We’ve previously mentioned Das Safe, the well established safe deposit facility in Vienna, as a place where you can open an anonymous safe deposit box to store gold bullion, important documents etc.

But we always warn you not to keep all your eggs in one basket. Readers in the Americas have often asked us about safe deposit facilities in Panama City, Latin America’s financial hub… but up until the beginning of this year there was no such facility. The safe deposit box business in Panama was controlled by established Panamanian banks, who required clients to go through a bueaucratic account opening process and then join a waiting list for a safe deposit box to become free.

That’s all changed with a new safe deposit facility in Panama City, Panama that opened earlier this year. Peter Macfarlane recently visited this facility and was given a detailed tour by the owners. And, he says, it compares very favourably with other safe deposit boxes worldwide. Peter, for example, takes the credit for having suggested putting shredders in the private viewing rooms, a suggestion which management immediately adopted.

Best Safety Boxes is located on the ground floor of the Credicorp Bank building. For those of you who know Panama City, that’s the big green building on 50th Street (Panama’s “Wall Street”), near the Global Bank Building. It’s in the best area of town, and being surrounded by banks make the security excellent. Best Safety have their own top notch security. They offer five different box sizes ranging from $400 per year to $1250.

Now here’s a hot privacy tip! You cannot rent safe deposit boxes anonymously in Panama, but you can do the next best thing: a Panama corporation with nominee directors can rent a box for you. Provided you are present when contracting the box, you (not the nominees who sign the contract) would get the secret code necessary to enter the vault, as well as the two physical keys necessary to enter the box.

If you are interested in getting a Panama corporation with a box set up, contact Peter Macfarlane directly, via the Q Wealth Offices.  If you would simply like to rent a box in your personal name, drop by the facility or contact Scott LeRoy for an appointment

It’s also worth noting that located at the entrance to the safe deposit facility is a casa de cambio (money exchange house) that aims to offer good rates on currency exchange in Panama. Because the country uses the US dollar in daily circulation, not too many people need to exchange money in Panama. But when they do – for example Europeans who arrive in Panama with Euros, Pounds Sterling or Swiss Francs – the rates of exchange have typically been terrible. So much so that you will see signs saying “Compro Euros” (We buy Euros) fixed to utility posts all over Panama City – but this kind of black market exchange is risky. We are delighted, therefore, that the people at the Best Currency Exchange are trying to break this mould by offering the best rates for Euros etc.

Editor’s note: the above article was originally published in Q Bytes, our free weekly e-mail newsletter. If you would like to receive more privacy, wealth and freedom tips like this every weekend, please be sure to sign up for your free subscription here.

“How to Build a Bridge to Real Retirement Security”  That’s the theme of a special new report we have just uploaded to the Q Wealth Members Area. Q Wealth members may now download it free of charge. If you’re not yet a Q Wealth member, see what you are missing!

Myself and a colleague had the great pleasure of meeting Ron Holland recently at a conference in Nassau, Bahamas, where he officially launched this new report.

Days later, on January 25th, one of the predictions made in this report already came true: Obama was already talking about mandatory IRAs for smaller employers.

Just a few days ago on March 22nd, Bloomberg announced that the bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama. The loss of Triple-A (AAA) status for US Treasury Bonds is another prediction made in Ron’s report. America will use about 7 percent of taxes for debt payments in 2010 and almost 11 percent in 2013, moving “substantially” closer to losing its AAA rating, Moody’s said just last week.

So those two predictions are already coming to pass. But fortunately, there is still time to take action on this report and particularly on the concrete, step-by-step solutions contained therein. So I’m very happy that we were able to make a deal with our friends at BFI Consulting in Switzerland to bring this report to Q Wealth members.

In this report you will read about Stealth Nationalization and how your retirement plan is set to become Washington’s ATM machine. You, says Ron, will (via your retirement plan) be the final buyer of collapsing US Treasury Obligations! There will be no public outcry because so many people will benefit – at your expense!

But you can take action now to protect your retirement funds. This report tells you how. It tells you what strategies you should be looking to pursue, and why you should forget about involving the government in your retirement. Look instead at non-qualifying multi-currency offshore investments as a way to safeguard your wealth and your future. If you must keep your Qualified Retirement Plan (QRP) says Ron, make sure YOU are the trustee – as in a self-directed retirement plan or unleashed IRA.

I would urge you to download and read this report now. It’s available free to Q Wealth Members. If you’re not yet a member, you can sign up in a matter of minutes for the price of a good lunch!

Peter Macfarlane reports on Offshore Banking, Offshore Investing and Asset Protection for Q Wealth Report.

The FDIC yesterday shut down seven more banks in five US states, bringing to 37 the number of bank failures in the U.S. so far this year, on top of the 140 that collapsed in 2009. The news was particularly bad for depositors of Advanta Bank in Utah, as regulators were unable to find another bank to take it over. Therefore anyone with deposits exceeding the FDIC insurance level of $250,000 loses the excess.

