Editor’s note: the following is an extract from this weekend’s Q Bytes newsletter. If you would like a free, no-obligation, no-spam subscription to Q Bytes, please click here.

This morning I got up bright and early to write Q Bytes, only to be hit by computer problems and spend the next two hours trying in vain to fix a video driver issue. Of course I have my secure laptop – mainly used for e-mail – as backup, but when writing I like to use my big monitor, the one on which I cannot now fix the resolution.

This problem reinforced the extent to which we rely on technology in our day-to-day lives. The vulnerability. The world we live in is all interconnected, at many levels… We all know that technology is not foolproof. And even more ominously, we all know that technology includes an on-off switch that somebody controls.

For example: What if the networks used for ATM machines and credit/debit card payments went down, even for a day or two? Can you imagine the panic? I think the chances of this actually happening sometime in the not too distant future are pretty high, all things considered. It may be due to technical problems, or a cyber attack… or it may simply be a conscious decision by those with access to the on-off button.

I remember a few years ago when Northern Rock Bank collapsed in the UK, millions of pounds were transferred out via internet banking during the night by desperate account holders until the system ‘mysteriously collapsed.’ This was one bank, very small in the global scheme of things. I wonder how that would pan out on a bigger scale… like a run on the dollar, if China decided to stop supporting Bernanke’s printing press?

Financial markets are particularly at risk. After the events of September 11, 2001, financial markets were shut down for several days. If a catastrophe of similar proportions, natural or man made, were to hit the USA, it’s a safe bet that the same thing would happen again – a so-called ‘bank holiday.’  Even a purely electronic catastrophe could hit the financial markets. Brokerage accounts would of course be blocked. Where would that leave all those people who have bought gold through the stock markets as a ‘safe haven’?

And for those who worry about how to avoid gold confiscation, similar to what happened in the 1930s… if you were the government, would it be easier to go round door-to-door hunting down physical gold for confiscation… or would you just switch off the stock exchange and seize something like the SPDR GLD ETF? There’s $58 billion dollars right there in just one company…

A seizure of financial assets would be politically unpopular. An “emergency equities sales tax,” however, presented as a windfall tax on evil speculators who have brought the country to its knees, might be more palatable for the masses. Forcing people to put their retirement funds into government bonds or state pension plans (empty promises) for ‘security reasons’ would be seen as protection for the masses. We’ve already seen this exact technique used in France, Hungary and Argentina.

Going back to the technology, our systems are so delicate these days because they rely on the internet. Even a decade ago this was not the case. Now, everything from your TV and home heating system, to the checkout at your local store could stop functioning if there was no internet. I consider all this interconnection a huge risk. The world is getting more fragile all the time. We are living in strange times where anything could happen.

You might think I am very pessimistic. But that’s not the case. I just like to analyze risks, do my best to minimize them, then carry on with enjoying the good things in life. That is where we at Q Wealth differ from conspiracy theorists, survivalists or ‘preppers.’

Preppers might want to build a backup internet system using ham radio data transmissions. They might fill up their basements with canned and dried foods. That’s a perfectly valid option, but I would be more inclined to make sure if there was a major catastrophe, I could be sure of getting quickly to a second home in another country with a well-stocked wine cellar, from where I could safely manage my investments in farmland and physical precious metals that don’t depend on stock markets or internet.

Knowing that I have my family taken care of, enough assets protected in the best offshore banks, the right residencies and second citizenships in place, rather than leaving any of this to chance or conventional wisdom, allows me to sleep soundly at night.

Beyond that, and more excitingly, we are investors and speculators at heart – we know how to manage risk. That is what we do best. And all this uncertainty going on in the world is actually a  fantastic opportunity – probably a once-in-lifetime chance to generate real, long term wealth. As long as you understand the risks, you can not only prepare for them, but turn things around to your financial benefit.

This is our philosophy at Q Wealth. Security – with an investing and financial focus. If you’d like to hear more, the first thing to do is become a full member. The second thing you should do, once you are a member, is interact with our office. We have some great people who have access to little-known practical solutions to protect and grow your wealth in a secure offshore environment. A lot of it’s written up, but even more is in our heads, and everyone at Q Wealth can point you in the right directions.

HONG KONG EVENT EARLY BIRD SIGN-UP

This leads me right in to our next point, the Q Wealth Symposium, taking place in Hong Kong this October. We had a couple of very successful conference calls on this topic this past week, and many astute readers have already signed up, taking advantage of our early bird bonus.

However, if you missed the calls for any reason, don’t worry, you still have a chance…

You should plan to be in Hong Kong for three days: October 21 and 22 will be ‘classroom’ style presentations and discussions, whereas on the 23rd the presenters and others will be available for informal meetings. For example, we will have bank representatives from our best offshore banks on the spot, so if you bring the right documents with you you’ll be able to get your offshore bank account number then and there. This will be your opportunity to open a multi currency account or a non-dollar-denominated private bank account. You will be able to meet international private bankers at the event.

