Peter Macfarlane comments on the increasingly loud calls for regulation of the gold market, and the unintended consequences it could trigger.

The [commodities regulator] would also have to act to limit the gold acquired individually and by the E.T.F.’s. All of these measures would have to be coordinated and put into effect on a global basis.

I am wondering where to start with my comments this statement, taken from this article published in the New York Times and its sister paper the International Herald Tribune last week, by Steven M. Davidoff.

The full article  includes some sentences designed to make it seem impartial, but it’s clear that the writer is in favour of strict global regulations on the gold market, in order to “protect” investors from a perceived bubble in the gold price.

Worse still for us, there are some elements of truth in it. Perhaps we really do need the regulators to take a look at gold ETFs. And if they start looking in to dark corners, the results – including the unintended consequences – could affect us all.

Is gold in a bubble right now? Hardly!

• Gold is typically priced in US dollars. What some people see as a rise in the price of gold, I see as a fall in the price of the dollar relevant to gold.

• Gold is a traditional safe haven in times of turmoil. That is why more and more people are transferring assets into gold. Some people believe gold may be near its peak right now. I put this question to Dirk Steinhoff of Global Gold (who will be attending our Hong Kong Symposium) the other day and his counter-argument used an irrefutable logic. Do you think, Dirk asked me, that all the underlying problems that cause people to look for a safe haven have been solved? Far from it, I replied – things like the US and European debt problems are obviously getting much worse not better. So, investors in gold are hardly going to dump gold suddenly and buy dollars or euros. Quite the contrary – demand for gold will rise, so the price has to rise.

Mr Davidoff’s argument in the NYT seems to be that the price of gold should be limited to protect small investors. He even suggests that the Commodity Futures Trading Commission should try to persuade the media to “talk down the speculation.”

In my view, the media should be helping out individuals by talking down the US dollar. But of course, realistically, this is not going to happen.Too many Americans are sitting there in a bubble, as their life savings are being wiped out by the devaluation of the dollar, unaware of the other options open to them like gold, or stronger currencies held through tools such as multi-currency offshore bank accounts. That is the message we at Q Wealth are trying to get across to people who will listen, but unfortunately we’re a very small voice in all the media cackle. There are two ways to sleep soundly at night: be ignorant, or be prepared. Most Americans unfortunately fall into the former category.

Actually, it’s not small investors driving the gold market. Institutional investors are snapping up gold. Central banks from countries like China, South Korea and even Mexico are dumping dollars to buy gold.

Exchange Traded Funds (ETFs) are, however, certainly a big driver in the gold market. And it is here that regulators really should take a look. See our free Gold Report for more details on the dangers Gold ETFs – click here to download it free.

The danger is that all this could create the perfect storm, to give the government the excuses it needs to intervene. I have never been a believer in conspiracy theories about the government knocking on doors confiscating gold. But articles like this one by Mr Davidoff are now appearing in the mainstream press, and we can expect a lot more of them in the coming months as gold breaches the $2000 and then $3000 benchmarks. Regulators will face a lot of pressure to stick their noses in, and might well do so.

In fact, Mr Davidoff is probably unaware, but regulators in the US did already step into the gold market earlier this summer. The Dodd-Frank Act outlawed certain forms of gold transaction involving Over-the-Counter gold transactions by US citizens, this regulation having come into effect on July 15th this year. This was a relatively minor interference, but prudent investors should take it as a sign of things to come.

The GLD ETF currently claims to hold almost $75 billion worth of gold. If regulators uncover problems with ETFs (problems that basically have already been uncovered, but regulators have ignored the warning signs) then the fallout could be catastrophic.

ETFs are meant to track the gold price. This has been under pressure for a long time, and there have been more and more examples of minor divergences. We could reasonably expect to see a much greater divergence in the future, where the price of real physical gold uncouples from the price that is supposedly fixed by the markets.

Another likely scenario is a temporary suspension of gold trading on COMEX while regulators interfere, perhaps in conjunction with the announcement of the ‘discovery’ that some gold supposedly held by ETFs does not exist in real life. While for sure trading could and would eventually move to other markets, the upset would be enormous and would specially affect those who hold gold in financial accounts, ie bank obligations in gold, since many banks and other financial institutions sell virtual gold to their clients and then hedge these obligations with COMEX contracts.

Solutions? We’ve said it time and time again. Do not buy virtual gold like bank deposits, or ETFs. Do not buy gold certificates or gold obligations. Buy physical gold, in a place you control, that does not depend on the banking system or financial markets in any way. There will always be a strong demand for physical precious metals and they are an excellent way to protect the value of your investment.

One excellent way to hold physical precious metals is through the Global Gold program. Personal referrals are available for our members, or you can just contact them directly. Another way is using the Malca-Amit vaults in Singapore. Another way is through a bank program we know of where the bank actually guarantees real physical gold in a Via-Mat vault – the main advantage of this being that you can use your physical gold as security to borrow dollars or euros, a debt that will hopefully be gradually wiped out by devaluation of those currencies… for the moment we are saving this option for paid members, who may contact our offices for a referral to the provider.