These Friday afternoon bank raids have become commonplace by now. What’s interesting, however, is that regulators, quoted by AP, are now saying that “The pace of bank seizures this year is likely to accelerate in coming months, as losses mount on loans made for commercial property and development.”

It was not many months ago here in Q Bytes that we warned you about the coming US commercial property bust, which will make the residential/sub-prime crisis look tiny in comparison.

The FDIC is planning to spend about $100 billion bailing out banks over the next four years. But  get this: they will only deal in future with smaller bank failures. Legislation now in the senate proposes to set up a completely different system to cover failures of big, complex financial institutions. Besides, for reasons we’ve written about frequently including in the latest Q Wealth Report, we believe $100 billion will be nowhere near enough. The government printing presses will soon be rolling again, leading to further devaluations.

Our intention here at Q Wealth is not to scare you. In fact, we have always said that with careful planning and a little thought, there are numerous ways you can profit from the crisis… turn the crisis to your advantage.

First of all, our advice is to reduce dollar exposure. If you have savings, the first thing you need is a simple multi-currency bank account that allows you to switch currencies online. That way you maintain flexibility and privacy. Very few if any US banks offer multi currency accounts, so you’ll probably need to go to an offshore bank. While we do believe FDIC insurance will protect the dollar amounts in US bank accounts, what is the value of having the same amount of dollars in five years, if you can only buy half as much with those dollars?

Fortunately, the best offshore banks are a much safer place to stash your money. If your know how to choose an offshore bank carefully, you can avoid exposure to risky business practices which are bringing down so many US banks. And whilst a million will get you better service in a different class of bank, offshore banking is not just for millionaires. There are good offshore banks out there where you can test the waters by opening foreign currency accounts with $500 or less. Another myth, also untrue, is that US citizens cannot open offshore accounts. Full details of some of these recommended banks, including  our list of offshore banks and contact information, can be found in our free Practical Offshore Banking Guide 2010 available to members.

The last laugh, however, is with the real estate speculators – whom many blame for causing the crisis. No matter what happens to financial markets, people will always need a place to live. When there is ‘blood in the streets’ there are bargains around. Our Q Wealth Expert and Real Estate Guru Thomas Bolther has recently said he believes it’s time to BUY US real estate. Real estate investors who have followed Thomas’s advice from past Q Wealth events and stayed liquid are now set to make a killing. Thomas will be writing more about this on his own blog over coming weeks, at bolther.com He’s also confirmed as a scheduled speaker at our event in Ireland in September (see below)

Malta, Europe’s most densely populated country, is perhaps best known for tourism. It also boasts a fascinating history, an island that has granted safe haven to everybody from pirates and crusaders to modern-day hospitaller orders. Malta is an English speaking country where cars drive on the left. It’s one of the newer members of the European Union, and its currency is the euro.

Malta is not particularly attractive for offshore banking or companies. Though it is free of currency controls, has a stable banking system and you can easily open accounts there in various currencies, do not expect banking privacy in Malta.

Many tax exiles, however, are checking out Malta to see if they would like to call it home longer term. Like Andorra, Malta is a relatively affordable European tax haven to retire to and set up official residence – you can probably afford to buy a house with a pool in Malta, even if you can’t afford a studio in Monaco! Unlike Andorra or Monaco, Malta is in the European Union. Also unlike Andorra and Monaco, Malta does not have minimum stay requirements for official residents.

Although Malta is not tax free, you can effectively cap your tax at just €4,192 per year. Those who apply under the Residents Scheme Regulations, 2004 (the Maltese retiree program) and satisfy the few conditions stipulated  will be provided with a certificate issued by the Commissioner of Inland Revenue (Malta). This certificate has a dual purpose: First, it acts as a Malta permanent residence permit issued in terms of Article 7 of the Immigration Act. Secondly, it confers on the individual a special Maltese tax status which entitles him/her to these considerable income tax benefits.

Residents with this status must pay a flat rate of 15%  on your local Maltese income (including capital gains) and on his foreign income remitted to Malta. There is a minimum tax of €4,192.  Foreign source income not remitted to Malta – in other words, your entire worldwide income whether it be earned, unearned, capital gains or whatever – is not taxable at all.

It gets better. Persons in possession of this type of Malta residence certificate can also claim double taxation relief in respect of tax paid outside Malta on any income remitted to Malta which is subject to tax in Malta.  This applicability of this benefit is increasingly available giving the very wide network of double taxation treaties that Malta has now concluded.

Who is eligible for the Maltese Retirement Program?

Any non-Maltese citizen, no matter whether an EU citizen or not, may apply for the above-mentioned residence certificate by providing documentary evidence that he /she:

1. can bring into Malta an annual income of not less than €13,950 in his respect and a further €2,300 in respect of each dependant; and
2. has either an annual income of not less than €23,000 arising outside Malta or has in his possession a capital of not less than € 349,000; and
3. will take up residence within one year of being approved.

