Diplomatic Immunity For Your Assets In Interesting Times!
SUNDAY, MAY 19, 2013 AT 7:30PM
Since I write so much about financial fiascos, debacles, nightmares, and entanglements. I’ve been asked by my readers about ways to protect assets in this environment. I had to disappoint them: I don’t give financial advice. Even if I did, I wouldn’t have all the answers. But I just finished reading an excellent book on precisely that topic, so I decided to review it.
Going Global 2013, A Special Report from Casey Research, starts with the premise that we live in interesting times, in a world that has, let’s say, some issues. Particularly concerning financial safety.
– There is the toxic mix of the “dubious dollar,” mauled continually by the Fed’s money-printing operations, and the gigantic US deficits and debt.
- Then there is the risk of “lightning-fast asset seizures,” such as when the IRS thinks you haven’t paid your taxes or when a government employee gets your name confused with someone on a blacklist, and suddenly your bank and brokerage accounts are locked. You might not even have access to cash to hire a lawyer to help recover your property.
- Not like it hasn’t happened before: “gold confiscation” is something the US government resorted to in 1933, and might resort to again. “Investment controls” were practiced in the US in the 1940s and 1960s; if imposed again, it might become impractical or illegal to buy or keep assets outside the US, whether for effective diversification or for taking advantage of profit opportunities.
- Already a reality, or becoming one: “Rising income taxes” and “exorbitant estate taxes and shifting rules” that make tax optimization that much more important. And finally, one of the craziest risks in the US, “predatory lawsuits” that can hit anyone, particularly those with deep pockets.
But there are strategies to deal with these risks: true international diversification. The authors – six of them, all specialists in their field – begin step by step with the simplest measures, though in today’s interesting times, even they aren’t simple anymore.
So the authors lay out how to open foreign bank or brokerage accounts – a form of currency diversification that is becoming increasingly tough for US citizens because many foreign banks no longer accept them as clients. Later in the book, they propose tactics, such as establishing a non-US Limited Liability Company (LLC), which conveys numerous advantages, including a warmer welcome at foreign banks. Such an LLC can open accounts where an American cannot; it can discourage “would-be lawsuit attackers”; and it can be crucial in estate planning.
They dive into the issues gold storage in the US vs. overseas, stock markets in other countries, and foreign annuities and life insurance. Then they move to more ambitious topics: setting up a self-directed IRA, such as an Open Opportunity IRA, which reduces the hassles of a regular self-directed IRA. It can invest internationally, buy real estate or rental property down under, for example, or get a brokerage account in Singapore.
But the “permanent solution” is an international trust that places your assets in a more benign legal environment – the arrangement can be involved and might require a leap of faith: “The only way to achieve complete protection for your wealth is to let someone else own it for you!” the authors write. Though few people have an international trust, the advantages are enormous, and the authors walk you through the ins and outs.
To complete internationalization, the authors also discuss how to buy a second home in a foreign country, and how to obtain a second passport. Legally! They provide an overview over the countries that allow dual citizenship, what their rules are, and how long it takes. And they add some interesting but crucial tidbits: for example, a Singaporean passport is the only one in the world that allows for visa-free travel to China, the EU, and the US!
US taxpayers who internationalize their assets are subject to some hairy reporting requirements; the authors sort them out and provide essential information, down to the IRS forms that have to be dealt with.
Going Global dissects the pros and cons of individual countries. It provides numerous links, in addition to contact information of foreign banks, other financial institutions, organizations, and companies that can offer further information or be helpful in setting up these strategies.
Who Going Global is for: Anyone who doesn’t yet have vast holdings and complex structures overseas but wants to find out more about it, get started on the right foot, learn how to do it legally, and avoid the many pitfalls along the way.
Who Going Global is not for: Broadly internationalized investors with dual passports, and with homes, bank accounts, trusts, and LLCs scattered around the globe; or anyone wanting to evade US taxes. “If you dream of a numbered account stuffed with a string of zeroes’ worth of money secretly earning undeclared income behind Uncle Sam’s back… wake up! Those days are gone, and financial privacy is dead, snuffed out by US reporting regulations that blanket the world’s financial system,” the authors write. And they warn: “Do not attempt to evade taxes in the name of financial privacy; the penalty for noncompliance is wealth-crushingly severe.”