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)

by Peter Macfarlane

There’s a lot of misconceptions out there about offshore banking and investing. Newer readers especially may believe a few of the myths exploded below! Even if you’re an old hand at offshore banking, I thought you might enjoy this brief list of some of the most common offshore banking myths…

1. Offshore banking is illegal. The Facts: Granted there are a few countries in the world that outright prohibit their citizens from holding accounts abroad. But very few – even those with strict controls like South Africa, Venezuela and Russia don’t ban their citizens outright from holding offshore bank accounts. Most countries do however have laws insisting that you report your offshore bank accounts to the tax authorities. You can easily verify these requirements with a local professional.  For sure there are some illicit funds deposited in offshore banking havens, but they constitute a small percentage of total criminal proceeds held in banks within high-tax jurisdictions. Bank secrecy laws these days definitely do not protect criminals. The idea of associating offshore banking with crime is all about trying to persuade people to leave their funds where their governments can get their hands on them!
2. Offshore banking is only for tax evasion. The facts: Recent campaigns by major governments and left-wing think tanks try to tar everybody with the same brush. Most people who bank offshore these days are not evading taxes. They are looking for legal tax planning and asset protection strategies – for example: currency diversification, and protection against political risk factors.
3. To have a bank account offshore you need lots of money. The facts: Yes, there are many obscure but very good private banks that won’t be interested in a relationship under a million or two. But there are also plenty of banks, large and small, that are still interested in the regular middle class customer.  At some of the best offshore banks in the best offshore banking countries, you can easily open a bank account with a deposit of $500 or less. There are plenty of options and you will find details in the Q Wealth Practical Offshore Banking Guide.
4. Offshore banks are situated in remote corners of the world or obscure islands, thereby making it difficult to manage the account. The facts: While many offshore jurisdictions are indeed small islands, they are all connected by fiber optic cables! Today, the physical location of the bank is not really important. You can deposit funds electronically and manage them over a secure internet connection. For withdrawals you can wire money out using the internet banking, or you can have an internationally recognised debit or credit card like Visa, Mastercard or American Express.
5. You have to travel to the bank personally to open an account. The facts: The best offshore banks do not require this. They have procedures in place to open accounts either entirely by mail, using copies of documents certified locally, or you can open accounts through other representatives or offices that may be closer to you. Often, if you pay the travel expenses or you are investing a larger amount, you can even have a bank officer travel to visit you.
6. Offshore banking is tax-free. The facts: In most cases you don’t have to pay taxes in the bank’s jurisdiction. The notable exception is Switzerland, which does charge Swiss withholding taxes on the income of foreign account holders. What you do have to remember is that many high tax countries tax the worldwide income of their residents, and one – the United States of America – taxes the worldwide income of their citizens even if they are not resident.
7. Offshore banks open anonymous numbered accounts. The facts: It is still possible in some banks to open numbered bank accounts. Most Swiss banks, for example, offer this facility for a small annual charge. A numbered account is where your name does not appear on the title of the account. However, they are not technically anonymous, since the bank will still need to know who you are. Normally your real identity will only be accessible to a few high-ranking bank officers, and your passport copy will be held in a paper file in the bank’s vault, rather than on a computer where a data or identity thief could potentially download it. So whatever account name or number you are assigned, you will not remain fully anonymous to the bank. It is also no longer permitted to send or receive wire transfers without fully identifying the legal account holder.

Further resources:

For further reading you might enjoy learning about the best offshore banks. If you would like to know more about offshore banking and more generally how to protect assets through international investing, check out our free five part ‘Secrets of the Super Rich’ course. We will be happy to send it to you free and with no obligation whatsoever. We also guarantee not to spam you – we hate spam as much as you do. To receive your free course, sign up here right now: Free Secrets of the Super Rich course

You missed out this time on our small, intimate Meet the Men Who Made Their Clients Millions event in Bantry, Ireland. Maybe next time.

Anyway, one of the topics of discussion was ‘Mass Production versus Custom Tailoring’. The decision to go offshore is very personal, and is something you should not entrust to mass production. It requires custom tailoring.

In other words, you don’t necessarily want to structure your offshore set-up with the help of the company that pops up first on Google. Mostly, these companies are so-called ‘corporation mills’ who have slick advertising but little regard for the financial well-being and privacy of the client.

You probably won’t read this advice anywhere else – because the best, most  convincing, well written websites and “offshore” literature is put out by the biggest outfits. But we like to tell it as it is, even if it upsets some people.

It is just common sense to assume that your private financial affairs will invite  more scrutiny if you are a customer of an outfit that actively sells offshore banking services thousands of people. And if that offshore banking outfit has problem clients who are up to no good (a typical problem when they take on all and sundry for fast profits) then those people’s problems will very quickly become your problems!