Within one year of residence approval, the individual must purchase or rent a home in Malta. If the Maltese home is bought, it should cost at least €69,000 in the case of a flat, or at least €116,000 if it is a house. If the applicant decides to rent instead of buying, the rent paid must be at least  € 4,150 per annum.

Note: Interested in tax havens, retirement and residence? Please feel free to browse The Q Wealth Report site for more useful free information like this.

by Phillip Townsend for The Q Wealth Report

Not that long ago, Albania—a Balkan nation in southeastern Europe wedged between majestic mountain ranges and the Adriatic Sea—conjured memories of Stalinist isolation, endemic corruption and widespread poverty, a place mostly avoided by tourists, expatriates and PTs. But thanks to the combined effects of positive change, ambitious goals and a recent influx of cosmopolitan Albanians who have returned from self-imposed exile in Italy, Greece and beyond, it’s slowly making a name for itself as an expat- and tax-friendly destination.

With a vibrant, chaotic and haphazardly-planned capital (Tirana) that is littered with architectural relics of an Ottoman, Italian and communist past, this hospitable but economically deprived country has had the misfortune of being precariously close to what was one of the world’s most volatile regions (war-torn Yugoslavia). Even so, this majority Muslim country is emerging as an affordable refuge of sorts near the southern edge of Europe.

While jet-setters frolic in now-gentrified coastal Croatia and Montenegro, forward-looking would-be expats from Western Europe are trickling in to scout for seaside real estate in what could be the next Riviera; others are considering a life of urban pleasures in a capital that swapped its drab Soviet-style gray facade for a bright palate of primary colors.

Tirana’s old-fashioned eateries, coffee houses and raki (fruit brandy)-soaked taverns now share the sidewalks with trendy bars, fancy restaurants and stylish boutiques. Here, an apartment in a newly-built residential complex will set you back as little as $40,000. Outside the city, affordable real estate is drawing newcomers to places like the charming town of Saranda on the pristine Ionian Coast, a largely unspoiled stretch fringed by white-sand beaches. Here, in this underdeveloped Mediterranean, condos start at only $50,000.

But Albania has more to offer than a new attitude and rock-bottom property. It could be an option for those seeking to reduce their tax burden. With high-tax OECD nations like the U.S., UK, Australia and Germany dead-set on putting tax havens out of business—claiming they deprive their government coffers of billions in revenue and encourage money laundering and other illegal activity—Albania is quietly playing up its tax stance (generally a flat 10% on personal, corporate and capital gains earned within its borders). And the government is actively seeking to attract foreign investment while becoming even more taxpayer-friendly.

Although it’s unlikely the country will morph into an honest-to-goodness tax haven, as Albania finds ways to provide more tax relief and becomes wired into global financial networks it could offer many of the benefits without the official label—something that could keep it from being an object of special scrutiny, prompting opponents of low-tax jurisdictions to target the country as a conduit for dirty dollars and a lock box for renegade fortunes.

Only time will tell whether Albania will emerge as a popular refuge for globetrotters and their assets. For now, it’s an under-the-radar retreat offering an intriguing mix of tantalizing contradictions and new promise.

Note: Unfortunately, security requires a mention. While Albania is troubled by petty street crime, primarily pickpockets in day and more daring types after dark, the country is usually quite safe. The exception is area near the Kosovo border, a wild, often dangerous frontier (think armed gangs and scattered land mines) that should be avoided at all cost.

Stay tuned for a detailed expose of Albania by Phillip Townsend in a forthcoming issue of The Q Wealth Report.

Phillip Townsend, an international consultant and writer with close to 25 years’ experience in offshore and global lifestyle planning, authors a new blog on freedom, privacy and prosperity. Visit http://offshorelifestyle.blogspot.com

Financial frauds and scams may not be a nice topic to close on before Christmas. But it’s an important one. I think even more so than in past years, I’ve talked to many investors this past year who have lost money – sometimes large amounts – in offshore investment scams of one type or another. They and their families won’t be having a great Christmas. So I think it’s an important topic.

It’s certainly not that offshore is full of scammers or even risky. Scammers are everywhere. But offshore investors often make an easy target. Forewarned you can go out and make money offshore without worrying about such things. That is why it’s important you read this article if you want to avoid forex scams, ponzi schemes and the like.

Back in the summer I was invited by a rather mysterious company to a ‘forex luncheon’ in a building in Panama City (Ocean Business Plaza to be precise). I thought it a little odd, since I have nothing to do with forex, but in the spirit of investigative journalism, I went along…

Over ordered-in sushi, which was rather good by the way, the host proceeded to make a presentation about dodgy-sounding hedge funds, roll over programs and a lot of other stuff that had absolutely nothing to do with forex.

