Are we on the verge of another global food crisis? asks Peter Macfarlane. And if so, how can we protect ourselves and profit from this crisis? This could have a huge impact on your offshore investments and assets, and – more importantly still – your safety and security. How to protect your assets and yourself? Read on for more…

Editor’s note: If you are not yet a subscriber to our free asst protection and offshore investing newsletter, Q Bytes, we thought you might be interested in the following article by Peter Macfarlane from last weekend’s edition. Sign up now to Q Bytes to receive Peter’s insight in your e-mail each weekend.

Are we on the verge of another global food crisis? Some people think so. This could have a huge impact on your investments, and – more importantly still – your safety and security.  There are even ways to combine secure investments in this area with second passport opportunities. That’s why we’ve decided to focus this weekend’s Q Bytes on this important theme.

Last month was marked by large-scale anti-government protests in Tunisia and Egypt. It’s fair to say that the Tunisian revolt inspired the Egyptian one. The Tunisian riots were sparked by a simple dispute about the right to sell food. Last year we also saw food riots in other African countries, such as Algeria, Mauritania and Mozambique.

Wheat prices have surged 50% since early June, the biggest jump in 30 years, according to HSBC. Droughts in Russia, Ukraine and Kazakhstan, which together account for 26% of world wheat exports, are leading to fears of tight supply and super-charging prices.

Today’s scares are just the latest sign of what could be one of the biggest challenges facing the global economy over the next 20 years – the fight to feed the world. Investors and speculators should definitely be paying close attention.

Food, of course, isn’t like other commodities traded on world markets. No country wants to run out of food or watch sky-high prices dump people into poverty and malnourishment. So both exporting and importing countries often take extreme, knee-jerk populist measures if they think a shortage is coming or prices will keep rising. These measures include things like hoarding and export restrictions. For example, Russia slapped a ban on wheat exports from mid-August last year, while Argentina has severely restricted beef and soybean exports.

Severe structural problems in the world of agriculture have made the balance between supply and demand very precarious. On the production side, there is a severe lack of investment in the rural infrastructure and agricultural research that we need to keep yields increasing. On the consumption side, all those newly wealthy Chinese, Indians and Brazilians are now buying more food than previously… more meat, for example, which means more grain gets turned into livestock feed instead of people-feed. Also don’t forget to add the new diamond for bio-fuels into the equation.

According to the OECD and the UN’s Food and Agricultural Organization (FAO), world population is expected to grow by 2.3 billion people between 2009 and 2050 with nearly all this growth from developing countries. They estimate that feeding a population of 9 billion will require a 70% increase in global food production by 2050.

World Bank Chief Robert Zoellick writing in the Financial Times, in an article that already caused controversy by suggesting that major economies look at a partial return to the gold standard, warned that “with food accounting for a large and volatile share of tight family budgets in the poorest countries, rising prices are re-emerging as a threat to global growth and social stability.”

Another problem many people have not taken into consideration is the falling value of the dollar.  Ben Bernanke’s quantitative easing will continue to cause a greater demand for dollar-denominated commodities, from people like us who are seeking to exchange fiat money for tangible assets.

Where are we going with all this? It’s well known that the Chinese are buying up large swathes of Africa, mainly for natural resources, while Latin America is seen as the new breadbasket – or perhaps the meat producer. Argentina’s government is certified nuts as far as we are concerned, so even wealthy Argentines are investing their capital in production in neighboring countries, particularly Uruguay and Paraguay. Brazil, meanwhile, is speeding ahead in agricultural production.

As some of you may know I recently attended a closed doors briefing in Paraguay with a small group of Q Wealth readers, during which we heard presentations from agricultural and forestry experts (Paraguay’s former consul in Hamburg to be precise, who has now returned to his home country and is heavily involved in forestry.)

I’ve invested quite a substantial part of the assets of my personal investment vehicle in Latin America’s southern cone area recently (including Paraguay and Uruguay) as I believe this area definitely represents future growth opportunities. Another very positive thing about this region is that it’s eminently liveable. That is, you can easily enjoy a safe, clean and reasonably priced first world lifestyle in the area. Africa has lots of potential too for the more adventurous amongst us, but I’m not about to move my family there. However, my family have spent time in Uruguay and got on great.

Last but not least, both Uruguay and Paraguay are quite liberal when it comes to naturalizations – that is, second passports.