Let me give you a practical example of another typical problem with mass production offshore asset protection. Once upon a time there was a European Private Bank. They employed a special guy who did nothing but appear at seminars for wealthy people. He pitched offshore bank accounts, annuities, and other “tax favored” products of his  bank. The bank had a great website where the tax advantages of these  products were fully explained. For instance (modified for simplicity),  you could put say EUR 100,000 in an annuity that earned 4% a year. You got paid EUR 5000 per year as a “tax free return of capital” until the EUR 100,000 was paid back.

By then, 20 years later, you might be dead! But when you died, your heirs inherited the EUR 100,000 death benefit – also completely tax free. It was a nice way to move assets offshore where they were judgment proof, and killing two birds with one stone, earning EUR 100,000 tax free.

In my opinion, products like this were borderline legal at the time. However, due to the heavy marketing  the rules of the game were changed. This business came to an abrupt end. Why? Because the “authorities took notice” and eliminated this particular loophole for annuities.

That is one of the main reasons that we don’t “name names” when we talk about offshore banks in our public articles. This information is reserved for paid subscribers. You will find banks named (including contact information and other details) in our Practical Offshore Banking Guide that is available for instant download in our Members Area.

We purposely choose to deal with low profile but secure offshore banks – not ones that actively target foreigners or have great internet marketing skills.  And that, dear reader, is why I suggest – if you haven’t already – you invest the small $87 fee required for a year’s membership of Q Wealth. You can sign up online right now.

Still, if you’re not quite sure yet, why not check out without any charge or obligation our Free Offshore Banking Course?

If you’ve ever considered going offshore, banking, living, investing or doing business internationally in Latin American offshore financial centers like Panama and Uruguay,  or on one of the Caribbean islands (Cayman, Bahamas etc), I’ve got some important news for you below.  As Swiss banks are under pressure as never before to lift the veil of bank secrecy, places like Panama have become to look like more attractive options. But how does this work in practice? What is going on today in the secretive world of offshore banks?

The following missive was sent out in our free Q Bytes newsletter a week ago. Response from readers has been phenomenal so we decided to publish it here on the blog, in order to make it available to a wider audience. (If you would like to receive news like this in advance, directly in your e-mail box, be sure to sign up for Q Bytes – remember it’s free!)

As we noted in our last article on the benefits of Panama Corporations and Bank Accounts, Q Wealth has quite a strong Latin American bias when it comes to investing and carrying out offshore business. Although this may surprise some readers, especially in the face of the world-shaping events and undeniably huge money-making opportunities in the Far East that we’ve also recently covered in Q Bytes, we can assure you that ours is a well thought out and considered policy.

Some places in Latin America are very liveable – Panama, for example, for those who dream of living tax-free near a tropical beach, or Uruguay for traditional European style city living at a fraction of the cost of the original version.

This week we are pleased to announce a brand new report prepared by Alternative Latin Investor magazine in association with Peter Macfarlane and The Q Wealth Report. This brand new report covers in-depth the state of offshore banking and wealth management in Latin America and the Caribbean – from a completely new, independent perspective.

It’s based on exclusive interviews with hands-on people in the know, movers and shakers like top bankers and business leaders. And best of all, this report is available entirely free of charge to Q Wealth members. You can download your copy right now in our Members’ Area.

If you have ever considered setting up a Panama bank account, retiring to a vineyard in Argentina, or opening an offshore internet  bank account (or an e-commerce offshore merchant bank account), then you need to read this report. It will help you understand how offshore banking in Latin America and the Caribbean works today – not so much the nuts and bolts of how to do it that you can already get from our Practical Offshore Banking Guide, but things like why different jurisdictions offer different services, how and what the local people, expat bankers and retirees are thinking right now, how governments in the region are reacting to political pressure from the USA, G20 and OECD, and how to ensure the security of your bank deposits… this report will give you the geopolitical depth behind the headlines, essential information for anyone considering living, investing or doing business in the region. You might also enjoy reading our post on the best offshore banks.

We would especially recommend this report as essential background reading alongside our Practical Offshore Banking Guide 2009.

HERE’S WHAT YOU WILL LEARN IN OFFSHORE BANKING LATIN AMERICA 2009

Will reading this report be a good investment of your valuable time? I’m sure that’s what you want to know. So here are a few of the key points and quotes specifically covered in this report, that I thought you might find particularly interesting. I’ll try to expand on these in future articles, but in the meantime you can read the details in this Offshore Banking Latin America 2009 report…