I was not the only financial professional there – and whilst everybody was very polite it was clear that nobody in the room was taking the presenter seriously. Some people simply got up and walked out after finishing their sushi. Why they invited me I have no idea, since surely I have a certain reputation as a scam investigator by now and we have an article on our site warning against exactly this kind of scam: Due Diligence for Offshore high Yield Investment Programs. This particular scheme predictably went down a few months later.

During 2009 some of the opaque offshore investment schemes that have collapsed include:

• Hatfield Oak International
• Venture Resource Group (VRG)
• GCI
• Finanzas Forex
• Global Prosperity Plan a.k.a. Global Pension Plan (Belinda Eigenman)
• and several Swedish Credit Unions

Sweden, while a very stable and reputable country, has spurned a minor industry in scams with its credit union legislation. I’ve come across various Swedish Credit Unions over the years and not one has been legitimate.

There are doubtless many others of which I am not even aware. But they all share the same characteristics: above average (unrealistic) rates of return offered, not marketed through conventional channels, based offshore and relying on secrecy to attract clients… and if pushed, they claim that they achieve their returns using forex trading.

Forex trading is extremely high risk. If you have a good, honest broker, you can either make or lose a lot of money. The problem is that few people really understand forex trading so it is an easy play for scammers. There are mysterious entities like CLS Bank and the DTCC that I have written about previously that really do settle multiple trillions of dollars per day in transactions.

Obviously, if you have a dishonest broker, you get the potential downside without the potential upside. Though in reality, the vast majorioty of these scams are classic ponzi schemes that have absolutely nothing to do with forex.

Over the years, clients of Q Wealth have lost millions to scammers of this type. I know, because I’ve seen the proof. Unfortunately these people came to us after they had problems getting their money out.

Others have been smart enough to come to us before putting their money into such schemes, and we can honestly claim to have saved those people millions over the years too. For those who don’t know, one of the benefits of Q Wealth membership is that you can contact us any time for impartial, informal advice on any investment you are thinking of participating in. That alone could be worth thousands of times the cost of membership to you, so I know some members see their $87 annual subscription as a kind of insurance policy.

Doubtless in 2010 we will continue to see lots of similar schemes. Offshore is not full of scammers. If you follow the advice here and in our free weekly e-letter Q Bytes you can easily reach the best reputable offshore banks and offshore brokerage houses. Although we don’t get into investment advice as a business, when we see something good from a reputable source, we do let our members know – recently we’ve been recommending resource and gold mining stocks for example.

What are the trends in scams? What do I expect to see in 2010? The classic ponzi will always be around, because there are always new marks who will fall for it. Probably the forex tag will continue to be applied to these scams.

However, there are some new emerging trends that I have seen in recent months. One is forestry investments – high yields guaranteed from the Brazilian rain forest or from noni or teak plantations in Panama. Following the Copenhagen summit, expect to see more scams revolving around carbon credit trading. And following the surge in gold prices, I am already seeing ads online from penny stock pushers (boiler room penny stock scam operations) who are literally touting the latest ‘undiscovered’ gold mine!

We will also continue to see fraud attempts surrounding documentary credits. Letters of credit and bank guarantees are legitimate instruments used in international trade. But serious international traders have never heard of things like prime bank guarantees, roll-over programs, bank debentures, proof of funds leasing, standby letters, seasoned notes or anything of that nature. Also look out for anything that describes itself as a ‘HYIP.’

So don’t be scammed in 2010. Avoid anything mentioned above like the plague – and if you’re a Q Wealth member who is not sure about something, just write me or Richard and you will get an individual reply in due course. Final piece of advice: if you haven’t yet read our free five part course ‘Secrets of the Super Rich’ you should do so. It is without obligation, and did I mention it’s free? Just enter your e-mail address in the sign-up box above to receive yours.

I usually refrain from commenting on market conditions. There are two reasons for this.

First, I not really a financial markets guy. I get very bored with all those charts, waves, theories and so on. That’s probably one reason why I stand out from all the self-professed analysts out there on the net. On the rare occasions I do open my mouth about the markets, it’s because I have something serious to say.

My job is nuts and bolts offshore structuring. I’m talking, as regular readers of this blog are well aware, about offshore banking, offshore investing, offshore asset protection and hedging against currency collapses. I like active businesses. I do run a private offshore investment vehicle, but it doesn’t get involved in traditional financial markets – only in what might be termed ‘alternative investments.’

In other words, I prefer to invest my money in sound businesses that I can actually see and exercise some influence over. Businesses where I have the CEO’s personal cellphone number.  Since my modest little fund doesn’t handle multiple billions, I naturally invest in small businesses without stock market listings. I look for small, recession proof businesses in growth areas that will not be affected by short-term financial swings. This is only a hobby at the moment, but over the last few years it has turned into a very profitable one.

Second, I don’t believe the markets are free at all. And again, why complain about something I don’t have any control over? Much better to focus my limited time on something like writing or helping my clients protect their assets.

