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Forbidden KnowledgeReport Series

A Publication of The Sovereign Society

xes,

Personal

Security,

BigB

rother,

PATRIOT

Act,

Self

Reliance,

Liberty,

Austr

ia,

Estate

Planning,

CTAs

,

Insurance,

APT,

Variab

onomi

c

Citizenship,

OffshoreR

esidency,

Spot

Market,

Pr

ecious

Metals,

Synthetic

Currencies,

Switzerland,

Captive

Insurance,

Liec

suran

ce,

Hong

Kong,

Limited

Li

ability

Company,

IRS,

Eli

te

Global

Investments,

Cu

rrency,

Asset

Protection

Trust,

Offshore

Banking,

Forbidden Knowledge

by The Sovereign Society Research Team


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able o Contents

Introduction ...................................................................................................................................... 3

Chapter ONE

Te Meaning o Liberty ..................................................................................................................... 5

Chapter WO

Second Passports & Dual Nationality................................................................................................. 9

Chapter HREE

Oshore Banking: Privacy & Asset Protection ................................................................................. 17

Chapter FOUR

Te Matter o Cash .......................................................................................................................... 27

Chapter FIVE

Investments ...................................................................................................................................... 33

Chapter SIX

Your Finances and Estate Planning ................................................................................................... 43

Chapter SEVEN

axes & How to Avoid Tem Legally ............................................................................................... 51

Chapter EIGH

Oshore Havens .............................................................................................................................. 61

Chapter NINE

Personal Privacy & Security .............................................................................................................. 73

Chapter EN

Retirement ....................................................................................................................................... 81


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legally and with maximum personal security and nancial privacy.

o knowledgeable people, true nancial security means:

the maximum possible tax avoidance

the strongest possible nancial privacy

the greatest degree o asset protection

the most protable investments


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CHAPER ONE

Te Meaning o Liberty

A Critical Lesson in Crusoe Economics: What

You Must Know to Survive the Coming Attack onInation ............................................................. 5

You May Be an Anarchist I... ............................. 6

Te Best Form o Government... ........................7

A Critical Lesson in Crusoe Economics:

What You Must Know to Survive the Coming Attack on Ination

July 2008by John Pugsley

While the presidential candidates have ocused their pre-election posturing on war, healthcare, and jobs, anunmentioned elephant has wandered into the room. His name is ination.

O course, everyone else has noticed the elephant including the world press. For example, one recentissue o Te Wall Street Journal mentioned ination in no less than 19 articles. Te average ination ratesaround the world have nearly doubled in the past year rom 3.6% to 6.3%.

Food and energy prices are rising even aster. In the 27-nation European Union, ood prices rose by morethan 7% since 2007.

Yes, these higher prices are painul. But beware. Increasing prices are not the threat. In act, like a bittermedicine, they are a natural cure or a dangerous imbalance in the economic body. Higher prices represent aneeded readjustment between the quantity o goods, and the money in circulation.

I price hikes are allowed to run their course, they would lead to a new era o prosperity. But policymakerswont allow that to happen.

Like an addict who reuses to go through withdrawal, the public will demand politicians do something.Rather than conessing to their own ination-causing shenanigans, the politicians point the nger at the pri-vate sector itsel. Tey blame the very consumers and businesses that are damaged.

Misguided economists also promote this absurdity. Tey say the cause o rising prices isrising prices!Tey say cost-push ination, and demand-pull cause ination. Tey tell us cost-push ination occurswhen the prices o certain goods rise, thereby driving up prices o other goods. Similarly demand-pull ina-


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tion happens when too much demand pulls a products price up, and that products higher prices pulls upother prices.

Whether McCain or Obama wins, the public will demand that the ination elephant be shot.

I say: Beore swallowing this illusion, apply Crusoe economics. Imagine Robinson and Crusoe are on an

island. Robinson shes and Crusoe makes bread. Tey barter, exchanging one sh or one loa o bread. Teprice o a sh is a loa o bread, and vice versa.

One day Robinson only catches one sh, so he brings hal a sh to market and doubles his price, demand-ing a loa o bread in exchange. I Crusoe agrees, has this caused ination?

No. Ination is a rise in the price level. I Robinson raises his price, Crusoe must lower his proportionately,or no trade takes place. I one price doubles and the other alls in hal, the price level remains the same. Pro-ducers cant cause the price level to rise, no matter what they do.

Te thing missing in the cost-push, demand-pull allacy is money itsel. When all other goods arepriced in terms o the money commodity, and the money supply increases, all prices appear to be rising atonce. All prices, that is except the price o money all in exact proportion to the rise in price o other goods.

Money is produced by central banks and governments, not by you or me. Whether McCain or Obamawins, the public will demand that the ination elephant be shot. A near universal belie in these absurditiesalmost guarantees the next president will aim the gun at businesses and consumers. Prepare yoursel or pricecontrols, rationing, excess-prots taxes, and a tsunami o regulations.

Solutions? Keep reading. Our otal Wealth strategy is your bullet-proo deense against the elephantgun.

You May Be an Anarchist I...

November 2006by John Pugsley

Liberty means responsibility. Tat is why most men dread it.George Bernard Shaw

At a nancial conerence in Georgia some years back, I wound up on a panel seated next to CongressmanBob Barr, a conservative Republican. As we shook hands he commented that this was the rst time he hadmet a real live anarchist.

Mr. Barr was unaware that he had probably met many anarchists, especially i he knows any o the mem-bers o Te Sovereign Society. Its not that most anarchists are in the closetits just that most anarchists dontrealize they are anarchists.

Te term anarchist has been plagued by more than a century o bad press. Back in the early 19th century,

a ew bomb-throwing revolutionaries usurped this wonderul word. Now, not a week goes by that GeorgeBush or some other politician doesnt accuse terrorists o being anarchists. errorists arent anarchists. Teyrenot individuals who are demanding reedom rom government they want to become the government. er-rorists are micro-governments that want to become macro-governments.

Calling a terrorist an anarchist is Orwellian newspeak, in which good becomes evil, right becomes wrongand war becomes peace. In act, its a vicious slur on anarchists. Consider the correct denition and history othe word rom Te Encyclopedia o Philosophy...

ANARCHISM, a social philosophy that rejects authoritarian government and maintains that voluntary


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institutions are best suited to express mans natural social tendencies. Historically, the word anarchist derivesrom the Greek an archos, meaning no government.Pierre Joseph Proudhon (What is Property?, Paris,1840) described himsel as an anarchist because he believed that political organization based on authorityshould be replaced by social and economic organization based on voluntary contractual agreement.