Going Global is short (about 110 pages); a fast and interesting read with a refreshing lack of jargon. It’s expensive: $99. But for those who want to learn more about how to protect their assets, and with an eye on the mounting financial challenges of our times, it may be the best money ever spent. Available exclusively from Casey Research
Statistics: Posted by yoda — Sun May 19, 2013 10:46 pm
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ATF Seeks ‘Massive’ Database of Personal Info: ‘Assets, Relatives, Associates and More’
April 6, 2013
By Gregory Gwyn-Williams, Jr.
A recent solicitation from the Bureau of Alcohol, Tobacco and Firearms (ATF) reveals that the agency is seeking a "massive" online database capable of pulling up individuals’ personal information, connections and associates.
On March 28, ATF posted the notice on FedBizOpps.gov, entitled "Investigative System." The solicitation was updated on April 5 with a few minor changes.
The document says that the system will be utilized by staff "to provide rapid searches on various entities for example; names, telephone numbers, utility data and reverse phone look-ups, as a means to assist with investigations, and background research on people, assets and businesses."
The system is described as a "massive online data repository system that contains a wide variety of data sources both historically and current that can be utilized in support of investigations and backgrounds."
The overview of the solicitation states:
Staff will utilize "a number of internal databases as well as external sources to provide timely and relevant information and intelligence products to law enforcement agencies at the federal, state and local levels."
The system "provides a means to rapidly check records across the country" and is "necessary in assisting investigators, agents and analyst to find people, their assets, relatives, associates and more."
The ATF says they will use this system to provide information to Intelligence Analysts, Special Agents, Inspectors, Financial Investigators and Law Enforcement.
The investigative system will allow ATF to "obtain exact matches from partial source data searches such as, incomplete social security numbers, address, VIN numbers, etc."
The system will also have the ability to "link structured and unstructured data to find connection points between two or more individuals."
Statistics: Posted by yoda — Sun Apr 07, 2013 12:57 am
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Spain now taxing expats on their worldwide assets, time to buy in Dubai?
Posted on 05 March 2013
Foreign residents who live more than six months a year in Spain are now being taxed on their worldwide assets and there are very high penalties if you are caught not complying. Spanish austerity has caught up with its free wheeling expat community with a vengeance.
Leaving Spain is an option but then house prices have fallen more than 30 per cent from the peak and selling at any price is difficult. Sellers out-number buyers and there is a huge inventory of unsold property in Spain.
For Spain it looks like another self-inflicted national disaster. Expats are often mobile and when they move out of Spain that will be bad for an already slumping housing market and all the other spending by this affluent one-million strong community.
Spain has already seen an exodus of Britons due to the falling value of pound sterling pensions when translated into euros. By contrast the British are still among the top buyers of property in Dubai where there is no facility to record local earnings and assets, let alone overseas assets.
Property remains untaxed, except for modest community and house transfer taxes. There is no capital gains tax, nor income tax in Dubai. Not surprisingly the city is witnessing a continuous inflow of high net worth individuals who wish to base themselves in the emirate, particularly for the seven months of fine weather.
Those who have a home in Spain, and have the means could consider spending five months in Spain and seven in Dubai. That would qualify them as resident in Dubai and not Spain.
It’s common to meet new arrivals in Dubai who have become outraged at being pursued like criminals in their own countries, even when they have paid all their taxes properly. These states increasingly regard wealthy citizens as fair game to finance their debt-financed public sector ponzi schemes.
This is clearly going to get much worse before it gets better. The eurozone and UK are in recession and there is a mounting backlash against austerity cuts. Taxing the rich is an easy option for democracies where the majority is a tyranny for the rest.
Freeports like Dubai with a long tradition of minimal taxation are safe havens from this disaster that will only make the citizens who stay behind in these countries poorer in the long-run.
