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Political Diversification - Offshore Banking

Rancho Santana, Argentina

June 27, 2014 | by Steve McCurdy

Introduction


In today’s economic environment, investors should carefully consider politically diversifying their holdings by moving some assets offshore. To paraphrase legendary author and speculator Doug Casey, the biggest risk to our portfolios is not investment risk; it is political risk. Anyone who does not transfer a portion of his assets out of his home country will, in Casey’s words, “be led into a lobster trap and cooked.”

 

In a crisis a government can simply declare a national emergency, and use that declaration as a license to impose onerous restrictions on private capital. In April,1933, for example, President Roosevelt issued executive order 6102 confiscating all private gold in the United States, and in August, 1934 he followed up by taking privately owned silver bullion. Those who obeyed the Executive Order were paid $20.74/oz for their gold and $.501/oz for their silver, compared to then-prevailing market prices of $35.00/oz for gold and $1.29/oz for silver. Many courageous holders of both metals managed to dodge the order and avoid taking losses by moving part or all of their precious metals to Switzerland.

So how do you offshore your assets? Among the best methods are buying precious metals overseas, acquiring foreign real estate, and buying foreign currencies and/or opening foreign bank accounts. We discuss foreign precious metals ownership in detail here and here, so in this article we will concentrate on offshore real estate and foreign bank accounts and currencies.
 
Before acting on any of the ideas explained below, it is imperative that you fully understand two concepts; the first is the concept of “reportable assets,” and of course the second is U.S. Income Tax Law. Some foreign held assets are “reportable” to and taxable by the U.S. Government, and some are not.
 
Important Note: Reporting requirements for assets held abroad by US citizens will change dramatically on July 1, 2014, effective with implementation of a provision of HR 2847 called “The Foreign Account Tax Compliance Act,” commonly known as “FATCA.” To read a detailed discussion of the new reporting requirements go here.

Offshore Real Estate Holdings

 
If you own real estate in a foreign country, that real estate is not currently reportable.
 
There are a growing number of investor-friendly, capitalist enclaves springing up around the Rancho Santanaworld today. Legendary speculator Doug Casey is involved with one in Cafayete, Argentina.” Near the equator, 7,000 feet up in the Andes Mountains, Cafayete has a nearly constant year round temperature range of 40° to 80°, sunshine almost every day, and 15,000 foot peaks on all sides. It is safe and pristine, and inhabited mostly by transplanted American entrepreneurs.
 
Another desirable escape is Rancho Santana on the Pacific coast of Nicaraugua.  Rancho Santana can probably best be compared to Hilton Head Island forty years ago. Beautiful and lightly developed, ocean front properties can be purchased right now for 20% to 30% of a comparable Hilton Head price. Right next door to Rancho Santana is Guacalito De La Isla, one of the most strikingly beautiful venues on earth.

The Golf Course at Guacolita 
The Golf Course at Guacalito, Nicaraugua

Many expatriate American capitalists now also are moving to Singapore, where tax rates are attractive and where entrepreneurial investment opportunities abound, and some, including precious metals advocate James Turk, live in Southern Spain. You can view some of the world's most popular offshore havens here.
 
In any event, we recommend you seriously consider a second home in a safe, far-away place where you can not only improve your standard of living, but where you can escape to if and when we experience societal breakdown in the US.

Foreign Bank Accounts and Currencies

 
Currently, U.S. citizens can maintain bank accounts in foreign countries up to a maximum of $10,000 per person without reporting to the government. If there are five persons in your family you can open five accounts of $9,999 each in the five names without reporting. One option for an offshore account is the Caye International Bank in Belize. Banks in Belize have a 24% capital requirement compared to 3% for U.S. banks, and you can have full check writing privileges on your CIBL account. So, in relative terms, Belize banks are both safe and liquid. If Belize doesn’t appeal to you, you can always go up to Canada and open your account(s) there for $9,999, and accounts are also available in the relatively safe jurisdictions of Switzerland, Singapore, and Australia, among others.

Foreign Currencies

 
There are also readily available foreign currency options. Everbank in Jacksonville, Florida,Assorted Currencies enables its customers to purchase Certificates of Deposit and/or maintain savings accounts in any one of 22 foreign currencies. All accounts are FDIC insured, and give holders the full benefit of currency valuation appreciations. If you maintain an Everbank savings account (minimum $2,500 opening balance), you may call the bank at any time and convert to another currency (Swiss Francs to Chinese Yuan, for example). You can also convert back into dollars and take your “winnings” at any time you choose.
 
Another option is to simply buy foreign currencies with your U.S. dollars and take physical delivery of the currencies just as you do with gold and silver. Gold Money will sell foreign currencies to you for physical delivery for a nominal premium.

Summary

 
We hope you will find these suggestions useful. We are continually uncovering new and innovative ways to diversify your portfolios and prepare for financial crises, so please check back with us often.

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