When it comes to protecting your assets and wealth against devaluation, we’ve been saying for a long time that no major fiat currency is safe. The only long term solution is gold bullion.

Just about ten days ago I wrote in What They Don’t Want You to Know About the Euro Crisis that the real crisis is with the US dollar. Things, I wrote, don’t get hyped this much by accident. The powers that be are keen for the dollar, the euro, and the yen to go down in unison. I suggest you read that article first if you haven’t already.

As I expected, the Euro bounced back slightly once the furor over ‘PIGS’ had passed, rather than collapsing further as some expected. In purchasing power parity the dollar and the euro are about one to one: my general rule is that something that costs a dollar in the Americas costs a Euro in Europe. So there is no doubt the Euro is overvalued in that sense. But the dollar is equally overvalued.

What’s interesting now, is that – exactly on cue – the media are hyping down the Yen. Now, according to the BBC, Japan’s new Prime Minister has announced that the country is at risk of collapse.

What can we learn from all this from an asset protection standpoint?

We’ve never recommended forex speculation. Most people I know who try their hand at forex trading lose money. By forex trading I mean highly geared speculation on ‘pips’ that move by the second.

On the other hand, having easy access to foreign currency exposure is not only less risky, but is completely prudent. A multi-currency bank account allows you to do this.

For those not familiar with multi currency accounts, this is basically one bank account, with one bank account number, in which you can hold many currencies. When you log in via your internet banking to check your balance, you will see not just one balance, but several: you might have for example a US dollar balance, a euro balance, a yen balance and a Singapore dollar balance.

By default, incoming wires or cheques you deposit are retained in their original currency. If you want to change currencies, a few click of the mouse are all that is needed.

Where can you open a multi currency bank account? This is not so easy. In some countries, notably the USA, it’s hard to open a foreign currency account in the first place. They are simply not set up for customers who don’t want to be in dollars.

One notable exception in the US is EverBank. I have previously written a review of EverBank – basically these guys are good at what they do, but our focus here at Q Wealth is specifically offshore investing. As EverBank tend not to accept as account holders international clients who do not have US social security numbers, nor foreign corporations, they are not really on our radar. We also think to achieve international diversification, an account at a foreign bank is better. I just mention them here because some US readers may be interested, especially if the amounts are smaller and they don’t want the hassles involved with Foreign Bank Account Reporting.

In other countries, like UK and Australia, it’s quite easy to open a foreign currency account, but each currency requires a separate account. Sure you can place buy and sell orders but there are fees, minimum balances to consider etc. In other words, you don’t have the simplicity and freedom of one account that can hold numerous currencies.

The same problem exists in offshore and private banking centers like Panama. In Panamanian banks, if you want to switch from say Euros to Yen, you have to give 72 hours notice! And the range of currencies is typically limited to 4 or 5.

That said, we deal with offshore banks in the best offshore banking jurisdictions in Europe, as well as Singapore, that offer much more attractive multi-currency account facilities. Switching currencies is instant, there are no requirements for minimum balance, and best of all you can access a range of more than thirty (30) currencies within one account, from the dollar and euro through to the yuan and the real.

If you are interested in opening such an account, remember that Q Wealth readers are entitled to a free referral to one of our recommended best private banks. Full details, including the application form for this service, are included in our Best Offshore Banking Guide.

by Peter Macfarlane for The Q Wealth Report

Anyone looking for currency diversification strategies should consider a multi-currency bank account. Unfortunately this banking product is virtually unknown in North America and the UK, although it is commonplace in some European countries. I say ‘unfortunately’, because this is one of the most simple and convenient tools for anybody looking to diversify out of the dollar. In this article, I’ll explain more about multi-currency accounts and how you can open one.

A multi-currency account is simply a bank account, with a single account number, in which you can hold balances in various different currencies. For example, you log in through internet banking and immediately you see a summary screen showing you have so many US dollars, so many Euros, so many Canadian dollars, so many British pounds etc. Many banks allow you to hold a wide range of currencies, including more exotic currencies. Some European banks now even allow you to hold ounces or grams of gold in your account alongside national currencies.