For more than a century, the word has been used by those in power to describe a doctrine o destruction,while its more proper meaning is a peaceul system o sel-responsibility. As Te Encyclopedia o Philosophygoes on to note, []here is no necessary connection between anarchism, which is a social philosophy, and ter-rorism, which is a political means occasionally used byactionists belonging to a wide variety o movementsthat have nothing in common with anarchism.

Anarchism is a philosophy o reedom. We anarchists believe that voluntary cooperation is the answer andauthoritarian government the problem. Te Encyclopedia o Philosophy agrees: Anarchism in general rejectsthe state. It denies the value o democratic procedures because they are based on majority rule and on thedelegation o the responsibility that the individual should retain.

Te main dierence between the anarchists and the socialists, including the Marxists, lies in the actthat while the socialists maintain that the state must be taken over as the rst step toward its dissolution, theanarchists argue that, since power corrupts, any seizure o the existing structure o authority can only lead toits perpetuation.

Perhaps some o the conusion stems rom the concept o government. What is a government? Te wordis derived rom the Greek kybernan, which means to steer. You and I can be governed by someone else, orwe can govern ourselves. Tere can be an external sovereign, or we can be sovereign individuals. Tose whowould control us and our property by orce, and that includes every petty thie, terrorist and political party,advocate government by orce... the complete antithesis to anarchism.

What a tragedy that anarchism, a word that concisely describes individual sovereignty, has been co-optedby authoritarian governments to mean just the opposite. In the pure sense o the word, Im an anarchist andproud o it. I dont want to govern you, nor do I want you to govern me. I you believe that you should havethe sovereign authority over your own lie and assets, and steer your own uturethen, surprise! Youre anan-archist, too.

Te Best Form o Government...

September 2006by John Pugsley

For 2,500 years, philosophers, politicians and social scientists have struggled to answer a proound ques-tion bequeathed by the ancient Greek philosopher, Socrates: What is the best government?

During Socrates lietime, Athens was a true democracy. All ree citizens could vote at the Ecclesia (gen-eral assembly) on every law. O course, o the 400,000 inhabitants o Athens, 250,000 were slaves, and only

a small number o the 150,000 reemen or citizens actually presented themselves at the Ecclesia. Yet, all hadthe right. o settle disputes, Athens had a supreme court, the Dikasteria. But unlike the American SupremeCourt with nine members, the Dikasteria consisted o over 1,000 members selected alphabetically rom theroll o all citizens. Again, a true democracy.

Socrates saw democracys aws. HistorianWill Durant describes the great philosophers position: Whatcould have been more ridiculous than a mob-led, passion-ridden democracy, a government by a debating-so-cietyIs it not a base superstition that mere numbers will give wisdom? On the contrary is it not universallyseen that men in crowds are more oolish and more violentthan men separate and alone?


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Plato, Socrates student and biographer, wrote: Until all philosophers are kings, or the kingshave thespirit and power o philosophy, and political greatness and wisdom meet in onecities [states] will never haverest rom their evils no, nor the human race.

At the time o Socrates death, Sparta had just deeated Athens, and a wealthy Athenian minority advocat-ed abandoning democracy because it was inefcient during war. Tey ormed the oligarchic party, advocatinggovernment by a ew o the powerul and wealthy. Tey revolted, but their revolution ailed.

Plato elt he understood why. Aristocracy ails, he said, because power is limited to too narrow a circle,while oligarchy ruins itsel by the scramble or wealth. Ten democracy comes: the poor overcome theiropponents, slaughtering some and banishing the rest; and give to the people an equal share o reedom andpower.

But then democracy turns into disaster because the average citizen is not intelligent enough to select thebest rulers and wisest course. Mob rule ends in tyranny as the wiliest and the most unscrupulous atterer,calling himsel the protector o the people rises to supreme power. (Does this call to mind any o the politi-cians o the 20th century?)

Socrates great question, What is the best government? has wended its way through all o the greatphilosophers o the past 2,500 years. Plato believed that a specialized orm o communism was the answer.

His amous student, Aristotle, argued one best man should hold all political power, and he tutored Alexan-der the Great, who became monarch ater leading the greatest conquest in history. But this orm o govern-ment also ailed.

Some 2,000 years later, the excommunicated Jewish philosopher, Baruch Spinoza, addressed Socratesquestion. Spinoza arrived at a more enlightened realization: Te last end o the state is not to dominate men,nor to restrain them by ear; rather it is to ree each man rom ear that he may live and act with ull securityand without injury to himsel or his neighbor. In act, the true aim o government is liberty.

Unortunately, Spinoza could see no alternative except to give the power to the state. Arguing monarchywas efcient but oppressive, he stumbled back to democracy, while admitting democracy tended to put medi-ocrity into power, leading nations back to where they started. Hence, he wrote, I think it is that democra-cies change into aristocracies, and these at length into monarchies. He died beore ever nding a satisying

answer to Socrates question.Great minds like Voltaire, Kant, Nietzsche, Locke, Rousseau and Spencer have also wrestled with Socrates

question. Yet one o Spinozas conclusions seems to hold rm: the true unction o government is liberty. Ithats our starting point, what is the best orm o government? Autocracy, with a single person ruling? Oligar-chy, giving power to a small action? Plutocracy, with the wealthy governing? Democracy, with power exer-cised by the majority? Or democracys variation, a republic, where a majority hands power to representatives?

I argue that the answer is none o the above. I the unction o government is liberty, then the best orm ogovernment is the one orm that has never truly been tested sel-government. It is a world in which everyindividual is sovereign. Somehow, I think Socrates would agree.


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CHAPER WO

Second Passports &Dual Nationality

Best Second Citizenship& Residency Programs ....................................... 9

Your New Country in a Matter o Months:Economic Citizenship or Sale ......................... 11

Paradise Passports - How the Right PropertyCould Unlock a World o Opportunity ............ 13

From Choosing a Country to Actually PackingYour Bags ......................................................... 14

Best Second Citizenship & Residency Programs

September 2005by Robert E. Bauman, JD

Having a second passport and dual citizenship can bring you greater travel saety, aster access to living

abroad, and may even lead to potential tax ree existence in another country. And it all can be done legally. Iyoure in a hurry and want a second citizenship in a matter o months, there are only two nations that oerthis quick service, but or a price. Tey call it economic citizenship but its really citizenship or sale. Te twonations are the Commonwealth o Dominica and St. Kitts- Nevis, both in the Caribbean area. Several othernations, including the U.S. and Canada, oer immediate residence in return or substantial investments in ajob-producing business, but not immediate citizenship. Tat usually requires several years o actual presence.