• Diversifying location for capital is a significant trend in both the Americas and Europe. Those new to offshore banking may be thinking twice about moving in that direction, but those familiar with its mechanisms feel it is a haven in the present climate. You’ll find out why.
• Whereas before most people thought the worst couldn’t happen, now smart people are planning for worst case scenarios. For Americans, that means a total collapse of the dollar. While inexperienced investors may feel that foreign markets are risky during times of crisis, smarter investors are well aware that risk can be substantially reduced by diversifying offshore.
• Instability provoked by the financial crisis could spark the return of economic nationalism like currency controls or even expropriation around the world. This may be carried out via the back door. Learn how investors and banks in the region are protecting themselves and their assets. For example, learn why corporate accounts at Brazilian-owned banks in New York and Nassau have grown ten-fold since the beginning of 2008.
• Find out more about the breakdown between corporate and personal accounts, and how clients typically achieve stronger asset protection through the use of corporate structures
• Read candid interviews with bankers about how European tax directives could affect European banks with branches in Latin America… this is stuff you won’t read on banks’ corporate websites.
• Why Panama is “not so artificial” and has “a solid economy” – compared to certain Caribbean jurisdictions that might look great on paper, but where the rule of law may not be respected. What image do you want to project when people do due diligence on your offshore corporation? One offshore provider gives a few warnings about things that don’t appear in the official brochures, and names a couple of jurisdictions (including one island that is particularly popular with Americans) that have a less than positive reputation.
• Learn more in-depth about the Panama banking system by reading interviews with local bankers and business people. Legally speaking, there are three different types of banks in Panama – what are the differences? Which should you choose, if any? How does Panama provide security for bank deposits?
• Why asset protection is so important: “If you want to sue someone in the States it doesn’t cost you anything but you can go bankrupt defending yourself.” Learn how Caribbean jurisdictions easily prevent this kind of fantasy lawsuit from ever being filed.
• “Before you had to be a multi-millionaire to make it worthwhile. Now there are people with $100,000 looking to diversify into foreign currencies or invest overseas. This has been made possible by offshore internet banking.” Read about the latest internet banking technologies, debit and credit cards, and multi-currency accounts in the region.
• Read an exclusive interview with Gaetan Bucher, Swiss-Dominican banker and the founder of the $850 million ‘International Financial Centre of the Americas’ – the first financial free zone in the world. This is literally a new ‘financial city’ due to start construction by the end of 2009 with completion scheduled for 2012. IFAC will offer real time offshore banking as well as an electronic clearing and settlement house LAIFEX – backed up by sophisticated financial services from big names. The regulations are being drawn up by Washington law firm Patton Boggs and Deloitte Consulting in London. Lloyds of London are also involved in the project.  Crucially, it is completely aligned with ‘best practice’ guidelines from the OECD and G20. This interview in my view represents a fascinating vision of the future of offshore banking and investing, where borders become insignificant. What will the offshore landscape look like when IFAC opens in 2012? Anyone thinking of going offshore now should think very seriously about this last question.
• Discover a new free online networking opportunity aimed at Baby Boomers retiring offshore, where they can search for international real estate, ask questions of experts, and meet people with similar interests. It’s a chance to connect with people who have ‘been there and done that.’
• Nothing beats doing your homework on an offshore jurisdiction before you finally select. One banker comments how smaller banks are often more orderly than big banks. He says, “Look for a historic bank that has worked well for many years, that has a strong balance sheet and doesn’t do strange things.” And you’ll learn other due diligence tips too.
• Do people who are retiring in the region need offshore accounts, or can they get better services from local banks? An important question for those applying for residence or buying property. It’s answered in this report.

All the above and more is covered in Offshore Banking: Latin America 2009, available free for download in Q Wealth’s Members Area. If you are not yet a member, you can buy access online now for just $87 for a year’s membership. Sign up now and get this info while it’s hot of the press!

by Frank Suess, BFI Consulting

For centuries, gold has attracted investors seeking to protect their wealth and provide a ´safe haven´ in troubled or uncertain times. This remains a reality for modern investors too, although there are also a number of other reasons that underpin the widespread renewal of investor interest in gold. Gold can add an element of potentially outstanding capital gains to your safety-oriented portfolio. And, if structured adequately, gold will entail a minimal downside risk.

We consider buying gold “the right way” to be a HOT topic and unique opportunity in achieving the following benefits:

• Diversification out of continuously devaluing paper currencies, thereby protecting one´s assets against a loss of purchasing power AND, at the same time, setting it up for capital gains.

• Retaining liquidity and purchasing power for the next upturn in business cycles (which in our view has NOT arrived yet), thereby securing the opportunity of taking part and benefiting from it. It is important that the gold format one chooses is supported by a liquid market, i.e. you want to be able to buy and sell rapidly if need be.

• Safe haven: In volatile and uncertain times, there is typically a “flight to quality” as investors seek to protect their capital by moving it into assets considered to be safer stores of value. Gold is among a handful of financial assets that do not rely on an issuer´s promise to pay, offering refuge from default risk. It provides insurance against extreme movements that often occur in the value of traditional asset classes in unsettled times.

• Paper Currency Hedge: Gold is often used as an effective hedge against fluctuations in fiat currencies. In particular, a close relationship tends to exist with the U.S. dollar. When it appreciates, the dollar gold price falls, while a fall in the dollar relative to the other main currencies produces a rise in the gold price. While this may also be true of other assets, gold has consistently proved among the most effective in protecting against dollar weakness.

• Added asset protection and privacy: Structuring your strategy appropriately can provide a considerable level of privacy. Depending on the format gold is bought in, there are considerable privacy and safety related differences. More specifically, buying gold “the right way” can mean avoiding reportability and minimizing confiscation risks.

