Once you’ve secured your assets offshore in a protected structure, what next? How do you put them to work for you? How do you really ‘create wealth offshore’?

Certainly there’s no point in keeping much cash in an offshore bank account. Interest rates are at record lows, and offshore banks typically pay lower interest rates even than what you are used to offshore. Precious metals like gold and silver are an essential part of any portfolio… but you don’t want to keep all your assets in those, either. Stock markets are good for speculation with a small amount of capital, but frankly they are so manipulated that you as a small player will depend more on luck than judgement.

That leaves one asset class that we haven’t covered for a while: alternative offshore investments, like private offshore hedge funds. I’m moved to write about these because in the last week I’ve come across a couple of interesting opportunities from people I trust.

A WARNING AND CAVEAT FIRST
Those last three words are very important: ‘people I trust.’ Offshore investments are generally subject to little or no regulation. They are intended for sophisticated investors. Unfortunately there are some people out there who are just bad investment managers, and worse are outright offshore investment scams, so you need to go with people you trust.

The good thing, however, is that with alternative investments you can have a much greater involvement with management. You can typically get to interact and meet with managers. One of the opportunities I heard about this week even includes the fringe benefit of being able to use properties owned by the fund in South America.

So it’s all about finding people you trust. The very best way to do this is to get on a plane and do your due diligence in person, seeking second and third opinions along the way. Fortunately, there are people who can point you in the right direction by providing you with the benefits of their research as you start off. In this week’s free Q Bytes newsletter that has just gone out to subscribers, I mention three such people. I won’t name them here because I want to respect their privacy, but if you don’t want to miss out in future, be sure to sign up for Q Bytes.
FOR SOPHISTICATED INVESTORS ONLY

When investing in this kind of opportunity, who you know is everything. Funds like this don’t accept investments from the public, and even less from US residents unless they can certify themselves as sophisticated investors. Fortunately, such limitations don’t apply to participations from entities like Panama offshore corporations, Panama Foundations, or offshore LLCs, though entry levels are typically six figures.

I’m keen on Latin America not least because of resource investment opportunities. And earlier this year a number of Q Wealth readers got involved via Linda Dixon, our long-time  friend from Canada who moved into the gold and silver business in Peru and few years ago, with an alternative investment in a silver mine. These investments are coming to fruition now with huge returns. I talked to Linda a couple of weeks ago and she is preparing some interesting articles and videos for us, that will be available shortly in the Members Area.

If you don’t yet have access to our Members Area, you can see a summary of benefits (in essence, a list of all the info and tools you are missing out on) right here
Another trusted friend who has made a detailed study of alternative investments in frontier markets lately founded Alternative Latin Investor. Nate has been based in Buenos Aires for quite some time, and is just back from a four-month stint in Africa seeking to expand coverage of frontier markets over there. I’m trying to persuade him to join us on our residence, citizenship and investment trip to Paraguay this coming January.

Nate is putting on a very interesting webinar with some big-name experts on alternative investments in Latin America. It is scheduled for November 10th and requires advance registration – with an early bird discount before November 2nd.
NEW PETER MACFARLANE INFO SITE
Finally, just a notification that the new Peter Macfarlane & Associates site is finished. It’s nothing flashy or exciting, but explains a little more about why my consulting firm does in terms of corporate structuring, precious metals and second citizenships. Feel free to check it out at http://www.petermacfarlane.info

Yet another CD supposedly containing stolen Swiss bank data is being hawked around state governments in Germany…  prompting a German politician to comment that stealing private financial data should not become a ‘popular sport.’

Meanwhile UBS is investing heavily in new ad campaigns targeting new markets, suggesting that it has ‘drawn a line’ under the tax evasion scandal that dominated has dominated the last couple of years and is ready to move on to new (non-US) markets,

In fact, more and more Swiss and other European private banks are looking toward the Asian wealth management market – with Singapore being the preferred launchpad into the coveted mainland China growth area. Some people in the west seem to think that all Chinese live in poverty on subsistence wages – while many do, out of those billion people there are many thousands of millionaires who have profited from all the money flowing into China from the west. These individuals are keen to keep their money in safe places out of the reach of the Chinese government. This target market is the new gold rush for Swiss and other private offshore banks…

And where better to base operations than Singapore? The Singapore government is building on its now firmly established base as an international financial centre. New legislation, for example, allows Singapore banks to move into associated businesses previously closed to them, like company formation, and trust and corporate administration. (Tip: Visit our Singapore jurisdiction info page)

We’ve long said that the vast majority people going offshore these days do so for completely legitimate reasons and in compliance with their local tax legislation. People who open offshore bank accounts these days are probably more interested in asset protection and capital preservation than anything to do with tax – and if they are looking for ways to legally reduce tax, they will do so through structured and legal offshore tax planning tools like corporations, offshore LLCs, foundations and annuities.

