How to Move Your Money Safely out of Harm’s Way

Mexico, 1982: Unemployment is 40%. The government is printing money so fast, prices double in five months. Mexicans rush to trade in their pesos for other currencies… until the government issues currency controls, and it becomes a crime

Austria, 1920–21: The government prints money to cover its debts from World War I. Food and fuel costs explode. Bankers urge their customers to convert Austrian Kronen into a more stable currency… even though it’s against the law.

A law-abiding widow is wiped out on the day of a bank run. She writes in her diary: “Why don’t you think the Krone will recover again?”[I asked my banker.] “Recover!” [he] said with a laugh… “just test the promise made on this 20 Kronen note and try to get, say, 20 silver Kronen in exchange.” “Yes, but mine are government securities: Surely, there can’t be anything safer than that?” “My dear lady, where is the state that guaranteed these securities to you? It is dead.”

The value of the U.S. dollar has dropped 7.4% in the last 12 months. For some farseeing Americans, the prospect of becoming trapped by their government in a worthless currency is not a historical curiosity: It’s a matter of urgent action.
Which is what brought me to a vault in the “free zone” inside the Zurich International Airport in Switzerland. My friend and Agora Financial Investment Symposium alum Egon von Greyerz invited me to check out this way station in the global gold bullion trade.
In early April, we spent nearly a week in Zurich during the European Gold Forum, examining opportunities offered by Egon’s firm, Matterhorn Asset Management. Many of the insights you’ll read about today were gleaned during that week — and from the three decades of experience Egon has in the global asset-protection business.
Egon gave us a personal tour of the vault facilities and described how one goes about storing gold bars there — outside the reach of even Swiss customs authorities. The vault is used by big banks like UBS to move bullion around the globe for its uber-elite clients… but as Egon showed me, it can be used by individuals quite easily too.
“Why would someone go to the trouble of stashing gold bars in the ‘free zone’ at the Zurich airport?” seemed like a good question to start with. So that’s what we asked him.
The answer, it turns out, has a lot to do with your financial future — no matter what your net worth.
Even if you’re a person of modest means and you merely want to “spread the risk around” by putting a portion of your wealth outside U.S. banks and the U.S. dollar… it’s becoming harder and harder to do so.
But not impossible.
In this special report, we’ll sound the alarm about the “virtual Berlin wall” that’s going up around Americans and their assets. We’ll also walk you through some steps you can still take to safeguard your wealth overseas — provided you tread carefully.
Then we’ll explore our favorite method to keep your hard-earned wealth away from Uncle Sam’s grasp. You can make this work no matter how big or small your nest egg might be.
Finally, we’ll explore the ultimate way to get out from Uncle Sam’s thumb. It’s an extreme step… but some people do take it.
Whatever you decide to do after reading this report, you’ll have a game plan to protect your money from the biggest threat it faces — the U.S. government.

America’s “Virtual Berlin Wall”

How Uncle Sam Schemes to Keep Your Money Penned in… And Why a Swiss Bank Account Isn’t What It Used to Be

Think “Swiss bank account” and chances are you think “privacy.” Or even the ability to hide your assets from the IRS.
“You ever want to impress anybody,” said Steve Martin’s con man character in the 1997 movie The Spanish Prisoner, “they can find out you have a Swiss account — but Swiss law prohibits the bank from revealing the balance.”
That was then. This is now: Wealthy Americans have pulled almost all of their money out of Switzerland as part of what Reuters describes as “a global clampdown on tax evasion and banking secrecy.”
The clampdown got under way in 2008 when the IRS began looking into UBS, suspecting the bank was maintaining “secret” accounts for U.S citizens, with the intent of “hiding” a total of $20 billion of income from the IRS.
By August 2009, the IRS bullied UBS into turning over the identities of 4,450 U.S. customers.
Except the “agreement” violated Swiss law. It was one thing if the IRS suspected an individual of tax evasion; the law allowed Swiss banks to turn over records in that instance. But they were not free to cooperate with an IRS fishing expedition.
No matter. In June 2010, the Swiss parliament rolled over… and changed the law.
We’ll likely never know the fate of the 4,450 customers. The IRS likely found many of them did nothing wrong. Others no doubt took advantage of an amnesty program the IRS offered. If they disclosed the accounts’ existence, paid the taxes and paid reduced penalties, they were left alone.

How Swiss Bank Secrecy Was Destroyed… and the U.S. Middle Class Got Burned

Of course, UBS has only itself to blame. During the dot-com era, UBS executives felt they were missing out on the “American juggernaut”… so they paid $12 billion to buy the U.S. brokerage Paine Webber.
“They were compromising their independence,” explains broker and pundit Peter Schiff. “The minute you open up an office in the United States, you sacrifice that independence. Now the U.S. government is strong-arming these Swiss banks with U.S. operations.”
As a result, Americans are fleeing Switzerland. In 2006, North American assets held in Swiss private banks made up 18% of total assets. By 2010, that figure was down to 2%, according to a report from Boston Consulting Group.
Where did they go? “Hong Kong and Singapore are perceived as jurisdictions that are receiving lots of money coming out of Switzerland,” says Scott Michel, a partner at the Washington-based tax firm Caplin & Drysdale. “A lot of assets appear to be moving to Asian financial centers. The IRS knows this and has established a presence in Beijing and Sydney.”
So what’s this to you if you don’t have millions that you want to stash overseas… and you’re not trying to evade the IRS? What if you just want to diversify your risk and open a foreign bank account?
Unfortunately, that’s a lot harder than it used to be.
A “virtual Berlin Wall” is going up around Americans and their money — no matter their income or net worth. Just like the real wall that kept East Germans penned up in their Communist hellhole for three decades, this virtual one aims to lock up Americans into the U.S. dollar and U.S. banks.