Advantages to this are numerous:

• For a start, it is clearly a very convenient tool for anyone who is serious about diversifying currency risk. Instead of having lots of different account numbers and logins, you keep everything on one convenient screen. At any time you can easily exchange your balance in one currency (or part of it) for another currency.
• You can wire money in and out in different currencies, to and from anywhere in the world, without the need for currency conversions.  This type of account is therefore ideal if you frequently send and receive money internationally, perhaps dividend payments, or transfers related to an overseas property or family living abroad.
• Banks normally permit you to go overdrawn in one particular currency, provided your overall ‘global’ balance is in the black.
• You can have credit cards and checks linked to your main multi-currency account. Checks can be drawn in any currency. For credit cards, you normally have to choose one particular currency balance that will be debited.

Multi-currency accounts are a good, conservative way to hedge against currency risks or make profits with fluctuations. Unlike ‘forex trading’ your account is not leveraged, so there is not so much potential profit but there is also less potential for loss. This is an easy version of forex trading – for people who don’t want to have their eye on currency rates every minute or even every day.

A multi-currency bank account also beats currency ETFs hands down. With currency ETFs you buy and sell back to your base currency, paying a brokerage fee each time. With multi-currency accounts you hold the actual currency on bank deposit, rather than stock in an ETF.

Anyone who is serious about diversifying outside the dollar needs a foreign bank account –and for many people a multi-currency bank account is the logical choice. But what about the IRS’ Foreign Bank Account Reporting requirements? Simply by opening a personal account like this, you will not affect your tax situation in any way, neither positive nor negative. US persons will be liable to declare foreign bank accounts to the IRS.

However, as outlined above, there are many extra benefits besides tax benefits. One of the greatest advantages, besides the currency diversification out of the dollar, is privacy. Privacy is a basic human right, which is unfortunately disappearing fast when it comes to financial services, where domestic investments are basically an open book these days. Although you might be obliged to report your offshore multi-currency account to the IRS, private parties like credit rating agencies or lawyers who might want to sue you certainly won’t know anything about a private foreign bank account of this nature.

The multi-currency account was not designed as a sophisticated financial instrument. Rather it’s an accident of history, something that developed in smaller European countries like Switzerland, Luxembourg and Andorra where individuals commonly needed bank checking accounts in various currencies. This was especially true in the old days before the euro when Europeans did business in many different national currencies. Not coincidentally, these countries now offer the best international financial services as well as good banking privacy.

However, in modern private banking terms, such an account can provide a basic transactional banking relationship with a foreign bank, onto which you can tag many much more sophisticated wealth management services: for example, foreign currency loans for investing in bond holdings or stock portfolios. Most banks offer such services.

Needless to say, corporations, trusts, foundations and the like can also open multi-currency accounts and in such cases there is an even greater privacy benefit, and in some cases, depending on individual circumstances, tax reporting requirements may also be legally sidestepped.

How, then, can you open a multi-currency account?

Quite a number of banks in some European countries offer multi-currency services by default, as soon as you open account. Unfortunately, especially for US citizens, it has become very difficult to find a foreign bank that will open an account.

It is undoubtedly best if you can travel to meet the bank and open the account. Personal meetings and referrals from known and trusted parties still open a lot of doors that initial research might suggest are closed! It is, however, possible even today to open a multi-currency bank account through the mail.

If you would like further information, including links to specific banks that offer this service, you might like to check out my Practical Offshore Banking Guide, available free to Q Wealth members (just one of many asset protection, offshore banking and wealth creation related benefits). Another major advantage of Q Wealth membership is a free e-mail consultation on your personal situation, in which we can also make referrals to banks where we have working relationships as trusted business introducers.

You can either go sign up now, or if you prefer, sign up first absolutely free and without obligation to receive our five part online course, Secrets of the Super Rich.