• Portfolio diversification: Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset or group of assets that react in a common fashion. Portfolios containing gold are generally more robust and less volatile than those that do not.

• Physical or virtual ownership: You can buy gold in its physical form and store the coins, gold bars or jewelry that you have acquired. However, storage fees must be considered. And, one must consider a lower level of liquidity compared to a gold certificate or metal account (also referred to as a claim account).

BUYING AND STORING PRECIOUS METALS “AT HOME” OR OVERSEAS?

A key issue that needs to be addressed is whether an investor should buy gold offshore or “at home”. The answer will not be the same for everyone. Depending on your specific objectives and situation, you may be better off keeping your assets in your home country and storing physical gold in your local bank´s deposit box. You might, however, be well advised to buy and store physical gold offshore. Or, maybe, you should consider a mix of both.

Buying Gold “At Home”

Obviously, this is (a bit) more convenient, simply for the fact that you are not dealing with time and language differences. Furthermore, you can have the gold delivered to your home or directly to the local bank or storage facility of your choice with more direct control over your assets. However, a key issue arises — and this applies to U.S. investors in particular – in regards to the risk of government confiscation when buying and storing gold “at home”!!!

How might a gold confiscation be possible nearly 70 years after the last one occurred? This question is best answered with a series of other questions: Firstly, how will the massive U.S. federal debt (nearly $6 trillion and growing) and the outstanding international dollar float (resulting from the U.S. trade and budget deficits) be reconciled?

Currently, the U.S. dollar (still) enjoys a special status around the world as the primary reserve currency. This status encourages central banks and individual investors around the world to hold it. Leaving the various circumstances and potential scenarios aside, what would be the outcome if the stilts that propped it up were kicked out from underneath this built-in dollar market?

How might the U.S.government react to an economic emergency in which individuals, beset by either a devastating domestic inflation or a deflationary nightmare — or both — were fleeing the banks and equity markets for gold as a means of preserving their personal capital?

Historically, confiscation has all too often been the option taken by governments beset by an economic breakdown. Just as gold is the asset of last resort for the individual portfolio doing service in the most financially threatening times, it is often times the asset of last resort for troubled governments as well. As recently as 1998, during the Asian Contagion, both South Korea and Thailand implemented “voluntary” gold call-ins. The temptation presented by its citizens´ gold holdings was simply too facile to resist.

No matter how you look at it, investors must beware of government confiscation risks that rise exponentially in times of a severe economic crisis (as seen under U.S. President Franklin D. Roosevelt in 1933).

Buying Gold Offshore

The advantages of buying and storing gold offshore are primarily related to PRIVACY and ASSET PROTECTION. However, what is required to reap these benefits is a structure that allows you to re-allocate your precious metals rapidly and store them safely. Ideally, this is done in an efficient and low-cost mode despite any geographic distance issues.

Some clients may prefer buying and storing physical gold over a “virtual” gold account or certificate. They perceive a higher degree of safety in this strategy because of the fact that they are allocated a specific and tangible lot of gold. However, storing physical gold is obviously more costly. And, it is generally less liquid than its “virtual sisters”.

Despite higher holding fees, in today´s environment, BFI ultimately recommends holding physically allocated precious metals, preferably in bullion coin or bar format.

Conclusion

Both options, buying gold offshore or “at home” have their advantages over the other. The offshore option is more complex in execution and requires a larger investment. This is not a “do-it-yourself” commodity, unless you have lots of time and like to travel. Therefore, we recommend taking advantage of a full service program as offered by BFI Consulting and some other firms.

When going the offshore route, beware of strategies that sound too simple. Think the process through. And consider the hefty fees and taxes (VAT) you will pay in some European countries.

The “at home” solution is more convenient and efficient. The key risk, in case of a severe crisis, is government confiscation. It appears, however, that if approached cleverly, these risks can be minimized.

Further reading: Frank Suess Jr is CEO of BFI Capital in Switzerland. His firm provides solutions for buying and storing physical gold bullion, as well as offering a range of excellent portfolio management services for high net worth individuals. He can also assist with Swiss Bank account opening.

If you would like to read more about how to buy, hold and store physical gold bullion offshore, visit our Offshore Precious Metals page. You will also find good information for free here on Gold and Silver Investments.

Unfortunately, when it comes to offshore banking and international asset protection, people make a lot of mistakes. Blindly trusting advisers is one of the more serious.

We’ve long warned here of two things:

1. Don’t do business with offshore banks that have a presence in your home country. Especially not ones who send in employees to participate in illegal tax evasion schemes. Heeding this advised would have saved 50,000 Americans a lot of headache and loss of sleep in the recent IRS and Justice Department case against leading Swiss bank UBS.

2. Don’t assume that because you are not American, you are safe. This rule is highlighted by the latest news from Ottawa…

UBS, Switzerland’s biggest private bank and one with substantial operations worldwide, agreed in August to reveal the names of nerarly five thousand of its wealthiest US clients under intense pressure. Many people believed that the best offshore banks were the biggest – or simply went for the convenience factor given the Swiss bank’s large North American operations. They are learning to their cost, however, that ‘small is beautiful’ as strong and conservative local banks in Switzerland, such as the Swiss Cantonal Banks we have written about in Q Wealth Report, have been left unmolested and have maintained respectable balance sheets.