At Q Wealth we are not a share-tipping newsletter, but there are certain plays on agriculture in the southern cone region you can buy on international markets. Do your research and due diligence. More generally, you can also expect further significant gains on stock market investments in the ag sector.

Most important, however, is that you understand the big picture, that governments with their short term mentalities are not telling you. This is a region you should watch. With the largest fresh water reserves in the world, plenty of land that is ideal for food production, and relatively hands-off governments, it is probably the world’s best hope to solve the future food problems, and your best hope if you are looking for a safe place to hide out where you’ll never want for food or water.

More to follow in Q Wealth Report.

I continue to get lots of mail about the new USA-Panama Tax Information Exchange Treaty that was actually signed last week and was the subject of my earlier blog posting. This has certainly stirred up a hornets ne’st in terms of Panamanian offshore banks, law firms and corporate service providers.

One thing that is rather irritating as a writer is when people say “such and such a person doesn’t agree with you, here’s the link” … when in fact they don’t even know what I think, and the person writing the other link probably also has some hidden agenda like collecting taxes, or like selling consulting services to move to another jurisdiction.

What I said last week was in essence that while I hadn’t seen the treaty yet, I didn’t think there was cause for immediate alarm for my clients. I also explained that I had written an article explaining my position in the next Q Wealth Report that is due out next week in the Members Area.

Now the treaty is actually signed and published. You can download it here. Perhaps the most surprising thing about it is that it is retroactive to 2007. That is, the US can now demand information dating back to 2007 from Panama relating to tax investigations. Panama, in theory, can demand the same from the US on Panamanian tax evaders.

This is certainly bad news for those American taxpayers who may have set up non-compliant structures in the past and opened accounts with Panamanian banks. Such individuals need to take expert legal advice urgently. With the approaching holiday season the few US attorneys who actually know anything about this are going to be super busy/unavailable. I hate to say I told you so, but the people in trouble are going to be the ones who tried to save a thousand bucks on set-up fees by going with cheap internet-based ‘lawyers’ who try to sell important financial structures as if they were groceries.

In the case of our consulting firm, we can refer clients to licensed US attorneys if necessary, but we like to do a confidential consultation through our firm first. This generally saves the client a lot in attorney’s fees compared to going direct to an attorney, as we are able to brief the attorney fully on the situation. Sometimes we can even do so anonymously.

Let’s be very clear on one thing. Neither Q Wealth nor my consulting firm has ever recommended tax evasion. We find the principle of stealing people’s privacy in order to collect taxes to fund things like bailouts, unnecessary wars and high level corruption extremely distasteful. That is the direction we are coming from. But if you want to live in or be a citizen of a country, you have to follow its rules. Not to do so would be plain stupid, because they are more powerful than you are.

IT’S SO EASY TO OPT OUT OF TAXES LEGALLY

It’s really so easy to opt out of taxes and government control legally if you don’t like things the way they are. Americans have it slightly harder than our other readers because they have to opt out of citizenship, not just residence. This, of course, is unjust in itself. Anyone else can just make the move.

There’s a world of choice out there. First there are the well-known tax havens like Monaco and Andorra. Several of our clients have gone down to Nevis recently in search of instant second citizenship that come with purchasing real estate there. Then there are countries like Dominican Republic or Paraguay where it’s cheap to get a residence permit, you don’t have to stay there much, and there are no taxes on foreign sourced income. Then, there are mainstream countries like France, Spain or Canada where – with good pre-immigration offshore tax and asset protection planning – a foreigner can live almost tax-free and unmolested.

I would take this opportunity to remind you that if you are looking at citizenship and residence in Paraguay, I’ll be there in January. Why not make it your new year’s resolution to obtain an official foreign residence and start the clock ticking on a second passport, that could solve all your troubles once and for all and help you sleep better at night? Details here.

“THE OECD STUFF IS A FIG LEAF, A DIVERSION”

While we are on the boring but somehow important subject of tax information exchange treaties, here’s something interesting that happened this week, that was not widely reported.

Tax Justice Network is a group who want all the world’s governments to join together in collecting taxes. Apparently they believe that if there were no tax competition, no bank secrecy and a ‘level playing field’ when it comes to taxes, there would be no poor people in the world any more. Such utopian ideas may appear beyond help to pragmatic realists like us… but they do have an interesting blog.