Statistics: Posted by yoda — Tue Mar 05, 2013 2:39 pm
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The election results made it abundantly clear that taxes are going to be going up, and right now a lot of wealthy people all over America are trying to figure out how to best position themselves for the hit that is coming. There are a whole host of tax cuts that are set to expire on December 31st, and many analysts are now speculating that we could see a race to dump stocks and other financial assets before 2013 in order to get better tax treatment on those sales. Of course it is still possible that Congress may reach a bargain which would avoid these tax increases, but with each passing day that appears to be increasingly unlikely – especially regarding the tax increases on the wealthy. Whatever you may believe about this politically, the truth is that we should all be able to agree that these looming tax increases provide an incentive for wealthy people to sell off financial assets now rather than later. After all, there are very few people out there that would actually prefer to pay higher taxes on purpose. If the race to dump financial assets becomes a landslide, could this push stocks down significantly late in the year? Already there are all sorts of technical signs that indicate that stocks are ready for a “correction” at the very least. For example, the S&P 500 has already closed below its 200 day moving average for several days in a row. Could the “sell off” that has already begun become a race for the exits?
A lot of Americans have heard about the looming “fiscal cliff”, but most don’t really understand the specifics.
For investors, there are several key changes which will happen unless Congress does something by January 1st.
First of all, the tax rate on capital gains will go from 15 percent to 20 percent. For those with high incomes, the rate will be even higher than that thanks to a tax increase that our politicians managed to sneak into Obamacare. So, some wealthy individuals will see their capitals gains taxed at nearly 24 percent in 2013 unless something is done.
For dividends, the outlook is even more frightening. The tax rate on dividends will increase from 15 percent right now to over 43 percent for the highest income earners.
We have already seen these tax increases play into business decisions that have been made in recent months. For example, it is being reported that George Lucas potentially saved hundreds of millions of dollars in taxes by selling Star Wars to Disney this year rather than next year.
Anyone out there that wants to take advantage of the current tax rates on capital gains and dividend income better do so now, because these tax rates look like they are going to go away and they probably will not be back for a very, very long time.
According to CNBC, this makes the next couple of months an ideal time to dump stocks and other financial assets…
For many of the wealthy, 2012 is becoming a good year to sell.
They’re worried about the “fiscal cliff,” which is when tax cuts expire and spending cuts are set to go into effect at the end of the year.
Fearing an increase in capital gains and dividend taxes, many of the rich are unloading stocks, businesses and homes before the end of the year.
And the truth is that stocks simply did not have much higher that they could possibly go anyway. Anyone that is trying to “get out while the getting is good” should take heed of what Marc Faber recently told CNBC…
“The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view.”
In fact, Faber is absolutely convinced that a full-blown stock market crash is coming no matter what happens with the fiscal cliff…
“I think the whole global financial system will have to be reset and it won’t be reset by central bankers but by imploding markets — either the currency [markets, debt market or stock markets,” he said. “It will happen — it will happen one day and then we’ll be lucky if we still have 50 percent of the asset values that we have today.”
Politics and economics have always been deeply intertwined. The results of the most recent election are going to have some very deep consequences. Already we have seen a large number of businesses either announce layoffs or that hours for their workers will be cut back. You can find a bunch of tweets from small business owners talking about how they won’t be hiring anyone or that they will be forced to reduce hours right here. You can find a bunch of tweets from average citizens all over the country talking about how their hours are already being cut back right here.
With each passing day, our country is getting poorer, it is getting even deeper in debt and our economy is becoming even more unstable. We are on a path that will only lead to total economic disaster, but the American people just voted for more of the same.
So now we will get to see how this all plays out.
Is there anyone out there that is still optimistic about what is coming next for the U.S. economy?
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NEW DELHI — Three Indian oil firms have bid US$5 billion for Canadian oil sands assets of U.S.-based ConocoPhillips, company sources said on Monday, as the energy-hungry country’s output from local and foreign fields falls.
India is the world’s fourth-biggest oil importer, buying nearly 80% of its oil needs from abroad. With fuel demand and refining capacity rising, the government has told state firms to secure energy assets overseas to help power the expanding economy.