But now Revenue Canada wants the same information, according to Reuters.

A spokesman for Canadian Finance Minister Jim Flaherty recently confirmed that there is talk of tougher laws to compel offshore banks to cooperate with Revenue Canada.

As the Reuters article states:

Offshore private banking involves managing the wealth of rich clients from a foreign location. However, some clients have exploited the system to avoid paying taxes, especially if transactions are carried out in traditional banking secrecy strongholds such as Switzerland and Liechtenstein.

Fortunately Canadians (like Brits, Ausies, Kiwis and others) have the huge advantage over Americans, that they can simply opt out of their domestic tax systems by leaving their respective home countries. More and more Canadians are choosing to do just that – often becoming ‘snowbirds’ commuting to winter homes in warmer climes and living tax-free offshore. But to do that, reliable information and research is necessary. (The USA is the only country in the world that tries to tax its non-resident citizens.)

These topics are frequently covered in Q Wealth Report, your leading one stop shop for information on offshore asset protection and international banking. If you’re a Canadian with offshore assets, regard this latest piece of news as a warning call. It’s time to review the situation and look into your options. Here at Q Wealth we offer impartial advice, a wealth of articles and free reports, and a unique rolodex of reliable expert contacts in the offshore world.

If you’re not Canadian, will the next news of an offshore crackdown be from your government?

Wealthy Latin Americans have been banking in Uruguay for decades, but it is less well known as an offshore banking centre in the rest of the world. That could be good news for your privacy, says offshore banking commentator Peter Macfarlane.

Uruguay has acquired a nickname, “the Switzerland of South America” due to its discreet Swiss style private banks and its low profile participation in the offshore finance business. Although it’s not generally known as a tax haven, Uruguay was one of four countries that acquired a higher profile than they wanted for their offshore financial sector businesses this year, being blacklisted by the OECD / G20 summit as a non-cooperative tax haven. However, in a very civilized manner typical of South America’s most stable country, Uruguay was also one of the first to be removed from the offshore banking blacklist. So what’s the story?

Uruguay today has two different categories of banks. There is the domestic banking system, dominated by two government-owned banks, the largest of which is Banco de la República Oriental del Uruguay (BROU). Founded in 1896, BROU previously performed many of the functions of a central bank. Today it is posible for foreigners to open accounts in the domestic system, but Uruguay Residence will typically be required, and it is hard to open offshore corporate accounts for foreign corporations.

Of more interest to non-residents of Uruguay are the so called ‘S.A.I.F.E.’ These are local Uruguayan entities that are wholly owned by established foreign banks. Their offshore status means that they are prohibited from doing business in the local market: for example they cannot do business with Uruguayan residents, and they cannot offer local checking accounts. They can however provide a full range of commercial and private banking services to foreign, non-resident individuals and companies.

The idea of allowing foreign banks to participate ‘offshore’ in Uruguay was originally to stabilize the local system with the resulting influx of foreign capital. Despite drug money scandals in the early nineties and the fallout from the Argentine financial crisis, Uruguay has managed to maintain a clean, under-the-profile radar – and this is one of its main attractions today.

We frequently introduce our paid-up members to a couple of these foreign banks operating in Uruguay. One is located in the capital, Montevideo, while the other is located in the trendy tourist resort of Punta del Este. A personal meeting is required, but need not be held in Uruguay. For example if you choose to work with one of the Swiss or European private banks with a S.A.I.F.E. in Uruguay, the meeeting could be held at the European headquarters and then the paperwork would be sent to Uruguay to get the account open.

If you would like to know more about how to open an account at one of these offshore banking institutions in Uruguay, check out our Practical Offshore Banking Guide which is available free for download in our Members’ Area. (If you are not yet a member, you can join online right now)

Uruguay, it should be said, respects offshore banking and its bank secrecy in its constitution – definitely a positrive sign.  Notwithstanding inevitable partial piercing of bank secrecy in recent years, the right attitude remains.

Following the OECD G20 blacklisting, for example, furious articles like this one (in Spanish) appeared in the local press condemning attacks on Uruguayan sovereignty by larger nations abusing their powers. Some of the convincing arguments from that article, translated into English:

- The OECD text says that tax havens should bring themselves in line with “international standards” for tax-information sharing, as if it were a UN convention or some other multilateral agreement signed by Uruguay. Really it’s an OECD convention, of which Uruguay is not a member and has nothing to do with.

- Why are they doing this? Because over several decades OECD countries have been expanding and complicating their systems of taxation – out of all proportion with the return these administrations give to taxpayers. In other words – it’s their problem. What does Uruguay have to do with it?

- How does bank secrecy benefit Uruguay? In reality the question isn’t being put the right way. Bank secrecy is consecrated in the constitution. Of course there are limits and norms to bank secrecy, but these aren’t pre-requisites. In other words… it doesn’t matter if it benefits Uruguay or not, it’s a right. Full stop.