Sure I keep a little play money in my offshore brokerage account. And I surprise myself sometimes by how successful I am. Markets depend first on psychology, second on manipulations by governments and certain elite forces, and a distant third on actual fundamentals. Then, I remember that I subscribe to a few really good investment research newsletters that certainly make me money. (I’ve listed some of them before, but if anyone is specifically interested, let me know) But really I only put money in my brokerage account that I can afford to play with.

But if clients come to me seeking advice on financial markets, that is not my area. All I can do is refer them to one of my several trusted contacts in this area.

I must say, however, that last week  was abnormally glued to the screen. I always knew gold would go up, and I’m sure it will go a lot higher yet. But it certainly seems like Joe Bloggs on the street has decided gold is a good buy at the moment. The mainstream media hype, which is all that is backing the fiat currencies of the world, must be failing if even average investors are turning to gold. Heck, gold is now even sold in vending machines in Europe!

This week saw the news that French bank Societe Generale had released a report that Ambrose Evans-Pritchard in the British Daily Telegraph dubbed the ‘Bear Case Report.’ This report advises the bank’s clients on how to prepare for the dollar tumbling much further, global equities crashing below March lows, property prices tumbling (remember that email I sent a week ago to QWR  members about the coming commercial real estate crash?) and oil falling below $50 per barrel.

The only solution seems to be for governments to inflate their way out of the problem. But, as was once famously said, inflation is like being pregnant – you can’t opt to be a little bit pregnant!

This was before the news that Dubai World asked for a 6 month break, admitting that they can’t keep up payments any more. Bearing in mind that failure to honour debt obligations is a crime punishable by prison in Dubai, it must have taken some courage, desperation or both for them to own up to that.

Then there was that weird ‘technical difficulty’ on the London Stock Market, which halted trading for a few hours. Now I’m not a conspiracy theorist at all, but that really had me suspecting something.

Oh, and just to take our minds off economic woes, swine flu is conveniently back on the agenda – with a huge jump in deaths in Europe this week. Which of course don’t have anything to do with the wintry weather.

The BBC reported that maybe eating garlic could prevent swine flu. The price of garlic has jumped 300% in China, so expect a global increase to filter through soon. Evil speculators are to blame of course. Maybe those same guys who read the SocGen report, that suggested investing in farm commodities?

Fortunatelyas I write this over the weekend I can see the funny side of things. When faced with apparent disasters, my rule of thumb is “will this matter in five years time?” And although I firmly believe things are going to get a lot worse before they get better, let’s put things in perspective. A private offshore banker from a small Swiss bank (one of the cantonal banks) told me the other day that her grandparents had lived through a real economic crisis – when they didn’t have any food to eat in Europe after the Second World War. For most people hit by the recession, the real net impact is that they will be buying cheaper Christmas presents this year.

Well I’ve rambled on a lot, but what can we learn from last week? I don’t think anything that happened that will be remembered in five weeks, never mind five years. If you want a hedge against inflation, buy gold. Do not buy paper or digital gold as it is most likely a scam. Buy real, physical, solid gold. Want to know how to buy physical gold offshore? Click here.

But if you are willing to be more aggressive, these turbulent times are generating so many new opportunities it’s just incredible. I am truly excited and optimistic about what is going on now making people think about pressing the reset button. If you are not happy with your life as it is, or simply your investment portfolio as it is, the message is loud and clear: you can do something about it! Start with The Q Wealth Report, and join us in Cancun in March for an intensive long weekend course on building offshore wealth!

by Peter Macfarlane

In my Gold Report ( a.k.a. “How to Purchase and Hide Gold Bullion Offshore”) earlier this year, I wrote that the USA, UK and other major countries are bankrupt. This may not be news to some readers, but the vast majority of the population carry on believing the mainstream media, in spite of all that has happened.

Recently, I received a call from a personal consulting client asking why I said the USA was bankrupt. I guess he had seen in the last few days gold surging ahead, breaking new records in terms of US dollar pricing, while the dollar was falling. Now of course that doesn’t necessarily mean gold is really gaining ground… it could just be taken as evidence of the dollar losing ground – since gold is real money. The Fed can’t print gold.

What was the evidence behind my claim of the USA being bankrupt? And how does one define a bankrupt country? And where do other countries, particularly the UK and Switzerland, fit into the equation?

I decided to answer these questions briefly here, for everybody’s benefit.

First of all, defining a bankrupt country is not easy. Iceland clearly went bankrupt in a more traditional sense. But Iceland was a relatively insignificant country of only a few hundred thousand people. My contention is that the USA is also bankrupt, but it is not so obvious because there are many other factors there supporting the currency – the greatest of which is China. While the USA is bankrupt, China is the richest country in the world.

