus this week is fairly and squarely on Europe. With all the news this past week you might think the Euro is ready collapse. Is it? And can we profit from this collapse?

First of all, things are bad. We are not headed for a crisis, recession or depression. We are already deep in one. And yes, things are going to get a lot worse yet.

However, will the Euro collapse by the end of this year as some are predicting? I don’t think so. I would at the moment rate the chances of Greece leaving the Euro at about 50-50. But if Greece leaves the Eurozone, it does not follow that the Eurozone has to collapse. It would actually be strengthened, which might help to prop up the Euro for a bit longer.

I do predict that both the Euro and the Dollar will continue to fall in tandem, but I believe it will be more of the continued, gradual collapse we are seeing now – what I refer to as ‘stealth devaluation.’ Fiat money is on the way out, no question about it.

What we will definitely see is more collapses of large Euro zone banks. And this is where it gets interesting. Because it creates opportunities for sound investments outside fiat money. And remember, times of crisis are often where great fortunes are created.

Some countries on the periphery of Europe, like Ireland and Denmark, have good fundamentals, and relatively efficient, free market and investor-friendly systems of government – but they have been brought down by the excesses of their banks. These relatively small, nimble economies have the potential to be the first to recover from the crisis. Yet right now, you can buy in cheap.

I’m not saying now is necessarily the right time to jump into Europe, but it’s time to start watching. Opportunities could come along very soon, in both real estate and in shares of fundamentally sound companies that have been brought down by bank collapses. You always hear about the investors in bailed-out banks not losing money. What you don’t hear about is the well-run, cash-generating businesses that might have landed in trouble because their agreed bank financing did not come through at the last minute, or because the administrators of bankrupt banks called in loans early, or simply hiked up interest rates where they were unable to call in loans due to contractual terms. Ireland and Denmark have seen a lot of this.

If you’re looking for a historic precedent, who remembers the Icelandic crisis? Iceland, a small, nimble, economy, was brought to its knees by its banks’ excesses, but recovered quickly and is doing pretty well now, thank you! I think Ireland and Denmark are the next ones to watch.

I’m not the only one with this idea. According to an article in Thursday’s Financial Times, it’s hard to get a 5-star hotel room in Dublin these days as US hedge fund ‘vultures’ have moved in in a big way, looking for rich pickings.

Here at Q Wealth we have established connections in Ireland and Denmark, and I’m looking at private equity placements in these markets with some of our Platinum members. These investments will be outside the banking system (off exchange) assets, backed by ownership of real hard assets. There will be exit strategies for launching on financial markets in the future if that looks like something we should do a few years down the road.

ABOUT Q WEALTH PLATINUM MEMBERSHIP

We do currently have a few vacancies on our Platinum Membership programme. Platinum is our exclusive membership level aimed at people who are already sophisticated investors and probably have basic structures like offshore accounts in place – but are looking for the places where they can get the best returns on their investments, in a secure offshore environment. It’s a group of like-minded individuals who follow the Q Wealth philosophy and would like to exchange ideas with Richard, myself and the Q Wealth team via a highly personalized service, with regular phone calls and exclusive meetings.

If you are seriously interested in learning more about Platinum Membership, and the unique benefits it offers (compared also to our Mastermind level) please contact Richard Cawte.

As we’re all very busy this week with the Symposium in Hong Kong, we prepared in advance a valuable gem for those who didn’t have the chance to join us. We thought you might like to hear about two essential communication tools for PTs (Perpetual Travellers). These are services we wouldn’t be without, that make your life more private, more free, easier, and/or cheaper.

The first is primarily a privacy service. It secures all your communications on the web, not just e-mails but all your surfing, instant messaging, VOIP calls and the like. The second is a service that can save you a fortune in cellphone and data roaming charges, the only mobile phone service we know of with free incoming calls in over 115 countries of the world. And it’s anonymous to boot.