Thank you for the translations to offshorenet.com

Finally, any mention of Uruguayan banking on the internet would probably not be complete without a mention of Capital Conservator Treasury Services, a high profile player in the international offshore banking business. Capital Conservator originally set up as a Uruguayan entity but a few years ago they decided to change their place of incorporation, keeping only back office functions in Montevideo.

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by Peter Macfarlane

Last week, I wrote an upbeat article on the future of Swiss private and offshore banking, entitled “The Future of Swiss Banking Looks Better than Ever.” This article focused mainly on the recently averted US trade war with Switzerland, and how the IRS got the publicity it wanted to scare people into compliance. It appears that the deal between the IRS and Switzerland regarding UBS account holders has still not been fully resolved, dragging out the publicity machine still further.

But how is this strategy playing out in the rest of the world? Another much vaunted tax information exchange agreement (TIEA) is that which the UK has been negotiating with Liechtenstein. A press release put out by the HMRC (British tax authorities) states firmly that “Those who have been evading UK tax on assets held in Liechtenstein banks must now settle with us. There are no alternatives.”

Is that true? Not really. At any rate there is certainly no need to rush into any hasty decisions…  as the Press Release notes, “The Liechtenstein Disclosure Facility (LDF) runs from 1 September 2009 to 31 March 2015.”

This oddly-named Liechtenstein Disclosure Facility even more oddly also offers “a special Bespoke Service, including an option for personalised treatment by a `discrete [sic] HMRC (UK Revenue and Customs) team to ensure consistency of treatment’” notes TJN. At least it sounds like private banking clients will be getting the VIP service and treatment they are accustomed to!

There are more details which actually make this TIEA extremely favorable to the taxpayer, that I won’t go into here but can certainly cover in-depth in a future article in The Q Wealth Report. The bottom line is that this agreement – even more so than the US-Switzerland example – is more words and political posturing than anything else.

Brits with undeclared holdings in Liechtenstein probably need not be unduly worried, though it is clearly time to start looking into alternatives. One good alternative beckons in Panama for example – the Panama Foundation laws are almost a carbon copy of the famed Liechtenstein Anstalt or Foundation, and there is no TIEA with the UK.

But Brits at least have the option for completely and legally eliminating income taxes at a stroke. And those with undeclared holdings in Liechtenstein have until 2015 to do it. I’m talking, of course, about simply following their money and retiring overseas.

Contrast that to the USA where the IRS is dedicating more and more resources to pursuing thousands non-resident US citizens whom, it believes, are not filing their taxes properly. Americans are left with only one option to legally eliminate US taxes for ever – and that is renunciation of citizenship. It’s a big step, but certainly an option that Americans now seem to be taking up in droves – the brain drain I’ve often talked about. I’m seeing lots of American clients who at least want to establish residency somewhere offshore with a view to keeping their options open. Smart Americans are leaving and taking their money with them.

But it’s not nice to be stateless. So in order to renounce citizenship, or even just to keep their options open, US citizens need to be thinking about acquiring a second passport - whether it be via the slower and more secure route to a new citizenship through residence and naturalization, or the faster route of buying a second passport via economic citizenship programs.

Away from the USA and the UK, all around the world, tax havens targeted by the OECD and G20 summit in April amid a blaze of publicity seem to be getting back to business as normal. Belgium, hardly a low tax nation but another producer of fine chocolate – and one that perhaps surprisingly has substantial interests in managing non-resident bank accounts, just completed the hurdle of signing twelve TIEAs necessary to get off the blacklist. The last five countries they signed with? Singapore, the Seychelles, San Marino, the Isle of Man, and Monaco.

The cracks in the crackdown are beginning to show. A study recently published in Germany claims that “Tax is the price of civilization. Tax havens are the price of globalization.” Governments know that already and act accordingly. Just don’t expect them to admit it in public. And expect them to ramp up the use of scare tactics and bluffing to keep the populace under control.

Further reading: Writer Peter Macfarlane is a commentator, writer and consultant on offshore banking and asset protection matters. He offers a free personal e-mail consultation to all Q Wealth Members. If you are not yet a member, join today for instant access to Peter’s reports including the Practical Offshore Banking Guide, The Gold Report, and “Panama Foundations Demystified.”

by Peter Macfarlane, Joint Editor

Most continental Europeans like to take an extended vacation in August. But for those of us in the offshore banking and asset protection business, that just hasn’t been possible this year. I’ve also been relatively quiet in terms of my blogs recently, but it’s not because I’ve been on holiday. Quite the opposite. I’ve been beavering a way at full inboxes and stacks of paperwork from clients. In fact, business this August has been busier than most busy months in other years. It seems people are finally getting the message. Your assets are safer offshore! This in spite of a huge publicity campaign suggesting the opposite and backed by all the media resources the government could muster.

One of the main focuses has been the war of words this summer between Switzerland and the United States. But what practicaln implications does this have for those who already have Swiss bank accounts, or for those who are considering opening a Swiss account for the first time? That is what I will examine in this article.