Who says? And where is my evidence for that? No less authority than the Central Intelligence Agency, obviously a US government agency. Now don’t get me wrong, I know the CIA make mistakes, at least one of which led to a major war. But I think in this case the CIA’s figures are quite accurate…  Click here to visit CIA site and see the Current Account Balance ranking

Take a look at that page, which shows the Current Account Balance. In plain language, that just shows what countries have ‘money in the bank’ and which are operating in a permanent overdraft mode!

China is at the top of the list, with a huge positive balance – not far off that of Germany, which occupies the number 2 position.

The United States is at the bottom, with a negative balance more than five times greater than the next largest debtor, Spain.

You’ll also see the UK, France, Spain and Italy down there with the USA.

Here’s another interesting page to look at: Gold and Foreign Currency Reserves

You’ll see China up at the top again, with huge foreign exchange and gold reserves. Most of China’s foreign exchange reserves are held in US dollars.

On this chart, the USA is at number 19, with foreign exchange and gold reserves just above Switzerland’s (but note the USA has smaller reserves than Malaysia, Libya, Mexico and Iran)

So compare the figures – the USA’s negative current account balance with the USA’s reserves – what is actually there backing the dollar – and you’ll see a huge discrepancy. The current account deficit is almost nine times the amount of the reserves.

Here’s how I interpret those figures: The fundamentals of the US dollar are a disaster. It is being supported only because the Chinese and US governments want to keep its value up, and to a lesser extent because other governments see the dollar as a reserve currency. This arrangement has suited many parties for years, but it doesn’t really suit China any more.

Many other governments see the writing on the wall (especially the BRIC countries – Brazil, Russia, India and China) and are diversifying out of dollars for their foreign exchange reserves as well as for other important activities like trading oil. Take a look at where those four countries appear on the list. Very interesting!

So my conclusion is that the dollar is doomed. It has to weaken a lot further. I’ve explained in other articles why I foresee the continuing stealth devaluation of the US dollar rather than an outright dollar collapse. (See related article links below) I just cannot see how anyone, not even the might of the US and Chinese governments working together, can support the US dollar long term. Of course they might succeed in the short and even medium term.

Another interesting factor affecting the US dollar is the commercial real estate timebomb in the USA. We just emailed Q Wealth members with some important information on that this morning. If you are not yet a member, that’s something else you missed out on!

The Euro is a more complicated matter because there are such widely divergent economies in the Euro zone (Germany and Spain for example). Many people believe the Euro will break up. It might, but somehow I think that is unlikely. I think the Euro could benefit, at least in the short term, from the run out of the dollar. If you are going to keep reserves in fiat currency, and you want to avoid the dollar, the Euro is the logical choice. That said, its fundamentals are terrible too.

What about Switzerland? Switzerland is actually looking good. If I wrote that it was in bad shape in the Gold Report, that was because of its huge exposure to Eastern European currencies – another timebomb that I won’t get in to here. The other thing is that Switzerland is inevitably very dependent on whatever happens to the Euro. But I would probably revise my opinion from earlier this year on Switzerland. I keep some of my own assets in Swiss Francs.

And the UK? A lost cause in my view. They are stuck somewhere between the dollar and the euro. Sterling might recover in the short term.

Finally, I should say that I am no currency expert. I hold fairly strong views but don’t seek to impose them on other people. My work is offshore structuring and managing offshore banking relationships. Managing money is a big responsibility that I prefer to leave to others. But my own portfolio is heavily invested in gold, and I believe the next decade will belong to emerging economies. Buying currency is something akin to buying shares in a country. And my currency bets are on emerging markets.

Note: Peter Macfarlane is joint editor of The Q Wealth Report, a unique privately-circulated newsletter dedicated to achieving personal freedom, wealth and privacy – and to securing wealth and nurturing it offshore. If you are new here and would like to see more views like this, be sure to check out our free five part course on the fundamentals of offshore investing and international asset protection. Sign up now without obligation for this free course and our weekly Q Bytes free newsletter.

Our focus here at Q Wealth is on protecting your personal and financial freedom, wealth and privacy. Naturally offshore asset protection is an important component of that. A balanced portfolio would include both offensive (or should I say proactive) and defensive strategies.

The key thing to realize is that it’s not enough just to make money. In the current environment, your dollar, pound or euro balance could be going up – but you are still losing money… due to the ongoing devaluation of fiat currency! If that’s something you have a hard time getting your head around (and who could blame you, since the mainstream media don’t report on this) then you need to read more Q Wealth articles. I would start with this page: Offshore Gold Bullion vs Fiat Money

There you’ll find a good explanation of the value of gold in relation to fiat currency like the dollar, which is backed by nothing but the declining faith and credit of the US government! Although written a few months ago, it’s particularly relevant today as gold has just burst through the $1,050 mark.

You might have heard of ‘forex trading’ – a way you can make or lose lots of money very quickly. Big banks make big money on forex. But most individual investors I know of who try it end up losing their shirts. And more than a few of the forex trading sites out there that promise you huge returns are forex trading scams. Bottom line, it’s not for average investors like you and me who have other things to do besides trade.