Single Investment Delivers Potential Prots, Dual Citizenship and Visa-Free ravel

Te Commonwealth o Dominica is located at the northern end o the Windward Chain o the Lesser An-tilles in the Caribbean Sea. Dominicas economic citizenship program is rst rate. Since its inception in 1991,it has operated successully. A single investor may acquire Dominican citizenship via a direct cash contribu-

tion o US$100,000 to government and private projects; the sum is raised to US$150,000 or a amily o upto our persons. A new citizen o Dominica has the right to live and work there at any time, but living thereis not required. Holders o a Dominica passport can travel without a visa to more than 100 countries and ter-ritories, including the U.K., Switzerland, Sweden, and Hong Kong.

For citizenship inormation and assistance, contact Henley & Partners, Inc., Haus zum Engel, Kirchgasse24, 8001 Zurich, Switzerland; el.: +(41) 1-267-6090; Fax: +(41) 1-267-6091; E-mail: [email protected]; Website: www.henley-partner.com/dominica.


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Second Passports & Dual Nationality

Economic Citizenship in a Paradise with Splendid Beaches and Balmy Weather

St. Kitts-Nevis is the older o the two economic citizenship programs and it, too, has an established historyo successul operation.

Applicants must invest US$250,000 in an approved investment project. Government registration ees arenow US$35,000 or a main applicant and US$15,000 or each spouse and dependent child under 18. Young

adult amily members over 18 must pay US$35,000 each. In addition, proessional ees are US$15,000 or themain applicant and US$5,000 or each additional amily member.

St. Kitts (as it is called) and Nevis (say knee-vis) is in the Leeward Islands in the eastern Caribbean, 225miles east o Puerto Rico, 1,200 miles south o Miami. Each tropical island is a volcanic mountain risingabout 1,000 meters above the sea, with about 75% o the total population living on St. Kitts. Te islandsbalmy, virtually unchanging weather and splendid beaches and accommodations have made them popularvacation spots, oering a wide range o recreational amenities.

Nevis, which has its own Island Assembly, is a recognized tax and asset haven. It has a no-nonsense bank-ing and business privacy law that even the U.S. government cant crack unless crime is involved. Its pro-o-shore laws have existed or over two decades-so there is plenty o experience and precedent in the local courts-and the legislative assembly keeps the applicable laws current. Tere are well-established service companies

that can manage an oshore business, establish a oreign trust, etc., and some have convenient U.S. ofces.For citizenship inormation and assistance, contact Henley & Partners, Inc., Haus zum Engel, Kirchgasse

24, 8001 Zurich, Switzerland; el.: +(41) 1-267-6090; Fax: +(41) 1-267-6091; email: [email protected]; Website: www.henley-partner.com/stkittsnevis2.htm.

Visa Programs Make Tis the Leading Destination or Foreign Retirees

Everyone knows about Te Republic o Panama and its amous Canal, but Panama is also one o theworlds leading destinations or oreign retirees. Tats because it has numerous resident visa programs thatwelcome you with immediate residency status.

Perhaps the best known o these resident visas is the turista pensionado visa. Anyone entering the country

as a qualied pensionado is guaranteed to retain that legal status so long as they choose to stay in Panama.(Te word pensionado does NO mean you must be retired to qualiy.)

Under the pensionado program, the applicant must show proo o personal entitlement to a monthlyincome rom an ofcial oreign program (Social Security, disability, military retirement, government pension)or a private corporate pension plan, in the amount o at least US$500, plus an additional US$100 each or aspouse and other dependants.

Panama truly does oer probably the best residence deal in the world today. For this comparatively smallprice, the benets are incomparable, including exemption rom taxes, tax-ree importation o your automobileand household goods, and discounts on a host o goods and services.

Te visa application process or Panamas basic pensionado program is simple; a onetime application andno renewals or additional ees. Getting your permit takes as little as 30 to 60 days. Its ast, aordable and easy.

But you need an attorney to do all this.Contact: Christoph Zollinger, Mosson Group, Mossack & Fonseca Co., Arango-Orillac Building, 54th

Street, P.O. Box 0832-0886, W..C., Panama, Republic o Panama; el.: +(507)263-8899; email: [email protected]; website: www.mosson.com. Tis rm oers a wide array o visa and other legal services inPanama and around the world.

Signicant ax Incentives or Retirees

Although Belizes economic citizenship program ended in 1991, the country still oers signicant tax


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incentives to retirees and other oreigners. You can become a permanent resident i you have a US$2,000minimum monthly income rom non-Belize sources.

Belize is the only English-speaking country in Central America. Its mixed population o 280,000 includesdescendants o native Mayans, Chinese, East Indians and Caucasians. Independent since 1981, its languagecame rom its colonial days when it was called British Honduras. Situated south o Mexico and to the east o

Guatemala, Belize is on the Caribbean seaboard.In 1998, the Retired Persons Incentives Act was enacted to attract oreign citizens and oreign currency.

Te law established a residency program or Qualied Retired Persons (QRPs), oering them signicant taxincentives to become permanent residents (but not citizens) o Belize.

A QRP is exempted rom all taxes on income rom sources outside Belize. QRPs can own and operatetheir own international business based in Belize exempt rom local taxes. Tere is no minimum time thatmust be spent in Belize and QRPs can maintain that status so long as they maintain a permanent localresidence.

o qualiy or the QRP program, the applicant must be 45 years o age or older and prove personalnancial ability to support onesel and any dependants. A spouse and dependants (18 years and younger)qualiy along with the head o household. Initial ees or the program are US$700 or the qualied retiree andUS$350 or each dependent, plus US$100 or an ID card upon application approval.

Contact: Te Belize ourist Board, New Central Bank Building, Level 2, Gabourel Lane, P.O. Box 325,Belize City, Belize; el.: +(501) 223-1913; Fax: +(501) 223-1943; oll ree: 1-800-624-0686; email: [email protected]; website: www.travelbelize.org/.

Your New Country in a Matter o Months: Economic Citizenship or Sale

July 2006by Robert E. Bauman, JD

I oten get questions concerning how to acquire dual citizenship and the second passport that comes withit. Folks want to know how it can be done, and why they should consider it.

I start by assuring them that dual citizenship is legal under American law, as it is in many nations, and thatthe U.S. Supreme Court upheld this right in several cases decades ago. And o course, i the person is inter-ested in expatriation, the ormal act o surrendering U.S. citizenship (also a legal right), I explain that theycertainly need a second citizenship to avoid becoming a man (or woman) without a country, a modern dayversion o Edward Everett Hales disturbing novel rom 1917.