We’ll be covering topics like banking and secure investing, gold and silver purchase and storage (including gold storage in the Singapore free zone), and second residencies and passports, in a lot of detail. You’ll have a chance to meet the presenters as well as other like-minded individuals to exchange ideas. You can expect to leave this event having joined the dots… in other words, with a detailed road-map of where you want to get to and the specific practical steps you need to take to get there.

If you’re looking for information on how to protect assets in your retirement nest-egg, pass on value using trusts and foundations to the next generation, start a new international business, or take advantage of offshore investment opportunities in the new economy, this event is for you.

There’s a good reason why we have chosen to hold this event in Hong Kong, the obvious platform for investing in China. You’ll learn about how to buy or invest in Chinese currency, yuan renminbi, for example. But it’s not a Hong Kong centric event. We’ll also be talking about practical banking, investing and residence opportunities in places like Switzerland and Singapore, Panama and Latin America.

Until the end of May we are offering a substantial early bird discount, and I would encourage you to sign up now as places are limited. If you have any specific questions, please email Fredrick on events@qwealthreport.com – or to sign up go to our Events Page.

The ‘underwear bomber’ incident on Christmas Day on the NWA flight landing in Detroit should serve as a wake-up call for us all.  All the security measures put in place by governments supposedly to protect us against terrorists are not working. The government’s knee-jerk response is to increase security checks. Both these facts are of serious concern to our security, privacy and freedom. Allow us to explain…

Here at Q Wealth our intention is to bring you the common sense analysis behind the headlines. We base this analysis on our extensive experience and our good friends in both the ‘civil liberties’ and ‘intelligence’ communities. Bearing in mind that few facts of the case are known as yet and we are relying on TV reports for our information, here is our initial analysis – first of the actual event, then of the consequences. Warning: It is scary stuff.

First the good news: no-one was badly hurt. The underwear bomber burned his butt. Initial reports suggest he did not have a bomb, but rather some powder sewn into his underwear that he tried to inject with a liquid to cause a fire. Fortunately aircraft interiors are designed to be flame resistant, cabin crew are suitably trained and equipped with fire extinguishers, and one brave passenger physically restrained the terrorist. These three basic, sensible precautions saved the passengers and crew on that flight and the people on the ground below.

Whatever one may think of multi-billion dollar global spying operations and intrusive airport security measures, if they worked it would at least be a strong argument in favor of them. But this incident shows they do not work. The suspect’s father, a prominent banker, had taken the extraordinary step of reporting his suspicions about his son to the US embassy. The UK had refused to renew the suspect’s student visa because of his apparent terrorist connections. Yet here he was in possession of a valid US visa, travelling in his own name, allowed on board a flight to the US.

Airport security in Amsterdam, where the suspect boarded, is as ‘good’ as anywhere else. This writer passed through one of the new full body scanners there nearly a year ago. These are the super-duper new machines that are due to be rolled out over the USA next year. On my particular flight, the business class passengers were being checked by the new machine, while economy class passengers were being checked using the older method.

Nobody informed us what the machine was so I guess the majority of business class passengers had no idea they were having these photos taken. But a properly trained terrorist, especially one with a mechanic engineering degree like this one, who had something sewn into his underwear would surely have recognized the machine and snuck into the other line.

We are civil libertarians but we certainly recognize the need for airport security. The normal airport security that was in place in Europe (but not the US) in 2001 did not particularly bother passengers. It involved a quick scan of the hand-luggage and passing through a metal detector, as well as routine scanning of all checked baggage – measures which would very likely have prevented the 9/11 hijackers. I can also see the logic behind separating laptops at the scanner.

But none of the rules introduced since (restrictions on liquid, taking shoes off etc) make any sense. Does anyone think for a moment that a terrorist is incapable of forging a prescription from a Nigerian doctor that would allow him to take a syringe and more liquid that normal on board a plane? Depriving us of blankets and pillows or restricting hand luggage is just about inconveniencing passengers for absolutely zero security benefit.

Frankly, there is nothing more we can do in terms of physical airport security. It is impossible to introduce a fool-proof system. If a person is smart and determined enough they will be able to carry dangerous items past poorly-paid security guards – people who are taught to function like robots by reacting to whatever the latest threat is and, especially in the USA, to using scare tactics to bully passengers. And while the west wages war in other parts of the world, there will always be those smart and determined people.