INTRODUCING CRYPTOHIPPIE

You understand that you are being tracked on the Internet and that all your data is scooped up, sifted, sorted, bought and sold. Now you want to protect your Internet traffic and that of your family and customers.

Cryptohippie gives you military-grade technology in an easy-to-use form. You don’t need to be a tech expert to use their system. It was built by top professionals but designed for average computer users. Installation takes about 15 minutes; after that, it runs completely unobtrusively in the background -  you can use the internet just as you always have, but with far more peace of mind.

Not only does this protection cost less than a dollar a day, but they will also give you a secure email account, encrypted chat and excellent tech support.

We use Cryptohippie ourselves and can’t recommend it highly enough. We have known the people behind it for about fourteen years now and we know they are trustworthy beyond doubt.

But you don’t just have to take our word for it. Simon Black calls it “the Rolls Royce of online privacy.” Mark Nestmann uses it too. Steve Sjuggerud says, “Long-story short, it makes it so nobody – not Google, not even your Internet service provider, not the government, and (theoretically of course) not a hacker – can track your Internet activity back to you. This service is not free, but it’s worth every penny.”

We won’t rave more about Cryptohippie here, suffice to say if you are serious about protecting your privacy from prying eyes, you should have it. Cryptohippie have been kind enough to offer all Q Wealth readers a week’s free trial of their service so you can test it for yourself, and see how simple it is to set up and use. This is totally without obligation, and no credit card is required. To take advantage of this offer, visit Cryptohippie here.

Of course, if you want the more technical details of how the service works, and the lengths they go to to protect your privacy, you’ll find all the details on their website.

A REVIEW OF AIR BALTIC CARD – FREE GLOBAL ROAMING

A strange name for a global telephone service, but we first discovered this one by buying an anonymous SIM card (mobile phone chip) on board an Air Baltic flight. If you’re a frequent traveler anywhere, however, you can benefit from this service, and you don’t need to get on a plane to buy it.

Simply put, it allows you to be reached on one global phone number in more than 115 countries, from Albania to Zimbabwe, without you having to pay a penny for incoming calls. In other countries of the world where it is not free, and for outgoing calls from anywhere, you also benefit from rates that are much lower than most cellphone operators.

It’s a pay-as-you-go service – absolutely no fixed contracts, no monthly fees and no minimum spends.  You don’t even need to show any ID to sign up. It costs just EUR 10 to buy the card and you can get started receiving free calls immediately.

Or, if you buy EUR 50 worth of credit up front they give you the card for free. That is credit that you can use for outgoing calls, data services etc, which never expires. The only condition is that to keep your credit active you have to make or receive a call at least once every two years to keep your account active. I think if you get used to using this service, you’re unlikely to go a day without using it.

More recently, they have also started offering data roaming services. While international data roaming remains expensive, Air Baltic Card have some of the best rates, especially their low fixed rate across the entire European Union.

Another innovation is that you can divert incoming calls free to mobile or fixed lines in many countries. So let’s say you travel to a new country and buy a local prepaid SIM card, then divert your international calls to that number, people can still reach you on the same number as always.

And there’s more. If you buy 2 or more cards, you can talk mobile to mobile in any of those 115 countries for 20 cents per minute. Ideal for keeping in touch with your family and friends while on the go.

All you need is an unlocked mobile phone of the GSM type, the SIM card that you can buy online, and you are ready to go. You can buy the SIM card online here.

How does it work? Calls to the Air Baltic Card number, that has an Estonian country prefix, are relatively expensive – though not unreasonably so, we think. Calls from Skype to this number, for example, cost about $0.30 per minute. So they make money on the incoming calls, that covers the cost of the roaming.

There are SIM cards offering free roaming, but this is by far the best one we have come across. We’ve been using it for about five years and wouldn’t be without it.

We hope you enjoy our PT communication solutions, and we’ll be back with you next week with some exciting investing news from China, where I am headed next. Sign up for Q bytes, free of charge, to be the first to hear the news.