A second nationality is a hedge against unoreseen events. It provides the option to legally reside and workin another country that may oer tax advantages, although this is o limited benet to U.S. citizens. (I youare a U.S. citizen or green card holder, you are still accountable to Uncle Sam when it comes to reporting your

taxes, no matter where you live.)Most countries require a oreigner to become a resident and live there or an average o ve years or more

beore they are granted citizenship. But there is a quick route to a second passport in just a matter o months,but it will cost you dearly.

Its known as economic citizenship and only two sovereign nations sell it, both tropical island tax havensin the Caribbean the Commonwealth o Dominica and St. Kitts-Nevis.


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Escape rom America

Using the excuse o drug wars and anti-terrorism, plus imposing excessive taxation, government controlson private capital and travel restrictions are becoming more prevalent around the world. Smart people owealth naturally are seeking alternatives that allow them to protect their assets and income and to travel reelythroughout the world. And, in the case o the United States, the only way to escape rom taxes is to end your

citizenship.wo Caribbean jurisdictions oer economic citizenship under government-sponsored investment laws.

Tese nations want to create jobs, accelerate resort development and grow their tourist industries by bringingin more money. Te laws provide a oreigner with instant citizenship, a new passport, and permanent resi-dence, i desired. And both countries are oshore tax havens.

Become a Saint Kittian or Nevisian

St. Kitts-Nevis is an independent English-speaking island state situated in the northern part o the Lee-ward Islands in the eastern Caribbean. Te ederation is made up o two islands, St. Kitts and the smallerNevis, separated by a channel two miles wide. It is a ormer British colony, a member o the British Common-wealth o Nations and the United Nations. It has a pleasant climate, particularly during the cool months rom

December to March. Humidity is relatively low, and constant northeast trade winds keep the islands cool.St. Kitts-Nevis oers good opportunities or investors and manuacturers. Te workorce is well-educated,English-speaking and riendly. Other advantages include tax breaks o up to 15 years, repatriation o protsand the possibility o tax-ree entry o produced goods into the U.S. market. Substantial European importbenets also apply. Tere are no income taxes and no net wealth taxes in St. Kitts-Nevis.

St. Kitts-Nevis labels their instant citizenship plan, Citizenship-by-Investment Program. o qualiy orcitizenship, the government requires a real estate investment o at least US$250,000. Te islands are an attrac-tive place to own real estate, and there are some excellent real estate developments approved under the pro-gram. Te new citizen is not required to spend any set period o time on the islands each year.

Alternatively, there is an option available to purchase government bonds. Instead o real estate, one canpurchase US$250,000 equivalent in EC$ (Eastern Caribbean dollar) Literacy Month 10-year reasury bonds.

Details o this program are not yet nal and no date has been set or the next bond issue. Additional costsinclude ofcial government ees o US$35,000 or a single applicant, plus US$15,000 or each dependent.Tere are also application/proessional ees o US$15,000 (same as with Dominica) per application and aUS$2,500 due diligence ee per adult applicant. Tey require a reasonable amount o documentation or theapplication, and the application procedure itsel is airly simple.

Te St. Kitts-Nevis passport is relatively well regarded since only a relatively limited number o passportshave been issued under this citizenship-by-investment program during its nearly 20 years o existence. As aresult, St. Kitts-Nevis citizens enjoy a passport with a good reputation and good visa-ree travel. For example,passport holders still have visa-ree access to Canada. Visa-ree travel throughout continental Europe is alsoavailable by combining St. Kitts-Nevis citizenship with a residence permit in European Union countries.

A Passport o the Commonwealth o DominicaDominica is oten called Te Nature Island o the Caribbean. Its a small, beautiul island located in

the eastern Caribbean between the French islands o Martinique and Guadeloupe. Independent since 1978,Dominica is English-speaking and a member o the British Commonwealth. It has a Westminster-style parlia-mentary government, ree elections and peaceul transer o power. Tere is a strong currency and almost nocrime. Te economic citizenship program has operated successully since 1991, and it is based on a solid legaloundation in the Constitution o Dominica. A limited quota o applications has been set by the government.

Tere are now two options or obtaining citizenship: a Family Option and a Single Option. Under the


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Your Key to a World o Possibilities

Having a second passport and dual citizenship oers many advantages. It can expand your travel possibili-ties. It can also protect your identity, should you ever need to keep your nationality a secret or saety reasons.It can give you the right to reside in other countries, and give you a way to cross international borders i yourprimary passport is lost or stolen.

For U.S. citizens, a second passport has another benet - it is a necessary prerequisite i you want to legallydisconnect, once and or all, rom the U.S. tax system. Te only way to eliminate all U.S. tax liability is tocease being a U.S. citizen. But beore you do so, you must obtain a satisactory passport rom another country.

Tats where a St. Kitts Nevis passport can provide substantial benets. Since 1984, the St. Kitts NevisCitizenship Act has allowed oreign investors who acquire qualiying real estate to obtain citizenship andpassport. Tis makes it the oldest existing citizenship-by-investment program, and perhaps the most respected.

Tis program is strictly regulated. All applicants must submit to a thorough background check, providebank reerences and letters o recommendation, along with proo o no criminal record in their home country.

Applicants or economic citizenship must invest US$350,000 in an approved real estate project.

You may live in this dwelling, or rent it out - nearly all approved projects provide a managed rental pro-gram. A 10% property tax is generally added to the purchase price. However, there are no annual property taxpayments once you purchase the property. Tere is also a registration ee o US$35,000 or a main applicantand US$15,000 or each spouse and dependent child under 18. A due diligence ee o US$3,500 applies oreach applicant. Legal and processing ees add a minimum o US$10,000 to the cost, with higher ees applyingor more valuable properties or larger numbers o dependents.

Funds or your real estate purchase are placed in escrow and released to the seller only ater your applica-tion or economic citizenship has been approved. Only ater this process is completed is the registration eedue. Te title or the property is then registered and you and your amily receive your passports.

Should you choose to apply, there is no requirement or you or, in the case o a amily, the head o yourhousehold, to attend an interview in St. Kitts Nevis.

Te combination o real estate in a sae, peaceul haven such as St. Kitts Nevis, combined with alternative

citizenship and passport, can provide numerous benets, among them prot potential, increased travel op-tions, and international tax planning opportunities.

From Choosing a Country to Actually Packing Your BagsHeres Every TingYou Need to Start Your New Lie Oshore

June 2008by Robert E. Bauman, JD

One o the most requent questions I hear rom Sovereign Society members concerns moving abroad andmaking a new home in another country. Tey ask: How do I do it? When should I do it? What should I lookor in a new country? Who should I contact? Or even urther: Should I expatriate once I move?

