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.