Peter Macfarlane talks about the new tax treaties signed between the UK and Switzerland and Germany and Switzerland, and about how this model is likely to be expanded to other countries. If you hold assets in a Swiss bank account you should be making preparations now.

Following the agreements made by the Swiss banks with the IRS, that effectively end Swiss bank accounts for Americans, a Swiss bankers plan called the “Rubik Project” is about to impact British and German residents who hold accounts at Swiss banks. However, we expect this eventually to be expanded to other countries, especially those within the European Union and likely also Australia, India and a few other jurisdictions that have been particularly vociferous about Swiss banking secrecy recently.

If you are resident in one of these countries, you might need to take action now to avoid a huge tax haircut on your Swiss account next year. This article tells you about steps you can take now to secure and safeguard your assets.

The Rubik Project is little known and understood. Even Swiss bankers I talked to told us they had not as yet received any guidance on the subject. Here are some of the highlights:

• The Rubik Project is originally a Swiss initiative. The Swiss have designed it as a way of appeasing other governments while (a) keeping full bank secrecy in place and (b) keeping their own access to important financial markets like London and Frankfurt unhindered.
• The Swiss banks offer to create and administer a flat rate tax on behalf of foreign governments, starting with the British and German governments, though this project is designed to be expanded to other countries. A retroactive tax is explicitly permitted, so that is a particular point to watch out for.
• The Swiss bank will automatically collect tax by deducting from the client’s account. Initially in the case of the UK the amount will be up to 50%, depending how long the account has been opened. In other words, up to half the account balance will be transferred to the foreign tax authority in one fell swoop! The payment will be transferred first to the Swiss federal tax administration, then to the respective foreign government.
• In return for this, the account remains completely anonymous, full bank secrecy is preserved, and the account holder is no longer obliged to declare the account on his or her tax return. In other words, the tax payments are calculated by the banks but the payment is completely anonymous.
• Importantly, this applies not just to natural persons resident in a treaty state, but also to legal entities of the personal/offshore holding company type, where the beneficial owner is a natural person resident in a treaty state. This includes offshore companies, trusts, foundations and the like that do not engage in any commercial or manufacturing business.
• Account holders do have the option to opt out of the anonymous tax collection, by proving that they have fully declared the funds to their home tax authority.

If you are netted by this tax, you are of course free to withdraw your funds before the date your account become liable to the Rubik tax. But the question is where to put them? Here are a few pointers:

1. Since only the USA taxes its citizens, this project only applies to residents of the treaty countries. If for example you are a British citizen resident in Spain, or a German citizen resident in Paraguay, this tax is irrelevant to you. Changing your residency might be easier than you think! The only thing you need to do is make sure your Swiss bank has up to date details on your residency status, and copies of documents to back it up.
2. Setting up a simple company to hold the account, that was always a legal way around the EU Savings Tax Directive, is not going to work any more. There are however two ways to keep companies out of the net:

 - It appears that as long as your company engages in commercial transactions then it is exempt. There is no stated minimum, so this may be just one or two commercial transactions per year, that should be unrelated to the investment activity. However we would recommend if you choose this route you get your bank to agree in writing that the company will be exempt from the haircut. It seems to me that most banks will be keen to do this in order to retain the business.

- You can also change the beneficial ownership of the company, while keeping signatory control. There are a few ways to do this, that we will cover in future. One is by using an insurance company, and another is by using trusts.

Of course, what many British and German clients are doing right now is moving their assets out of Switzerland, often even within the same bank (eg Swiss-owned banks in Singapore)

This project is a uniquely Swiss initiative and we do not see it being widely adopted outside Switzerland.

The tax justice crowd are already claiming that the treaties signed by the UK and Germany are a sell out. It seems to me, however, a very pragmatic and ultimately sensible decision on both parts. The Swiss get to keep their secrecy, including a new treaty provision that limits requests for information to a maximum of 500 individuals per year – a clause specifically inserted to avoid fishing trips. The UK gets good publicity about cracking down on tax cheats, and some people will likely be scared enough to pay the tax. On the other hand, it’s quite an easy tax to legally avoid.