Now I know rom experience that many o the individuals who talk about moving abroad rarely ollowthrough with these ambitions. But honestly, I believe thats because many individuals have no idea how topursue their dreams. So i youre interested in setting up your residence abroad or securing a second citizen-ship, here a ew suggestions o where to start.


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Decide i Tis Is Really What You Want

Te rst step is a big one: Admit to yoursel that you want to live abroad. Once youve made up yourmind, its much easier to carry on with the details that ollow.

Next step: What exactly are you looking or in your new home? Do you want to live in a country that canreduce your taxes? Are you looking or bargain real estate? Do you want to move somewhere where youll nd

other American and oreign expatriates? Are you a beach person or mountain person? Would you rather live ina quiet countryside, at the heart o a major cultural center or in a large city?

Create Your Own Blueprint o an Ideal New Home

Make a list o your personal priorities and preerences. Determine whats most important to you. For ex-ample, are you looking or a low cost o living, cultural diversions, medical care or warm weather?

Once you have your preerences down on paper, do a little research. Which places match your tastes? Tennarrow down your list o possible paradises to two or three places, and spend some time in each one. You mayhave ormed a mental picture o what a oreign place may be like, but unless youve been there, done that,you may be in or a surprise when you see it rsthand.

Ater you have seen your two or three choices, cut your list down to one country. Tis is important: Planan extended stay in that country during the least agreeable time o year (the tropical rainy season, the hotsummer or the cold months). While youre there, tour the country and get a complete picture o what its re-ally like. It helps i you speak the local language, or at least get an interpreter to accompany you. Its true thatEnglish is becoming the universal language, but more so in some places than others.

Visit the country, meet other expats already living there and contact local real estate agents to inspect prop-erties or sale. (Always get reerences and be very careul o land titles. In some countries titles are tenuous atbest and you dont want any legal problems.)

You Have to Tink about axes

Once you have your country picked out, you need to consider your tax situation. Otherwise, its very pos-

sible you could ace harsh taxes even beore you leave the United States. Fortunately, you can avoid these extrataxes by consulting the right proessionals.

First, speak to an international tax planner or attorney in your home country. Check new tax obligationsin your chosen country. Places such as Panama or Belize impose no taxes except on local income. Switzerlandis willing to negotiate with wealthy oreigners seeking residence or a set annual tax that may be much lower.

Let Us Be Your Guide On Your Journey Abroad

Tere are many Sovereign Society publications that can give you a wealth o inormation about livingoshore. Included in the list are Te Passport Book, Where to Stash Your Cash, Panama Money Secrets, SwissMoney Secrets and Te Oshore Advantage Book. You can nd them on our webpage at www.sovereignsoci-

ety.com/catalog/.I youre a U.S. person, determine your obligations owed to the IRS. (Americans owe taxes annually no

matter where they live in the world or where they earn income.) You also should consult a tax expert, usuallyan attorney, in the country youre considering who, importantly, is experienced working with oreign resi-dents. Again, get reerences and always ask questions when you have doubts about something. Te best placesare countries that have territorial taxation meaning they tax only income earned within the countrysborders and not income earned oshore.

Consult a residency expert, usually a local attorney, in the country o your choice. Ask the expert which


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Chapter itle

visa or residency permit is most advantageous or you. Immigration laws change constantly and you need toknow exactly what youre eligible or as a oreign resident.

While youre there, open a local bank account in your new country. In some countries this will require anintroduction to the bank by your local lawyer and a reerence letter rom your home country bank. Tey usu-ally wont take walk ins.

Choose Your Moving Day!

Once you have picked your destination, set a date or your move. Decide whether to ship household goodsor buy new ones when you arrive. Te type o visa you obtain may or may not allow or tax-ree importationo personal belongings, like your car or boat, but consider the hassle actor o such shipment.

Tese days moving companies can deliver a pod to your door. Pods are storage units that look just likethe space on the back o a moving truck (only without the truck). You ll it up, and they deliver your belong-ings anywhere in the world. My son and daughter in law recently moved rom Cape own, South Arica toAtlanta, and had no problems with a pod move door to door o their urniture and property.

Well beore your move, set up a portable global ofce or mail drop in your home country or reliable andefcient mail orwarding, email, international phone calls, bill paying, and the like.

Tere are numerous services that provide a permanent address with orwarding capacity. Make sure yourlocal bank account is in good order, especially i you regularly receive direct deposits rom ofcial agencies.

Living in a oreign country does not make an American ineligible or Social Security or government andretirement payments, but direct deposit to an American bank account is preerred.

Rent, Dont Buy at First

In my experience, Ive ound its better to rent your rst home abroad. Spend at least six months living inyour new rented home beore you commit ully to buying your own home. In some countries, such as Pana-ma, the government gives a 20-year real estate tax moratorium on new buildings and some existing housing.

Once you have done all this, youre ready to buy your tickets and pack your bags. Youre ready to moveoshore and even expatriate i thats your ultimate goal. Best o luck on your journey and let us know i wecan help.


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Oshore Banking: Privacy & Asset Protection

CHAPER HREE

Oshore Banking:Privacy & Asset Protection

Your Quick Fix to otal Wealth ........................ 17

Protable Investing In Your Oshore BankAccount (Existing) ........................................... 19

How We Saved You By NEVER RecommendingSwitzerlands Largest Bank ............................... 23

Go East For Private Banking ............................ 24

Your Quick Fix to otal Wealth

August 2006by Robert E. Bauman, JD

One o the greatest threats to your wealth may be lurking deep inside your subconscious. Its called xeno-phobia. Xenophobia describes a person unduly earul or contemptuous o that which is oreign, especially

o strangers or oreign peoples.And tragically, this ear stops individuals rom seeking the whole world o wealth opportunities available

in other nations. Tese well-intentioned, but not very savvy, olks store every last cent o their wealth in U.S.banks and only invest in the U.S. investments their brokers suggest.

But its not too late to purge these xenophobic tendencies and move your assets oshore. Here are just aew o the major opportunities waiting or you.

Asset protection.1. Lawsuits long ago reached epidemic proportions in the U.S. I a creditor gets ajudgment against you where you live, you could lose all your assets, your business, home or bank ac-counts. In contrast, create a trust or amily oundation or invest in a suitable oshore jurisdiction andyour nances are essentially judgment-proo.At the very least, the long distance between a U.S. plaintis lawsuit and your oshore assets is likely

to encourage a avorable settlement. And keeping assets oshore avoids the U.S. asset-tracking net-work, which permits lawyers and their investigators to easily identiy and target the assets o a poten-tial deendant. (Revealing your oshore assets may be the best way to discourage a lawsuit. Just tellthat greedy lawyer, try and get em!) Tus, prudently using oshore havens can protect you romthe threat o lawsuits, civil oreiture, bank account reezes, business ailure, divorce, oreign exchangecontrols, restrictive laws or political instability.