The Menace of H.R. 2487: Will Any Foreign Bank Do Business With You?

One of the most insidious measures to keep your capital from fleeing overseas became law in spring 2010.
Almost no one noticed. It was tucked into a “jobs bill.”
H.R. 2487 presents you a stark choice if you hold more than $50,000 in “foreign financial assets”: You can bank at a foreign bank that coughs up information about account balances, deposits and withdrawals to the IRS… or else you can subject yourself to a 30% withholding tax on the income and gross proceeds from any U.S. assets in your foreign account.
And should any of this violate local laws the bank is required to close your account.
Here’s the kicker: Even non-U.S. customers are subject to the 30% withholding requirement on the U.S. assets in their account — stocks, bonds, whatever — unless the bank tells all to the IRS about its U.S. customers.
Little wonder that many foreign banks are throwing up their hands… and turning Americans away.
“You can still have money offshore if you report it and pay tax on it,” sums up the Sovereign Society’s Mark Nestmann about the law’s impact. “The challenge will be to find a bank that will let you open and maintain an account.”
You might still have a window in which to do so… This requirement won’t come into effect until the start of 2013.
Here’s what else the law does: It beefs up the reporting requirements if you hold “bank, brokerage, or ‘other’” accounts with a total balance of $10,000 or more. You have to put it on your Form 1040 Schedule B for the IRS… and you have to submit a Form TD F 90-22.1, otherwise known as a Foreign Bank Account Report, or FBAR, to the U.S. Treasury. Oh, this provision is effective with tax year 2011.
If your foreign assets total $50,000 or more, the reporting requirements are stiffer still. You must report ownership of any non-U.S. securities, any non-U.S. financial instrument or contract held for investment from a foreign issuer (think life insurance or an annuity) and any ownership stake in a foreign entity. This too is effective now.
In other words, you may not be uber-wealthy… but you still have a target on your back.
But there are steps you can take to make yourself a smaller target.

Offshore Havens for Everyone: How to Scale the Virtual Berlin Wall… and Safely Reach the “Other Side”

Let’s get down to the basic question: Say you’re a person of relatively modest means, and you want to park some of your assets overseas where you’re insulated from a sinking U.S. dollar and shaky U.S. banks. You can’t afford an army of lawyers and accountants to make this happen, either. What can you do?
Essentially, you have three choices to scale the virtual Berlin Wall. And two of them are very limited.
Choice #1: A small bank account. Even with all the new laws detailed above, you can still maintain a bank account overseas — and not report it to the U.S. government. But here’s the problem: The total balance cannot exceed $10,000. In fact, your total “foreign financial assets” — stocks, bonds, etc., including that account — cannot exceed $10,000.
And as indicated above, that’s assuming you can find a foreign bank that’s willing to do business with an American.
Choice #2: Foreign real estate. This does not come under the U.S. government’s definition of a foreign financial asset. There are no tax or reporting rules other than those that apply to your ownership of property within the United States.
The big plus about foreign real estate is that it’s hard for the IRS or the Treasury to get its hands on. The day may come when Uncle Sam slaps tight limits on holding foreign currencies — trapping Americans into holding depreciating dollars. But unless the Treasury Department wants to send agents to occupy your condo or beach hideaway, foreign real estate is nearly untouchable.
An additional benefit is that it provides you an escape hatch should you decide conditions in the United States are no longer tolerable.
The downside, of course, is that real estate is about the most illiquid investment you can own. A foreign bank account or brokerage account can be tapped for funds in a matter of hours or even days. Good luck trying to unload real estate in that amount of time… especially if you’re not on-site.
Choice #3: Gold. Even though foreign banks are fast becoming off-limits for Americans, you still have an important choice when it comes to stashing some of your savings outside the United States.
It’s just that instead of stashing those savings or euros or Canadian dollars or Swiss francs… you can store them in the form of gold. Gold affords you flexibility you can’t get otherwise.
For starters, you can keep gold in a safe-deposit box in a foreign bank. Many banks are willing to do this even if you don’t have an account. That’s because under IRS rules, gold in a safe-deposit box does not qualify as a “foreign financial account.”
Sounds great… until you start to think about the logistical hoops you have to jump through to make this happen. You have to buy the gold and then make arrangements for it to arrive at the bank of your choice, where it will then go in the safe-deposit box.
That creates its own paper trail. And good luck trying to do it yourself, transporting a significant amount of gold outside the United States.
But there are alternatives that are much easier. In fact, you can take care of it at home, online, in little more than the time it takes to read this report. We call these alternatives OGSPs — “offshore gold savings programs.”