This week, they finally admitted they might be wrong. An anonymous person, not me but someone clearly benefiting from an intimate understanding of private banking and politics, wrote them a tirade which I agree 100% with – and they admitted might actually be right. Here are some selected extracts:

The OECD stuff is a fig leaf, a diversion. The real power mongers want the whole system to keep going, and to put out these diversions. While they are all doing all this stuff for the popular press, for the NGO world and Civil Society who don’t know how it works from the inside – at the same time they are saying to their clients (as on the BFSB website) ‘all is hunky dory in the world of confidentiality.’ They are all saying to their clients: it is business as usual.”

It is a fee-earning opportunity too – I don’t have any statistics on this – but you can say to your clients: ‘just for an extra level of safety, we can restructure your accounts to this or that other centre, or in this other structure’, and then they can charge fees for it.

You can read the whole blog entry here. I suggest you do.

This is Peter again. Panama is a country with an amazing amount of intrigue. I think it has something to do with the heat and humidity. Personally, I love it. What is said on paper is not usually what happens in practice. Once you understand that, and combine it with other countries to create a multi-jurisdictional structure, you can turn it to your advantage. If you don’t understand how Panama works, it is dangerous.

All this hype about tax treaties, that came out of nowhere a week or two ago, is certainly a diversion. If the US had wanted tax information on US citizens from Panama before, they could have got it just as easily as they will now be able to get it. This is all about show. The way is now paved for another round of the IRS voluntary compliance program that has been targeting Switzerland and UBS until recently, and we will certainly see more of this and other jurisdictions targeted during 2011.

In the meantime the USA will continue to haemorrhage funds, because smart businesspeople (and Americans are nothing if not smart business people) see that their money will be better off elsewhere.

TJN ended by quoting the latest Le Carre novel:

“Money’s got no smell as long as there’s enough if it and it’s ours. Above all, think big. Catch the minnows, but leave the sharks in the water. A chap’s laundering a couple of million? He’s a bloody crook. Call in the regulators, put him in irons. But a few billion? Now, you’re talking.”

Bear all this in mind when you look to manage your wealth and offshore investments.

If you haven’t yet read our Free Report on Panama, do so now. It explains some of the hidden truths of doing business in Panama. It was written before the tax information treaty was announced, but it’s still essential reading for anyone looking to invest offshore in Panama.

It’s not often that major developments occur in Southern Europe in the month of August. Montenegro’s announcement of its new instant second passport by investment program this past week is an exception.

Perhaps the Montenegrin government hoped to avoid the inevitable backlash from certain nationalist and socialist politicians in the European Union, while attracting the attention of wealthy Americans, Russians and Chinese at whom the program is aimed.

Montenegro has just become only the third state in the world to offer an economic citizenship program, along with the Caribbean island nations of St Kitts and Nevis and the Commonwealth of Dominica. Austria has a similar program with a few more strings attached, while Paraguay, Uruguay and the Dominican Republic are known for their relatively liberal grants of second citizenship after a period of residence. (More information on citizenship by naturalization programs.)

Montenegro is the youngest country in modern Europe, having voted for independence and achieved international recognition in 2006. However its history dates back to Byzantine times. (See Wikipedia entry on Montenegro)

Since independence, Montenegro has boomed, fuelled by a surge of foreign offshore investment… to date mainly from wealthy Russians who have felt comfortable with its Slavic culture, stunning coastline, visa-free travel to the European Union, and confidential offshore banking regime that has been substantially cleaned up following some scandals in the 1990s.

By launching an official economic citizenship program, however, the government of Montenegro hopes to attract investors from further afield, by co-operating with international law firms, trust companies and offshore service providers. We don’t doubt they are taking aim at the huge Chinese market, as well as the increasing flow of Americans who – spurred on by policies like Obamacare and the HIRE Act – are looing to renounce US citizenship for tax, privacy and asset protection reasons.

The new Montenegro economic citizenship program will require an investment of at least EUR 500,000, some of which goes direct to the Montenegrin Treasury and the rest of which must be used to generate business and employment in Montenegro.

Although the announcement is new, insiders have been suspecting for some time that Montenegro passports were available to prominent wealthy investors. One of the most infamous to date is former Thai prime minister Thaksin Shinawatra, who now travels on a Montenegro passport. Mr Shinawatra was convicted in absentia in his homeland on corruption charges, but denies all the charges against him and has announced plans to invest in Montenegro, possibly in some of the luxury hotels along the coast where he has reportedly been staying.