Last week we heard the news from Swiss private banking giant UBS that they had finally reached agreement with the US IRS. Of course, nobody seriously expected a banking, watches and chocolate trade war – an agreement had to be made after appropriate posturing for a while on both sides. The terms of the agreement are still unclear – probably as part of a face-saving exercise for the IRS. My guess is they really didn’t get much actual data on account holders. Maybe a few thousand blatant tax evaders who had been stupid and lazy enough to evade taxes by holding assets in their personal names in undeclared accounts were turned over. If these people had been following our advice from even ten years ago they wouldn’t have had a problem!

However, the IRS got exactly what they set out to get in the first place. This case wasn’t really about information at all. It was about publicity.

Appropriately for those who speak with forked tongues, the IRS sent out a two-pronged warning message: first, to the US public and the world at large, that ‘Big Brother’ doesn’t approve of offshore banking. Thousands of American citizens with accounts at UBS suffered a lot of sleepless nights, and perhaps quite a few have decided to ‘turn themselves’ in anyway via the current tax amnesty arrangements even though their information never had been revealed and never would be. That is why it is so important, if you want to go offshore, to make sure you have access to the right information (shameless plug for our services here!) Those Americans who still believe and trust their own government – a fast shrinking minority – might be dissuaded from opening further offshore accounts.

The other prong of the IRS war of words was a message to Swiss banks, and to a lesser extent offshore banks in general. Banks across Switzerland and elsewhere have been busy closing the accounts of US citizens, based on ‘policy decisions.’ This again, of course, was part of the IRS’ plan all along. Other banks and governments have been taking note too: for example I’ve been hearing reports from Singapore and Hong Kong of banks closing offshore accounts belonging to Australian citizens, as the Australian government is showing of every sign of stepping up the attacks… probably emboldened by the success of the IRS publicity machine.

UBS was taught a lesson. An interesting article in this week’s Economist entitled Offshore Private Banking: Bourne to Survive, “UBS has been haemorrhaging funds, with an outflow of SFr30 billion ($28 billion) so far this year. But the country’s next four biggest listed banks, Credit Suisse among them, have had private-bank inflows of SFr31 billion.” A point of the Economist article is that people have abandoned the bank (UBS) but not the country or the concept.

Another of the Economist’s points is that most people are not actually in Swiss banks for tax reasons. I’ve long written that tax stopped being the major factor in driving people offshore years ago. Sure, people don’t like to hand over half of the fruits of their labour to the state. I can understand that and I’m sure you can too. But in the bigger picture, it is the distrust of big government that is driving people to protect their wealth offshore.

Tax, just like say electricity or salaries, is an expense people will pay if the environment for doing business is right. It would be a stupid person who would lose 100% of something just to save 50% of it. But what governments don’t get is that they have to make the whole business environment attractive. And the way the government should do this? Just keep their noses out of people’s private business and lives!

As more and more business can be done from anywhere on the planet, why would people stay in a hostile business environment? It’s not just money that economies like the USA, UK and Australia are haemorrhaging at the moment. It’s the smart people like you and me who follow the money.

These days as the Economist says, banking clients are  “mainly in Switzerland for its political stability and well-run banks.” (Since early 2007, 135 banks have “imploded” in the USA, but not one in Switzerland) Nothing to do with taxes. They are trying to escape an unhealthy business environment with factors like inflation, devaluation, bank collapses, civil asset forfeitures and the like.

Why oh why then, and this pains me… would people move their assets into the four largest banks? I’m on record as saying Credit Suisse will likely be the next target. It may be this year, or next year, I don’t know. But Credit Suisse already agreed, for example, to some information exchange with the French government. If you are a new reader here, I invite you to explore this blog and the related articles and you’ll find some of my advice on alternatives to UBS for Swiss private banking. For example my articles on the Best and Safest Offshore Banks and Countries and Alternatives to Swiss Banks for Wealth Management.

The bottom line, however, is that there are better alternatives than big Swiss banks like UBS and Credit Suisse for your offshore accounts – whether you are looking for an active business account, an online trading account, or a more hands-off style traditional Swiss wealth management account. If you would like to know more, that is what we are here for. Our membership costs just $87 per year and entitles you to immediate access to a number of informative downloads – for example our recently updated Practical Offshore Banking Guide. If you are not yet a member, go ahead and sign up right now. Or if you are not yet ready to make that commitment,  sign up for our Free Five Part Course on Offshore Banking and Asset Protection first of all to get a feel for our material…

Anyway… I’ve gone on long enough, but for sure we will be hearing more about this topic. A lot more! I’m just on the way over to Panama City, Panama now and will shortly be reporting more from there on some interesting developments in the way the Panamanian government and banking system is handling the heavy-handed OECD and G20 threats. If you would like to receive this update on the offshore scene in Panama, sign up for our special Free Panama Offshore Report and I’ll be sure to get it to you. There’s no charge – all you need to give us is your e-mail address!