The federal auditor last month flayed the country’s biggest oil explorer Oil and Natural Gas Corp., whose output has been almost stagnant for years, for its tardy pace of exploration and lax efforts in development.
“We have bid along with Oil India and Indian Oil Corp.,” a source at ONGC Videsh, the overseas investment arm of ONGC, told reporters on Monday. A source at Oil India said the bid was submitted at the end of July.
ConocoPhillips said in January that it was selling a stake in six Alberta properties that produce 12,000 barrels of oil a day (bpd) from an estimated 30 billion barrels of bitumen.
ONGC Videsh announced a shift in policy last year, when its then managing director, Jomen Thomas, said his firm would seek to buy assets in politically less risky regions such as North America to cut its risk and boost output.
It aims to invest US$20 billion to help increase its output seven-fold by 2030.
In 2011/12, ONGC Videsh produced 7.4% less oil and gas output than a year earlier, at about 175,000 bpd.
Managing director D. K. Sarraf said on Monday that oil and oil-equivalent gas output from the company’s assets may also decline in the current fiscal year due to geopolitical problems in Sudan and Syria. He said he hoped output would improve in 2013/14 when new fields including those in Myanmar’s A1 and A3 blocks are commissioned.
Sarraf declined to comment on a bid for ConcoPhillips but said: “The market (for mergers and acquisitions) is reasonably good. There is a lot of action in North America, Canada as huge credible resources are there”.
ONGC Videsh recently bought the 2.7% stake of Hess in the large Azeri, Chirag and Guneshli (ACG) group of oil fields in Azerbaijan and ONGC Chairman Sudhir Vasudeva said his firm could supply that equity oil to its refining unit MRPL , which recently raised capacity to 300,000 bpd.
MRPL buys Azeri light crude through spot tender and short-term deals. The move will help MRPL in replacing some of the oil it used to buy from Iran, as western sanctions aimed at curbing Tehran’s nuclear programme disrupt shipments.
Statistics: Posted by yoda — Mon Sep 24, 2012 12:40 pm
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Gold beats all other assets over five years, now heading up again?
Posted on 12 August 2012
Mid-August and financial markets are quiet with the main players on holiday. But gold and silver prices are showing signs of renewed life after a long trek sideways since the highs of last year.
This time last summer we wrote excitedly about $2,000 as the autumn price target and then gold rushed ahead and crashed from a high of $1,923 on September 6th. Still it was a major up shift and could happen again. The flickers of life in the bullion pits could mean a repeat of the bullish seasonal autumn pattern.
August 9th was the fifth anniversary of the beginning of the global financial crisis. And what was the best investment since then? ArabianMoney readers can probably guess.
Gold and corn are up 144 per cent over five years. Silver follows at 122 per cent. Oil is up 61 per cent and US treasuries 38 per cent. Stocks have been volatile to say the least and the S&P 500 returned only eight per cent.
It is indeed hard to get the daily or monthly trends right in markets. Many day traders lose the lot to commissions over time. But get the long-term trends right and investments take care of themselves.
Is this the right time to buy gold and silver? Well, the odds on a short-term gain in the autumn are very good on past precedent. The money printing central banks could pre-empt market crashes this autumn with some big moves that would be precious metal positive.
There is the US presidential election in November, after all. Or gold and silver could rise sharply in a seasonal move and then tank with the rest of the markets as the reality of another global recession finally dawns on financial markets.
However, in the long-run we are convinced that the precious metals bull market is far from over and that its performance over the next five years could be even more spectacular, especially in a dramatic price spike that we just have not seen thus far.
For a commodity price to really breakdown you need to see a price spike, and we will eventually get one for both gold and silver. Until then it pays to be invested because you never can tell exactly what the future holds for trading and could easily miss the best days for gold and silver by trying to be too clever.
Statistics: Posted by yoda — Sun Aug 12, 2012 8:20 am
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Protecting Your Assets from an Out-of-Control Government, Part I
By Terry Coxon
05/10/12 By keeping all your assets in the country where you live, you commit, ahead of time, to ratify whatever policy your home government might adopt, no matter how objectionable, unreasonable or pernicious that policy happens to be. If the next new mandate is “Register today to get a nail pounded into your head,” you’re already signed up.