Perhaps not surprisingly, however, people are increasingly leary of Switzerland. Privacy is still an important part of international expatriation planning, and the general perception is that privacy is under threat in Switzerland. It’s not surprising therefore that there’s increasing interest from North America in private banking in Singapore. Our article How to Open an Offshore Bank Account in Singapore has been consistently the most popular article on this blog for months.

While European account holders are not the target market of Singapore banks, their accounts are generally welcome, provided they take the time to jump on a plane and go and open the account in person.  What about American account holders? Are American account holders welcome in Singapore banks? The same generally applies, but the selection of banks willing to work with Americans is smaller, and the entry level in terms of minimum deposits is generally higher.

In some cases it is possible to open accounts by mail, but this is very difficult in Singapore. Of more interest, however, is the possibility to open an account via a representative office. Representative offices are basically foreign sales offices, often staffed by private bankers who are also involved in the day-to-day management of accounts for high net worth individuals. For example, a Swiss-owned Singapore bank might have a repesentative office in Switzerland that you could deal with on a day-to-day basis. This makes the account opening process easier (not so far to travel) and also alleviates problems with the huge time zone difference between North America and Singapore.

If you would like to know more about opening a private offshore bank account, we recommend consulting our Practical Offshore Banking Guide, available free to Q Wealth Members. To keep up to date on matters surrounding private banking, offshore accounts and the like – in Switzerland, Singapore and elsewhere – you can subscribe to our free weekly newsletter Q Bytes or add this blog to your RSS feed.

We respect your privacy and will not reveal your e-mail address to third parties.

One of our familiar themes here at Q Wealth is the decline and devaluation of the dollar – and how you can not just protect yourself against it, but actually turn it to your profit!

Devaluation was brought one step further last week by the latest round of currency controls on the US dollar introduced in the new HIRE Act.

Some people have written that these restrictions do not in fact amount to back door currency controls. We agree to an extent – they are not traditional exchange controls like we still see in some countries like South Africa or Brazil. But they are very much currency controls nonetheless. They amount to just one part of the stealth devaluation we have frequently talked about (see related links below).

Recently, legendary guru Marc Faber wrote that printing money represents a silent way for governments to default on their debt. When a government openly defaults on its debt, says Farber, the workout process is reasonably equitable.  But if a government devalues silently by printing, the burden of the default isn’t shared equally. Those who hold more of the currency being devalued, in this case US dollars, are disproportionately hit. Inevitably those hit hardest are not big sophisticated international investors, who have hedged their risk, but small investors who have simply never thought of hedging against currency risk.  That means, for example, average Americans who have savings in their retirement accounts.

Very few Americans have had the foresight to move their IRA assets out of dollars. Yet it’s something perfectly legal and quite easy to do… at the moment! The restrictions in the HIRE Act will make this much more difficult because they simply make it very difficult to transfer money abroad.

Yes, there are exemptions. The HIRE Act does not in theory impose any tax on an American who transfers his or her own money, to a foreign account in his or her name.

But, there is a big but, banks around the world will be running scared of the regulations. First of all, foreign banks won’t want the US account holders in the first place. Secondly, US banks will be desperately trying to cover their liability by checking the exact purpose of the payment, to make sure it doesn’t come within the scope of the legislation. The burden of proof will naturally pass to the account holder who is trying to transfer money, to demonstrate that the transaction is not subject to the new withholding tax. If the sending bank in the USA has any doubt at all about the purpose of the transaction, they will be forced to deduct 30% tax.

Net result? It is going to be darned difficult for anyone to transfer money out of the USA. If that isn’t a form of currency control, then I don’t know what is!

Faber is predicting that US Treasuries will collapse, sending yields up to a range of 10 percent  to 20 percent during the next five to 10 years, as inflation and supply explode.

Here at Q Wealth our intention is to keep you informed and provide actionable things you can do to protect your savings and your future. Right now, you can still transfer assets legally and openly out of the USA into offshore structures, offshore investments, and offshore banks where your assets are better protected – but for how much longer? I would give it until the end of this year, if that.

Right now, US citizens can legally acquire a second citizenship and passport, and legally avoid taxation on their worldwide income. But it is getting harder.

Where the US leads, the UK, the euro zone and Australia will follow. Subtle, hidden currency controls like this will become the norm in the developed world, particularly the OECD countries. We will continue to expose them while we can. And we will continue to provide real solutions, especially to our paying members. If you are not on our mailing list for the free weekly Q Bytes newsletter, and this matter concerns you, then sign up today for Q Bytes! And if you would like to know what you are missing if you are not a paid-up member of Q Wealth, please see Why Join Q Wealth?