But there is a little-known variation on forex trading that is known as the ‘currency sandwich’ or ‘arbitrage loan.’ This is still speculative, but is something you can leave on its own and just monitor in say ten minutes, once a week.

Some European private banks like Jyske Bank and Finansbanken (Bank of Copenhagen) have been offering this for years, but the vast majority of investors have never heard of it.

The key thing here is that you can get a 100% offshore loan, available to anyone, regardless of credit history. You can borrow money from an offshore bank at say 2% interest with no scheduled repayment date, then turn right around and invest it simultaneously for 10% – 30% a year return. In other words it’s a classic way to make money using other people’s money…!

How does this work? Is it a good idea?

Once you’ve established a relationship at the right bank, they will arrange for you to borrow money in currencies like Swiss Francs, Yen or Dollars where the interest rate is very low. Then you invest the proceeds of the loan in buying fixed income products in currencies like New Zealand Dollars, South African Rand or Hungarian Forint.

Let’s say you agree a five times leverage with the bank. If the initial deposit is $100,000, you get a loan of $500,000 making a total of $600,000. This can then be invested in a pre-defined diversified portfolio of instruments like bonds or CDs.

There are two ways you can gain – or lose. There’s the exchange rate factor: raising a loan in one currency and investing in another can lead to huge exchange rate gains as wells as losses. For example if you believe the US dollar will go down relative to the Aussie dollar, you might borrow in USD and then invest in AUD, looking for ‘capital gains’ on the currency.

Then there’s the interest rate factor: Investments are made in bonds – often government bonds – which pay a much higher rate of return than what you are paying in interest on the loan, leaving a profit there.

Given the right market conditions, this deal gives you the possibility of making extraordinary profits. The more volatile the markets – the more your profits can be.

The downside, obviously, is that sometimes such deals go against you – basically if you get the market wrong.  However you don’t generally get completely wiped out, because it’s very rare for these currencies to devalue overnight.

The next question of course is which banks offer this type of loan? I named a few above, but those are not necessarily the most confidential and if you happen to be a US citizen, you may find the reporting requirements an unwarranted intrusion on your privacy. As I said, there are a number of lesser-known European private banks that will offer this kind of deal – even to USA citizens provided the accounts are  are established via offshore vehicles (for example Panama Corporations or Private Interest Foundations ). A cheap Panama corp will suffice here since the goal is not tax planning but simply asset protection and opening up new opportunities.

But you must know who to ask, and how to ask (discreetly). I wouldn’t go so far as to say these deals are only available to insiders, but they are not available to people who walk in off the street – or the internet. That’s the reason I’m not going to name banks here. Then these high level private bankers would be flooded with e-mails from wannabees and tire kickers who don’t really understand the deal.

If you are interested in finding out more about these deals, first you must be a member of Q Wealth. If you are not already, you can sign up online right now for a mere $87. Then I will be happy to name such banks to you in an individual e-mail, as part of the free consultation that all members are entitled to. So, what are you waiting for? This is a great way not just to protect yourself against declining currencies like the US dollar, but actually to prosper and create wealth… out of the US government’s poor management of the economy. Now doesn’t that sound like the way things should be?

China’s banking system has twenty-five times the reserves of the US Federal Reserve. The USA’s power to dictate international monetary policy is lost as the rest of the world views the US dollar as a liability. People ask me every day about the “dollar collapse” – why do I keep predicting it, and why has it not happened yet? The answer is to be found in China.

For those of you who have already read How to Prosper from the Coming Shift in Power, module 5 in our free five part Secrets of the Super Rich course, I thought the following guest article by Keith Fitz-Gerald of Money Morning would be of interest. Keith is an investment analyst who lives part of the year in Asia. Here’s what he has to say…

Most Americans will view China’s effort to dethrone the U.S. dollar as the world’s main reserve currency as one of the biggest economic threats that this country will have to face.

But the reality is that this tectonic shift in global finance – and the economic shockwaves that will result – could provide investors with some of the greatest profit plays they’ll ever see in their lifetimes.

No matter which camp you’re in, the China-spawned changes are headed our way.

In 1990, the U.S. banking system was 2.3 to 2.7 times the size of its counterpart in China. Today, however, the situation has been reversed, and there is much more of an imbalance. In fact, China’s banking system has 25 times the reserves of the U.S. Federal Reserve.

At some point, the United States will no longer be able to dictate international monetary policy. Unfortunately, as our monetary policy aptly demonstrates, Washington seems to be the only player involved in this game of high-stakes global finance to not understand just how this is destined to play out.

