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

Legendary Swiss market pundit Marc Faber recently advised a group of high flying investment managers to ‘buy farmland and gold,’ reports the Times of London.

Dr Marc Faber is an interesting and often controversial commentator. His greatest claim to fame is having advised investors to pull out of the stock market a week before the 1987 crash. Now his belief, he reportedly told an assembled group of pension and sovereign wealth fund members in Tokyo the US is going to go bankrupt. The best way to achieve international asset protection and diversification is to buy physical gold and farmland, he believes.

So who is Dr Marc Faber? Dr Faber moved to Hong Kong in 1973 and – although he still keeps an office there – he resides in Chiang Mai, Thailand, along with a number of our subscribers and friends. As well as having penned several books, Faber has his own monthly investment newsletter The Gloom Boom & Doom Report.  Faber has been long term bearish about the American economy for a number of years and continues to be so.

According to Wikipedia, he concluded his June 2008 newsletter with the following:

The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I’ve been doing my part.

The reporting in the Times also offers insight into Faber’s way of thinking:

His investment advice, which was the first keynote speech of CLSA’s annual investment forum in Tokyo, included a suggestion that fund managers buy houses in the countryside because it was more likely that violence, biological attack and other acts of a “dirty war” would happen in cities.

He also said that they should consider holding part of their wealth in the form of precious metals “because they can be carried”.

One London-based hedge fund manager described Mr Faber’s address as “excellent, chilling stuff: good at putting you off lunch, but not something I can tell clients asking me about quarterly returns at the end of March”.

Needless to say, we agree with Dr Faber’s predictions. We have been telling people for several years to get out of the financial system by buying physical gold, as well as diversifying with multi-currency offshore bank accounts.

We also recommend purchase of productive and useful real estate, as opposed to real estate held for speculation. Farmland in countries like Paraguay, Uruguay and Brazil, for example, has proven to be an excellent investment over the past few years, but will only show its true value in the future. Our planned Paraguay Citizenship and Real Estate Investment Tour has been delayed somewhat due to pressure of work, but we are still planning to go ahead with it, now probably in early May. Anyone interested in coming along is more than welcome to contact us.