Financial privacy.2. Its only natural to want protection rom the prying eyes o government bureau-crats, business partners, estranged amily members or identity thieves surng the Internet. Financial


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advantage o the impenetrable asset protection available oshore. At the very least, this is your chance to storea portion o your assets oshore just in case.

For the very good reasons listed above, and or sel-interest as well, none o us can aord to be xenophobic in the21st century. Teres a whole wide world out there oshore and you only need to recognize that act and act.

Protable Investing in Your Oshore Bank Account

January 2004by Mark Nestmann

An oshore bank account can give you almost unlimited access to the oshore investments we regularlyeature in SI. But or many investors, the idea o an oshore bank account is shrouded in mystery. In thisarticle, Ill help you clear up the mystery. Ill help you decide what type o oshore account is best or you,where you should open it, what inormation youll need to disclose to get started, the best way to transermoney to and rom your account and a ew o the possible investments you can make with it. Plus, Ill show

you some ways you can reduce the ees associated with an oshore account.

How to Choose the Right Oshore Bank

Most oshore banks specialize in one o the ollowing areas:

1. aking money on deposit and lending it to businesses (commercial banks)

2. aking money on deposit and lending it to private individuals (savings and loans)

3. Buying and holding investments or private individuals (private banks)

Te type o account you need depends on your objectives. I you just want a small oshore nest egg, anddont plan to actively trade with your account, your best option is to use an oshore building society or sav-ings and loan, or a commercial bank. Interest rates are usually higher and the ees are much lower. I you are

doing business oshore, you will likely need an oshore commercial bank that specializes in business nanc-ing, multiple currency dealings and merchant payment solutions.

However, i you are like most members o Te Sovereign Society, and are an active investor, youll want touse a private bank. Te Sovereign Society has established working relationships with private banks in Austriaand Denmark. During the coming year, we anticipate establishing such relationships with private banks inother oshore centers.

Once you decide on a bank, here are the questions you must ask:

What types o accounts are available or international investors?

Are there any investments that nationals o your country are not permitted to purchase?

What taxes will be withheld rom my investments?

What investments are considered part o the banks balance sheet and thus available to the banks creditors(including depositors) in the event o the banks insolvency?

What are the ees or securities transactions and custody?

What other ees apply to the account?

Is my account insured against losses in the event o the banks insolvency?

How can I transact business with the bank? Are telephone, ax or e-mail orders accepted?

Is online banking available? I so, is this service available in English?


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Youll also want to check out the nancial standing o the bank. A convenient service or this purpose is atwww.tchratings.com.

Opening and Funding the Account

Banks worldwide now require customers to identiy both themselves ully and the source o their undsbeore opening an account. However, inormation you provide a bank outside your own country will not be

easily available to someone in your home jurisdiction. Indeed, in some countries, such as Austria, Panama andSwitzerland, bank secrecy laws assure that inormation about your account will only be released in the event oa criminal investigation, and even then only with the order o a local court.

For private banks, inormation you must provide will include:

A detailed application, including your name and address; what type o account you wish to open; whatcurrency you wish or it to be denominated in; and whether you wish to apply or a debit card. o satisythe know your customer regulations, youll need to present a copy o your passport and possibly a utilitybill to conrm your residential address.

Investor profle. Te bank will ask that you speciy your investment objectives, investment experience andthe investment risk approach you preer.

Source o unds. You will be asked to speciy the source o your unds, and in some cases, obtain a reer-ence letter rom a bank in your home country stipulating that the unds have been earned legitimately.

Choice o benefciary. Without proper planning, its possible that upon your death, your account assetswill not be made available to your loved ones without a complex and expensive legal proceeding. Te bestway to avoid this is to list your spouse, partner or other person as an account beneciary. Tis designationis revocable you can always designate a new beneciary. For banks that dont have this option available,an alternative is to make your intended beneciary a co-owner o the account.

Awire transeris the astest way to und your account. Your account is also credited much more quicklythan with a check. Just ask your domestic bank or wiring instructions. Most oshore banks also accept per-sonal or business checks. Te disadvantage is that it takes a considerable length o time or a check to clear.

You can also und your oshore account with pension assets. (For more inormation on this option, see

SI7/03.) In most oshore jurisdictions unding accounts with cash is discouraged and in some cases prohib-ited altogether.

What Kind o Account?

Oshore banks oer the same types o accounts as domestic banks, although the name o the account andthe way its used may dier. When you rst deposit unds, your oshore bank will open a current account.Te account will earn no interest or a very low interest rate, and the assets will be held on the banks balancesheet.

Certifcates o depositare available at most oreign banks, in almost any currency. You earn more inter-est or a larger investment or or a longer commitment. Te interest rate also varies depending on the creditquality o the issuer and the currency. Interest rates tend to be slightly lower than those published in nancial

newspapers, such as TeWall Street Journalor Financial imes. Depending on the banks policy, CDs may ormay not remain part o the balance sheet.

Securities accountspermit you to purchase stocks, bonds or unds, anywhere in the world. Te purchaseprice or each trade, less commissions, is debited rom your account and credited to a custodial account main-tained by the bank. Your securities are usually segregated rom the banks assets and are not available to meetclaims by the banks creditors. But inquire to make sure this is the banks policy.

As with a domestic securities account, you may issue limit orders, stop loss orders, etc. You may also buy andsell put and call options on many oreign securities, although the rules may be dierent than in your home coun-


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try. For instance, with European-style options, you can only cash out on the last business day beore expiration.Dividend and interest payments may be subject to withholding tax, depending on the country in which they areissued. You can oten reclaim withholding tax under a tax treaty between your country and whatever jurisdictionhas imposed it. Te United States, or instance, has tax treaties with more than 50 countries.

While it is common or oshore banks to purchase U.S. securities on behal o their clients, we dontrecommend this strategy, due to the IRS qualied intermediary (QI) regulations. Tese legal provisions stripaway all privacy or U.S. securities holdings purchased through a oreign bank.

Precious metals accountshave purchase options similar to those available or securities. Depending on thetype o custody you choose, the metals you purchase may or may not be part o the banks balance sheet.

Managed accountsare available i you have the equivalent o US$250,000 (more at some banks) to invest.Te stated portolio management minimums o most private banking departments are negotiable, dependingon the client. You can choose to have your portolio managed or growth, income, or a combination o growthand income.