Americans, by and large, run all their affairs within the confines of the US. The US economy is so large and so varied that it’s easy to assume that everything you want to do with your wealth can be done without crossing any borders. And people in the US, like people anywhere, live with the habits and attitudes developed over generations. They’re only human. In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind’s experience with rulers, there was little to fear from it.
Stay at home is still the norm for Americans, but it’s a norm that is slowly fading. Every billion-dollar tick of the government debt clock, every expansion of the government’s regulatory apparatus, every overreaching judicial decision made in the name of a compelling public need, every inversion of protection for citizens into license for the state and every intellectually tortured discovery of a new meaning in the Constitution’s 4,400 old words leaves a few thousand more people wondering how prudent it is to consign all their eggs to a single national basket. Encounters with high-handed IRS agents and eager TSA gropers do nothing to ease that concern. And for those who listen thoughtfully, the messages from our designated leaders and their would-be replacements only hurry the dawning sense of unease.
Specific worries include exposure to predatory lawsuits; fear of where income tax rates might climb; the prospect of losing a family business in a regulatory battle or simply through estate tax; the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly; the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls; the memory and precedent of the forced gold sales of 1933; and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.
But beyond those particular worries, and perhaps more important than any of them, is the sense that from here on, anything goes. The politicians will do whatever they find expedient, because there is no longer anything to stop them — not an electorate that is jealous of its freedoms and certainly not the Constitution, which is now just a playhouse for judicial imagineering. No one can know what’s coming next from the government and the financial system it has fostered, but for many of us there is an awful suspicion that we are not going to like it.
Most Americans still have yet to stick a single financial toe across the border, but more and more are considering it. Many, perhaps millions of toes are now twitching at the thought. Their owners want to end their absolute dependence on what happens in the US. They want to prepare for whatever is coming down the road, even though they don’t know what it will be. They want to be as ready as possible, even though their worries can only guess at what’s ahead.
Because internationalizing your financial life means dealing with the unfamiliar, the project can seem more complex than it really is, so it’s best to start with the simplest measures, even if by themselves they don’t give you all the safety you’re looking for. Even from a simple beginning, what you learn with each step will make the next step easier to plan. Start with the first rung on the ladder of internationalization. Then climb, at your own speed, to reach the right level of protection.
Rung 1: Coins in Your Pocket
Gold coins that you’ve stored personally give you something whose value doesn’t depend on the health of the US economy, doesn’t depend on any financial institution in the US and doesn’t depend on any US government policy. Gold coins are portable and hold their value no matter where in the world you might take them. They’re internationalization in a wafer. Safety cookies.
It’s best to buy the coins for cash, for maximum privacy. And there is a good reason to favor one-tenth-ounce gold Eagles. Gold coins mean readiness for troubled times; if you ever need to dispose of the gold in an informal market, it will be easier to do so with small-denomination coins that are widely recognizable and whose value matches the scale on which large numbers of people normally trade.
The premium on one-tenth-ounce coins (the price compared with the value of the gold content) is higher than on the larger coins — usually about 15% for the small coins vs. 5% for one-ounce Eagles. But the premium isn’t a dead cost, like a commission or bid-ask spread. The premium is a second investment; it’s what you pay for the packaging, and you can expect to recover it when you sell or trade. And in the circumstances when you would have the strongest reasons for thanking yourself for having bought some gold, the premium you paid will look like a bargain.
Rung 2: A Foreign Bank Account
On its own initiative, the IRS can freeze any bank account in the US without warning. The action might arise from mistaken identity, from an erroneous filing by some other taxpayer, from your failure to respond to an IRS notice in time or even from a postal error. And that’s what can happen without malice. Other government agencies have similar powers to act on their own, without giving you an opportunity to object in court. And any one of them might act against you for any of their specialized reasons — perhaps because someone resents your inattention to the needs of the migratory birds that visit your property or perhaps because someone thinks it would be fun to point to you as a terrorist, drug smuggler, arms dealer or child-porn merchant.