Bottom line? You should be especially aware of the retroactive nature of this treaty model, and the likelihood that it will be expanded to cover other countries. You should be making plans to avoid this, right now. If in doubt, talk to a professional adviser. Paid up Q Wealth members are entitled to free referrals to banks and advisers, including a free initial consultation.

It’s certainly been a turbulent week, even by the standards of this year! Reuters, for example, is hyping about High-flying gold crashing in $100 freefall. I’ve addressed this in detail, what you should be doing (buying farmland, precious metals etc) and what you should not be doing (freaking out about short term fiat currency and metal price movements) in a special last-minute addition to the latest Q Wealth Report.

Edition 58 is available now for download here.

In it you will find for example:

• A detailed article on banking in Hong Kong. This including my suggestion on the best way to open an account… that is not what most of the HK corporate service providers will recommend. And our analysis of the Tax Information Exchange Agreements in place in Hong Kong, as well as the regulation and security of Hong Kong banks. We also cover the possibilities to open accounts without travelling to the territory.

• An article by young entrepreneur Adam Richardson on the use of internet tools in your business.  I have personally learned a lot from Adam, a Q Wealth member whom I met at our event in Cancun a couple of years back. See if you can benefit from his experience and the strategies he proposes.

• A Complete Guide to Uruguay by our recommended contact there. If you’ve ever wanted to know how to open a bank account in Uruguay, how to get residence, how to get there and around, and more… our contact’s details are included and he is happy to help out readers who are interested in knowing more.

This and much more is in the latest Q Wealth Report. If you’re not yet a member, this is what you are missing out on!

Peter Macfarlane answers a reader’s question on second citizenships

There’s a lot of misleading information out there on second passport and economic citizenship programs, and some of that misleading information comes from the very sources that you would normally trust to be accurate – like the governments involved.

One example of this is Montenegro, a small European country with some of Europe’s most beautiful coastline, into which serious money from some very serious investors is discreetly flowing (look for example at the Porto Montenegro development.) I was there last year, shortly after the Montenegrin government announced the first new official economic citizenship program since after 9/11.

Although it was formally announced in 2010, the program appears to have been semi-officially available since 2008.  The legal basis for the economic citizenship program is found in Article 12 of the Citizenship Act of 2008:

“An adult person may be granted Montenegrin citizenship if he or she does not fulfill the requirements referred to in Article 8 of this Law if it would be in the scientific, economic, cultural, sport, national, or other interest of Montenegro”.

During this time, for example, the former Thai prime minister Thaksin Shinawatra received Montenegrin citizenship.

At the end of last year the program was supposedly suspended because of pressure from the European Union. It is, however, our understanding that this program remains open on a semi-official basis. Obtaining a second passport is really just a matter of approaching the government and making a substantial investment in the country. This investment is tax-free and may be in the form of government bonds, bank deposits or real estate. Of course, professional advice is a necessity in transactions of this nature.

A well-designed citizenship program, such as that operated by St Kitts and Nevis, can attract investors and badly needed investment capital to Montenegro, or to any country that decides to implement such a program for that matter.  We hope that in future Montenegro will once again see its way to relaunching this program.

Peter Macfarlane was asked to comment on the Greek/European debt crisis and the Obama jobs plan for the latest edition of Q Wealth Report, available to our paid up members. His answer was that both are basically irrelevant. Here is an extract from the latest QWR:

You wouldn’t believe how many e-mails I receive from readers asking for comments on this or that event. Unfortunately, however fascinating the topic, it’s usually difficult for me to reply, because the questions are very open-ended. For example, a typical question would be, “Peter, what do I think of the future of the Norwegian Krone in relation to the Euro debt crisis?” There is no one line answer to that.

My view is, and always has been, that we have to look at the big picture and the small picture. Forget about the medium picture. I leave the medium picture for the wild forex speculators.