Buying Foreign Currencies

One o the advantages o a oreign account is that it gives you easy access to oreign currency markets.

Heres an example o how this strategy might pay o.

Lets say that you purchased a one-year CD denominated in euros with U.S. dollars on Jan. 1, 2001.You invested US$10,000 in the CD, which had an interest rate o 4.0%. On that date, US$10,000 wouldpurchase EUR$9,414. One year later, on Jan. 1, 2002, you rolled over the CD or another year, this time at2.5%. And you did the same Jan. 3, 2003, at an interest rate o 2%.

On Jan. 1, 2004, your CD will be worth EUR10,236. But in the meantime, the euro has appreciatedagainst the U.S. dollar.We went to press Dec. 9, 2003, so we dont know the year-end euro-dollar exchangerate. But i its around what it is today1.22i you cashed out your CD on Jan. 1, 2004, and converted itback to dollars, you would have US$12,488, less oreign exchange ees.

Because o your currency gains, your total three-year return nearly tripledrom 9% to 25%.

O course, the euro could have just as easily gone down against the U.S. dollar. But since the long-termtrend o the dollars value is down, investing in global currencies may be an intelligent diversication.

Account Fees Youll Pay

Teres no getting around it ees in oshore accounts are higher than they are in U.S. accounts. Tis is aconsequence, in part, to the act that oreign laws generally prohibit nancial institutions rom disclosing anyinormation about individual accounts to outside sources. In contrast, U.S. banks and brokerages can reelysell or exchange inormation about your account to third parties.

Greater privacy, though, comes with a price. Fees and commissions you can anticipate paying oshoreinclude:

Currency conversion ees and hidden spreads.

Commissions or currency conversions generally are about0.15%- 0.5%, but beware o conversions that dont occur at or near the interbank rate, but at a less avor-able retail rate that may mask a hidden charge o 2% or more.

An account maintenance ee. Tis varies rom a at rate equivalent to about US$50/year to a percentageo your accountas high as 0.25%/year.

A statement preparation ee. Each time the bank executes a transaction, it charges a ee to print and mailyou a statement.

Commissions oshore are signicantly higher than in the United States. Expect to pay 0.15% or more or


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each bond trade and 0.3% or more or each stock you purchase. Commissions or precious metals gener-ally are about 1%. You may even be charged a commission o 0.15%-0.5% to purchase a CD (althoughgenerally not to roll it over). Te good news, though, is that commissions are coming down due to greatercompetition.

Loads and management ees. When you purchase oshore unds, you can anticipate paying a ront endload o 5% or more, plus annual management ees as much as 3%. Even oshore unds without a ront-end load may impose a rear end load i you sell beore a specied number o years have elapsed.

Sae custody ees. For securities the bank purchases or your account, you will pay a custody ee rom0.15%- 0.5% per annum based on their market value. As custodian, the bank collects dividends, couponpayments and, i the security has a maturity date, the value o its principal when it matures. Tese ees areor collective custody. Tis means your holdings are not segregated rom alike and interchangeable securi-ties o other investors. Higher ees apply or individual custody, in which case your holdings are segregatedand placed in secure storage under your name. In both types o custody, your holdings are generally notpart o the banks balance sheet.

Portolio management ees. A typical portolio management ee is 1% per annum. Tis ee does not in-clude ees and commissions or trades on the account.

Other ees.

Many services provided at no charge by domestic banks or brokerages are only available or aee at oshore banks. o avoid surprises, beore ordering a service, ask about the ee associated with it.

Six Fee-Saving Strategies

Here are a ew ideas to reduce ees in your oshore account:

Limit securities purchases to blue chip issues that you plan to hold or an extended period.1. Tis reducescommissions or securities trading.

Purchase closed-end unds that trade like stocks on a securities exchange.2. Tis eliminates the loads imposedby many oshore unds. Your bank will purchase and sell the und at the market price, which mayrepresent a premium or discount to the value o the underlying assets. You pay the same commissions

as you would or any other security. Note: We generally do not recommend paying premiums orexchange-traded unds (EFs).

ake delivery o your securities and precious metals and maintain custody in a saety deposit box or private3.vault. Tis avoids custodial ees, but you will be responsible or collecting dividends, coupon pay-ments, etc. I you want to sell your securities, you will need to nd a broker willing to execute thetrade and then arrange to have the certicates or metals securely conveyed.

Use intermediaries or currency conversions.4. I your bank will not conduct a trade at or near the inter-bank rate, you may want to use a oreign currency account or trade currencies through an intermedi-ary oreign exchange broker. One such intermediary isAsset Strategies International, headed up byCouncil o Experts member Michael Checkan (www.assetstrategies.com). Another oreign exchangeservice is www.customhouse.com, with an online afliate at www.xe.com/x.

Instruct your bank not to mail you account statements. Tis will eliminate or substantially reduce5.statement ees. At some banks, you can arrange to access them online.

Ask or a lower ee. I you are a good customer, and believe that a ee or a trade or service is too high,6.just say so. Chances are the bank will reduce it to a more reasonable level.

apping Your Oshore Nest Egg

Its generally best to leave your oshore assets oshore unless you need to tap into them in an emergency.Tis keeps the assets o the domestic radar screen. But i you require access to these assets, the same meth-


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ods used to und oreign investments may also be used to reclaim them.

Te easiest and most convenient way to obtain payments rom an oshore bank is via wire transer. It may alsobe possible to have a check issued in your domestic currency by a correspondent bank located in your country.

I you open a large enough account (approximately US$5,000 at commercial banks, higher at privatebanks), you can apply or a debit card to withdraw unds. Ask whether the card can be used outside the

country o origin and what the ees are or using it. Also nd out i the bank or credit card network imposes acurrency conversion ee i you need to withdraw unds in another currency.

However, dont use a debit card i you are seeking privacy rom your government. Te U.S. governmenthas obtained the credit card records o hundreds o thousands o Americans. Tese Americans allegedly usedoshore debit cards tied to bank accounts that the IRS says were never reported to the U.S. government andor which taxes were never paid.

Where to Open Your Foreign Account

Banks are part o modern commerce in every country. But Te Sovereign Societys top country picks oroshore banking are Austria, Denmark, Panama, Switzerland and Liechtenstein. We recommend these juris-dictions because they oer avorable laws to oreigners investing or doing business there, including (in most

cases) zero taxes or non-resident investors.

How We Saved You by NEVER Recommending Switzerlands Largest Bank

August 2008by Robert E. Bauman, JD

As you may have heard, the once venerable Swiss bank, UBS has taken a turn or the worse over the lastyear.