In principle, there are legal avenues for undoing a freeze or a seizure. But you’d need a lawyer, and being suddenly penniless could get in the way of hiring one.
A foreign bank account protects you from being trapped in such a nightmare. The US government can get to your foreign bank account eventually, because it can get to you. But a lightning seizure is very unlikely, because it would require a foreign government to override its own legal processes, which it generally wouldn’t be willing to do except in a grave emergency. So if your liquid assets at home were frozen, you would have cash outside the US to fund the legal cost of untangling the problem.
A foreign bank account is also a way to step back from the uncertainties of the US dollar, since the account could be denominated in another currency.
The US government has seen to it that Americans are no longer welcome customers at foreign banks. So forget about opening a Swiss bank account in your own name. However, if you apply in person (not by mail), you still can open a bank account in Canada. Be prepared to show your passport and to give the bank an original utility bill that confirms your place of residence.
Rung 3: Gold Abroad
The forced gold sales of 1933 were the work of an executive order signed by President Roosevelt. The purported legal basis for the order was the Trading With The Enemy Act, a legislative artifact of World War I. I have yet to find an explanation of how the authority for an order requiring Americans to sell their gold to the government at the government’s official price of $20 per ounce could be found in the Trading With The Enemy Act, but the fact that the enemy in question had gone out of business 15 years earlier didn’t seem to interfere with the legal logic.
The forced sale was a prelude to an increase in the official gold price to $35. The government’s reason for wanting that price rise was to gain leeway for a substantial, though limited, inflation of the dollar while keeping the dollar on the international gold standard. The forced sale was a way for the government, which operated in a political environment that still disfavored deficit spending, to capture the profit from the price rise. That profit would be a kitty for more spending without more borrowing.
Today there is no gold standard for the government to stay on. And deficit spending isn’t something politicians especially want to avoid; they’ve promoted it as a civic duty, to stimulate the economy. So the depression-era motives for a gold grab don’t seem to apply. Yet you can’t listen to a conversation between two gold investors without hearing the seizure topic coming up.
Are they just scaring each other? I don’t believe so. There are two potential motives for the government to again treat gold differently from everything else.
If the dollar’s slide in foreign exchange markets threatens to turn into a panic, the government might want to use gold sales to foreigners to mop up foreign-held dollars — in which case it might see a need to mop up the gold owned by its own citizens. That’s bad enough, but a second motive is a good bit nastier. At a visceral level, people who have centered their lives on government just don’t like gold. It’s an affront to the government’s authority to command and control and an insult to government’s supposed aptitude for solving economic problems. So disrespectful. From their point of view, every ounce purchased by an American is another tomato hurled at the political class. And the purchasers still constitute a tiny minority of the voting population. What could be more satisfying and convenient for the politicians than to kick sand in the face of gold investors for being such lousy citizens?
A new attack on gold ownership probably wouldn’t be a point-for-point reenactment of 1933. There are many weapons for mugging gold investors. It could be a prohibition on gold ownership coupled with a prohibition on sales of gold to foreigners. The only one left to buy would be the government, and being the only bidder, it would be a very low bidder. It could be a commandeering of privately owned gold, with token compensation like the $15 per day paid for jury duty. It could be a super tax, say 90%, on gold profits, which would get the job done slowly… or quickly if it were accompanied by a mark-to-market rule. Or it could be something none of us has thought of yet.
Not only can’t we know the shape of a future gold grab, we can’t know whether or how the rules would touch foreign-held gold. Owners of gold stored outside the US would be a minority of a minority. Their gold wouldn’t be the low-hanging fruit — it would be higher up in the tree and more trouble to get to. That’s why, in a casino sense, gold overseas is a different bet and a better bet than gold at home.
Maybe it will turn out that storing gold overseas won’t matter at all, in which case a little effort will have been wasted. And maybe it will turn out to matter a great deal.
To be continued tomorrow…
for The Daily Reckoning
Read more: Protecting Your Assets from an Out-of-Control Government, Part I http://dailyreckoning.com/protecting-yo … z1udlyg5uC
Statistics: Posted by yoda — Sat May 12, 2012 2:03 am
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