Details of this new second passport program are not yet entirely clear, except that it will be substantially more expensive than established competitors such as the St Kitts and Nevis program that also offers its passport holders visa-free travel to the European Union.

Rest assured however that we at Q Wealth will be monitoring the situation closely and we are already in contact with the government of Montenegro with regard to an interview and citizenship FAQ for the autumn Q Wealth Report. If you are not yet on our free e-mail list, sign up now to receive updates.

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?

Many of our readers are interested in offshore investing and offshore investment funds, and they frequently contact us for advice. The question we are most frequently asked is: Do high yield investment programs really exist?

In this article we look first at offshore investing scams and how to avoid them, then we will move on to the topic of genuine alternative offshore investment opportunities that can legitimately generate high returns for investors.

Of course,  programs referred to as HYIPs (High Yield Investment Programs) do exist, but most of them are scams – or more specifically ponzi schemes. There are internet HYIPs where you can invest $10 and get $20 back the next day. And there are more sophisticated scams, involving complicated terminology like ‘bank debentures’ or ‘standby letters of credit’. There are whole websites dedicated to scam concepts like ‘offshore fund leasing.’ People frequently lose hundreds of thousands of dollars to these more sophisticated rip-offs. Such funds, once lost, are almost impossible to recover.

One of the ironies about such deals is that the scammers often claim that they are making money with exotic named things inter-bank trading, seasoned notes, and other mysterious offshore financial instruments… some so secretive that ordinary bankers don’t know they exist!

Years ago we used to ridicule such ideas. We used to say that the bankers didn’t know about them simply because such things don’t exist. But the last few years have proven us wrong – there are indeed weird things going on behind the scenes that most bankers don’t understand or even know about! For starters, most bankers don’t seem to realize the facts about the giant Federal Reserve scam, a privately-owned company, printing money backed by nothing, that is responsible for the devaluation of the dollar. And very few bankers understand or have even heard of the mysterious forex operation CLS Bank that settles around $5 trillion worth of transactions every day. The lesson here is that all good scams have an element of truth.

But, here at Q Wealth we like to accentuate the positive. So let’s rephrase the question a bit. Are there any legitimate offshore investment funds where you can make say 10% or 15% return with little risk? The answer is yes, such opportunities do exist. But it does take some work to find them. And once you find them, you should be prepared to dedicate some time to monitoring them.

The general rule is that the higher the rate of return, the higher the risk. Some people are happier than others to accept risk. For example you might dedicate a small part of your investment portfolio to high risk ‘play money’. Younger people can generally afford to accept a higher degree of risk than persons approaching retirement. Absolutely the worst thing you can do, of course, is to put everything into one offshore investment because the worst can always happen.

So where do you find such opportunities? In Q Wealth Report of course! We are constantly on the lookout for genuine investment opportunities and funds that have the offshore advantage. What is the offshore advantage? Since there is no tax deducted at source and no automatic reporting, you can often roll over profits and reinvest them, rather than paying tax on the income. Over a period of five or ten years, the compounding effect can be huge.

The rule of thumb is that with onshore investment funds you might take three steps forward, then two steps back as the tax is deducted. With offshore investing funds, you take three steps forward, then the next year you take three steps forward again… and so on, and so on.

In our flagship Q Wealth newsletter, we frequently spotlight offshore investment funds and opportunities that we have done full due diligence on. There is always a risk, but we can help you minimize it. Since the investments we feature are generally managed offshore, you can participate as a sophisticated investor or via your offshore corporation, foundation or IBC.

Frequently Q Wealth Events also turn into incubators for great offshore investment ideas, that have a potential for high return. Getting together for a few days with like minded, free thinking individuals and simply brainstorming is a fantastic way to get these offshore income generating opportunities off the ground. Our next event will be in Ireland in September, and we will be focusing it even more than ever on offshore investments. Even if you only have a small amount to invest, consider coming along. Contact us to be put on the list and we will let you know as soon as the dates are fixed.

Finally, if you are interested in our offshore investment advice and are new to this site, don’t miss the opportunity to sign up for our free five part course Secrets of the Super Rich, delivered free and without obligation to your e-mail inbox. You will also receive a free subscription to Q Bytes newsletter, which from time to time features serious high value opportunities too.