Then another personal gripe of mine. More pressure on the use of cash payments for airline tickets. Last night US media were making a big deal of the fact that this guy paid cash for his ticket in Nigeria. All the ‘experts’ claim this is a warning sign of potential terrorist activity. I hope the people who are really in charge, rather than the so-called experts on TV, aren’t so stupid. I took the liberty of checking out the State Department’s website and here is what they say about use of credit cards in Nigeria:

The Nigerian currency, the naira, is non-convertible.  U.S. dollars are widely accepted.  Nigeria is a cash economy, and it is usually necessary to carry sufficient currency to cover the expenses of a planned visit, which makes travelers an attractive target for criminals.  Credit cards are rarely accepted beyond a few upscale hotels.  Due to credit card fraud in Nigeria and by cohorts in the United States, credit card use should be considered carefully.  While Citibank cashes some traveler’s checks, most other banks do not.  American Express does not have offices in Nigeria; however, Thomas Cook does.  Inter-bank transfers are often difficult to accomplish, though money transfer services such as Western Union are available.

So any airline flying from Nigeria had better accept cash payments……

But this is not an article about airport security. Travelling is a hassle these days but lack of pillows is a minor annoyance in the greater scheme of things.

Think for a moment about what would have happened if this attack had succeeded. The indirect consequences could be much worse than the direct ones. Think back to September 11th, 2001. Only this time imagine it worse. A lockdown of the USA. Borders could be sealed. Banks could be closed (Google the ‘bank holiday’ conspiracy theories…) and ATMs switched off. Assets could be appropriated by the government, as is common in times of war. Telecommunications and the internet could stop working. Martial law could be imposed. Events could easily get out of hand – causing blood in the streets, figuratively if not literally.

Similar things could easily happen elsewhere too. In the UK, for example, it is well known that the military have an emergency plan to seal off the whole of Greater London.

As smart individuals we need to make sure we are properly prepared for such catastrophes. Unfortunately, I think the probability of a successful major terrorist attack within the next few years is high, and it is more than likely to target the financial system. This would in many ways be awfully convenient for the powers that be, too – since then they would have somebody else to blame for a total collapse of the financial system that is happening already (see the related post links below to read about the decline in the value of the US dollar or ‘dollar devaluation‘)

I certainly hope I am wrong, and I am by no means saying that all the above things are going to happen. But I consider it would be smart to be prepared. It’s clearly better to have contingency plans in place and never have to use them, than the other way around.

So let’s treat this incident as a wake up call. We all get lazy. We all get stuck in our routines as soon as we feel a little bit comfortable and secure. But it should be a serious New Year’s resolution to put into place strong strategies to protect not just your assets but yourself. Don’t put it off. Do it now before it’s too late!

What do I mean? Different people have different necessities. But here are some of the basics:

• Physical gold and silver: The majority should be stored outside your home country, but you need some at home. Silver coins are better to barter for things like food. Both silver and gold are great investments. But if trading on the markets is suspended then all your ETFs, mining stocks, Perth Mint Certificates and the like will be worthless, at least in the short term. You need a proportion of your portfolio in physical metals. More on Buying Physical Gold Bullion Offshore here.

• Second residencies and passports: Again, it’s all about diversifying risk. Identifying yourself and your family as citizens of a neutral country may just come in very handy one day. Mobility is essential for your security. In the meantime, having legal residence (the papers) and/or a bolt hole (physical property) in a secure jurisdiction like a tax haven, well away from potential problems, is also reassuring. Rather than being forced to flee to an unknown place, you can just step comfortably in to a new life you have waiting for you. And the legal residence can lead to a second passport by naturalization after a few short years. More on Second Passports and Residencies here.

• Offshore Banking: Something as simple as opening a multi currency bank account outside your home jurisdiction can reduce and spread risk. Hold funds in various currencies and financial instruments. Any prudent investor should have international and foreign currency holdings and a multi currency account is a good starting point. For greater security and personal privacy consider the use of a Panama Foundation or Corporation. More on Offshore Banking matters here.

• Alternative Incomes: What would you do if you had to abandon your business tomorrow and leave the country? You should have not just assets in place overseas, but also a secure income stream from some sort of business you can run internationally. More on Offshore Wealth Creation here.

• Understand and Use Privacy Technology: Secure your internet communications. And, though this is certainly more difficult, think about what you would do if you didn’t have access to the internet. I don’t believe the whole internet will collapse, but parts of it certainly could. More on Privacy Technology in our new Secure Computing report, available in the members area.

There are lots more contingency plans you might need to put in place, depending on your family, your business, and your personal situation. For this reason we offer a free e-mail consultation to all paid-up Q Wealth members (obviously in our own time, it can take a few weeks for your reply) and we encourage you to attend our events where such contingency plans are discussed.

The first and most important step, if you like this article and haven’t already done so, is to sign up for our free Q Bytes newsletter to benefit from free weekly tips on major themes like offshore banking, asset protection, personal security, precious metals, and offshore wealth creation.