The big picture is that the ‘rich’ economies of the world, and in particular their fiat currencies, are in serious trouble. The purchasing power of the world’s super-currencies – the dollar, the euro and the yen – is going down the toilet. All the central bankers talk to each other on an almost daily basis with a view to maintaining “stability”- which means they should go down the toilet at roughly the same rate so the populace doesn’t notice.

Despite many protestations to the contrary by politicians, second and third tier western currencies like the Canadian, Aussie and NZ dollars, the pound sterling, and even the Swiss Franc, have far too much interdependence on the super-currencies. That is why, for example, the Swiss National Bank decided to try to fix its currency to the Euro recently. I do not think you can seek salvation by holding these currencies, except perhaps as part of an overall diversification strategy.

The other side of the big picture is the rise of emerging economies. China, a nation of peasants that is nominally communist, is playing a major role in keeping the US afloat and even stocked up on Spanish debt recently. The biggest industrial employer in the UK is an Indian company. Brazil’s economy and currency is so far ahead that Brazilian millionaires are snapping up Florida property like there’s no tomorrow.

This big picture scenario is neither a prediction, nor an invitation to debate. It is indisputable fact – what has already happened, is happening now, and will continue to happen.

The ‘medium picture’ is the short term changes. It’s easy for people to get caught up in this, because it’s what is pumped out to us by the mainstream media 24/7.

One week Obama’s new jobs plan supports the dollar while the Euro goes down because the Greeks have spent all their money again. So what? Who cares? Next week there will be some bad news from the US, some good news from Europe, and the euro will be ‘up’ again. It is all a distraction from the big picture.

Most of the media is US-owned, and I think it’s for this reason that there is a pro-dollar bias in this kind of reporting. The US economy is just as much of a disaster zone as the European one, if not worse. At least Europe is not spending so many billions fighting wars. In fact, if you are going to lump together Europe as one economy (which has its pros and cons, that I won’t go into here) you might as well just lump in the US while you’re at it and refer to the “western” economy.

If you are a forex trader – ie someone who wants to make short term profits off currency movements – you need to pay attention to this medium term stuff for sure. But if you are like most of our readers, simply looking to protect your hard-earned assets for the long term, this medium picture stuff is irrelevant. You should try to block it out of your mind, because it only serves as a distraction from the real big picture.

Most forex traders are banks, and they make money when currencies move. Doesn’t matter which direction. They just need turbulence in the markets to make money and be happy. The politicians are happy with this turbulence too, because it distracts voters from the big picture.

I should clarify here that I’m not saying this is good or bad. I’m saying it’s the way it is, and if you want to protect your assets and be successful you had better accept it. I do not subscribe to the view that ‘evil speculators’ are responsible for the world’s problems, nor do I believe that one political party or other is responsible. Bankers are just businessmen like you and I, looking to make a buck.  It was politicians, of all colours, that created these problems over decades.

This brings us to the small picture, and it is here that you should be concentrating your thoughts and your strategic planning. The small picture is you in the global economy. Once you understand the big picture, the small picture is easy. ‘Buy farmland and gold’ says investment guru Marc Faber.  What I tell people is a play on the old real estate agent’s refrain. What matters most when buying property? Location, location and location. How do you protect your assets in uncertain times? Diversification, diversification and diversification.

That’s what the Q Wealth Report is about. We give you practical, step by step guidance on the small picture – practical advice that you can implement easily.

It’s also this small picture we’ll be talking about in Hong Kong next month at our Q Wealth Symposium. How to invest in precious metals outside the financial system. How to invest in farmland without getting your boots muddy. How to use offshore legal structures to diversify assets across different sovereign jurisdictions or ‘flags.’ Trustworthy people you can contact to implement these solutions. And most importantly, how you can do this right away – because every day you delay, the politicians and bankers are eroding your assets. So if you know you need to do something, but are not sure what, join us in Hong Kong next month. There is no time like the present!