U.S. leaders continue to employ monetary policy as a weapon – despite the fact that most of the rest of the world views the U.S. dollar as a liability.
At the end of World War II, virtually the entire world functioned on dollars. By some accounts, 100% of the world’s money supply was the dollar. Today that figure has dropped all the way down to 19%, says Rochdale Securities LLC analyst Richard Bove, a noted expert on the U.S. banking system and Federal Reserve.

Now that the federal government has deployed a few trillion dollars more as bailout bucks, it’s clear that the greenback has lost its mojo and the U.S. government has lost its international monetary leverage.

Why is this worrisome? History tells us that the countries with the strongest economies tend to also have the strongest currencies. It may take awhile for the latter to catch up with the former, but the relationship is highly correlated relationship – suggesting that China’s on the rise economically, while its currency is advancing with the unstoppability of a diesel locomotive operating at full throttle.

So if the U.S. dollar gets derailed as the world’s chief reserve currency – as we’ve repeatedly predicted is destined to take place – the world’s next reserve currency is likely to be China’s yuan, known officially as the renminbi.

Washington says that won’t happen, since Beijing takes steps to keep the yuan from being fully tradable. That’s true enough. But Beijing also understands that the dollar is a liability – which is why China’s leaders are going to great lengths to establish the yuan as a viable currency all its own, while simultaneously minimizing the Red Dragon’s dollar-based exposure.
In the last six months, for example, China has signed at least $95 billion in swap agreements, under which it can trade directly with countries for payment in yuan. The countries that sign these deals are getting huge discounts from China in exchange for their participation – and for buying goods from China. And the deals enable China to do an end run around the entire dollar-based currency trading system.

When it comes to this long-term plan to boost the yuan’s importance, China is waging a campaign on multiple fronts. This past spring, for instance, China organized a meeting in Moscow – attended by representatives from Brazil, India and Russia – where the main goal was to supplant the U.S. dollar as the world’s main reserve currency, replacing it with a yuan-led market basket of currencies, one that is simply backed by China’s renminbi, or perhaps even one based on the International Monetary Fund’s so-called Special Drawing Right (SDR).

Created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system, the SDR was redefined in 1973 as a basket of currencies. Today, the SDR consists of the euro, Japanese yen, pound sterling, and U.S. dollar.

My guess is that this gathering in Moscow was merely the first of many such meetings that we’ll see take place around the world in the years to come. Expect the list of attendees to grow, as well.

Given all that we now know, the real question becomes: What happens if China succeeds and the yuan displaces the greenback as the world’s top transactional currency?

The list of potential implications is very long, and includes several scenarios that are almost apocalyptic. But most of the outcomes raise as many questions as they answer.

Let’s consider the Top Five:

1. Global Gloom Leads to U.S. Doom: The U.S. dollar goes into freefall for the simple reason that if no country has to hold dollars any longer, they won’t. Instead – thanks to the ragged state of the U.S. government’s finances – many countries will dump greenbacks fast as they can, which will only put additional pressure on an already-strained U.S. financial system, which in turn will further damage our economy.
2. Inflation Inflates: Inflation will strike here with a vengeance, as anything bought, sold or priced in dollars will instantly rise in price to offset this fall.
3. Repatriation Risk: With the dollar serving as the world’s de facto currency, U.S. companies bear very little exchange rate risk when the time comes to repatriate assets or make currency-related adjustments. That would change overnight and prices throughout the value chains would rise sharply to compensate.
4. Money Costs More: The cost of money itself would rise. If the dollar falls, not only will there be massive selling pressure against it, but the cost of borrowing it will rise dramatically as lenders raise rates to cope with the increased risk of dollar-based transactions.
5. Death By Debt: And finally, if there is another reserve currency, other countries will no longer have to buy our debt, and you can guess where that will leave us – especially given the fact that we’ve taken on trillions in new debt to help finance our way out of our current mess.

My best guess is that we won’t see any one of these things in isolation, but will instead experience a blending of several or all of them. To the extent that China continues to absorb our inflationary influences, buy our debt in measured doses and maintain its reserves, we’ll probably have a measured decline in the value of the dollar – but not the catastrophic fall many in the doom, gloom and boom crowd are predicting. At the same time, I also see the IMF change course in the next few years to reflect China’s increasingly substantial influence and monetary power.

On the individual investor level, this clearly provides a new set of influences that most investors have yet to grasp. Most will perceive what I have said as a threat, but I believe the correct way to view this is that there will be a whole new set of opportunities coming our way.

Some of those opportunities will be obvious – like the need to invest in currencies and commodities that are of interest to China. Others, like direct investments in China’s yuan, will require special insight, a good investment guide, or a leap of faith.

Further reading: If you’ve not yet read Q Wealth’s five part course on offshore banking, asset protection and international wealth creation, check it out now. It’s free. If you are already a member of Q Wealth then you will have access to a wealth of material and information on how you can take full advantage of opportunities presented by the global crisis.

The bottom line – and the most important thing to remember – is this: No matter how this plays out, there will always be an upside for investors who are willing to seek it out.