When the sub-prime crisis hit the banks last year, UBS was caught right in the crosshairs. Eventually, theSwiss bank had to ess up to more sub-prime exposure than any other bank in Europe. Already the Swiss bankhas written-down (crossed o) more o their books than any other bank worldwide.

ruth be told: We did not oresee the terrible UBS business judgment that led to this billion dollar loss(very ew could have guessed a Swiss bank would be so shortsighted).

No, what disturbed us since Te Sovereign Society began was UBSs unwillingness to stand up or theirclients nancial privacy.

It all started back in 1998, when UBS surrendered to demands rom the U.S. Federal Reserve. Te Fedgave their blessing to the 1998 merger o Swiss Bank Corp. and Union Bank o Switzerland which createdUBS.

But the Fed only signed o on the decision ater UBS agreed to provide U.S. regulators all inormationnecessary to determine and enorce compliance with [U.S.] ederal law. No doubt, that meant U.S. tax lawstoo.

U.S. regulators had threatened to shut down the banks extensive U.S. operations, (an implied threat thatstill hangs over UBS today). Rather than deend their clients privacy rights and Swiss bank secrecy, the bankcompromised in a big way.

Tat is why we have always advised U.S. depositors considering Swiss banks to avoid UBS AG and anyother Swiss bank with U.S. based branches, afliates or banking operations, other than a mere representative


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ofce.

We have inormal arrangements or our members with reputable private investment banks in Switzerland,Liechtenstein, Austria, Singapore, Hong Kong, Monaco and other jurisdictions that do guarantee nancialprivacy by law and have no sub-prime exposure.

As I said, as part o UBSs agreement with the Federal Reserve, they agreed to divulge nancial inormation

about their clients (which is unheard o in Switzerland).In other words, they agreed to run like an American bank. So is it any wonder that this bank suered

under sub-prime exposure just like the other American banks?

Go East or Your Private Banking!Why Singapore and Hong Kong Are Quickly Gaining Ground

as the New Money Havens

July 2008by Jack W. Flader, Jr

Not so long ago, the joke was that you couldnt walk down the central districts o Hong Kong and Singa-pore without tripping over a plethora o lawyers.

Fast orward to 2008, and you still hear the same joke. Only this time, you cant walk into a power break-ast, lunch, cocktail hour or gala dinner without tripping over a mass o well-groomed private bankers.

Te Go East mentality o private bankers has created opportunities or many as well as concerns regard-ing the realities acing the industry.

Why Bankers Are Going East

Te onslaught o private bankers is heading east in earnest largely or two reasons.First, the European Unions inamous tax savings directive has orced bankers to pick up and move rom

Europe. Te now inamous tax demands bankers to withhold taxes rom their clients.

Tis eort to coerce greater transparency has chased the well-heeled Swiss, Austrian, and Liechtenstein pri-vate bankers to Hong Kong and Singapore. Once they set up shop in Singapore or Hong Kong, these privatebankers can continue to ply their trade without worrying about Europes longest arm grabbing their clientswealth.

Second, the Asian Pacic Wealth Report boasted in 2006 that high-net worth individuals in the regionhold assets equivalent to US$8.4 trillion. Tats up by more than 10% rom 2005. And they also orecastedthat annual growth would jump 8.5% per annum to US$12.7 trillion by 2011.

What Hong Kong and Singapore Can Oer You

It is clear to those bumping into private bankers every day at upscale restaurants, that the banking industryhere is growing at top speed. Tis oers many opportunities such as...

Access to international equities, bonds and oreign exchange that may not be available via your homebanker

Strong banking privacy

Protection rom anyone who might want to sue you in the uture


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All the investment potential you would expect rom a private bank in Switzerland or Liechtenstein

An easier way to buy Asian real estate as local banks are well-versed in lending within their territories

Te peace o mind that comes with having a portion o your savings ar beyond the economic troubles oboth Europe and the U.S. right now.

So by all means, go east or your private banker, but be prepared or the rough and tumble, competitive

environment o Asias crowded private banking arena!


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Te Matter O Cash

CHAPER FOUR

Te Matter O CashGold, Money And Freedom:Inseparable Siblings ......................................... 27

Why A Few Misplaced Strong Dollar Words CouldForce Te Buck Higher .................................... 28

Te 3 Currencies Everyone Will Want When OilHits $150. ........................................................ 29

Why Emerging Market CurrenciesFrom Argentina to South AricaOer Extraordinary Opportunities .................. 30

Gold, Money & Freedom: Inseparable Siblings

March 2007by John Pugsley

Money is the most important thing in the world. It represents health, strength, honor, generosity and beauty

money is the counter that enables lie to be distributed socially: it is lie as truly as sovereigns and bank notes are money. George Bernard Shaw

When Shaw wrote those words in 1906, the money he praised was not the money we hold today. Tesovereigns he reerred to were quarter-ounce solid gold coins, and the bank notes he mentioned were redeem-able in gold. At the beginning o the 20th century, all the major nations, including the United States, GreatBritain, France and Germany, were on the gold standard. Te governments o these nations chose gold as themedium o exchange or a simple reason. Tey knew that or over 2,000 years, governments that issued cur-rencies not ully backed by gold or silver eventually toppled into economic chaos.

Te Roman Empire rose and ell through the debasement o gold money. By secretly pilering gold romcoins, emperors unded oreign adventures and expanded their power. In 15 B.C., Emperor Augustus estab-

lished the Aureus at 126 grains o gold. In 60 A.D., Nero devalued it to 110 grains. By 200 A.D., it wasdown to 60 grains. And by 268 A.D., the coin no longer contained any gold at all. Each reduction in the goldcontent was used to increase the number o circulated coins. Gradually, the Roman Empire crumbled.

In 1720, John Law convinced the King o France he could gain revenue without raising taxes. His moneycreation schemes brought hyperination and nancial ruin to France. Only 70 years later, during the FrenchRevolution, the French government again pretended prosperity could be restored by issuing paper money,called assignats. Again this resulted in economic ruin or the country. Mirabeau, a French politician o the day,said that inamous word, paper money, ought to be banished rom our language.


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Te Matter O Cash

Near the end o the 19th century, U.S. bankers and politicians again argued to abandon the gold standard.In 1876, Andrew DixonWhite, American college president and diplomat warned a group o U.S. congressmenabout the potential consequences.

Te expansion o paper money, he wrote, stimulates overproduction at rst and leaves every industryaccid aterwardbreaks down thrit and develops political and social immorality. Some listened, but in theend, the paper money advocates won.

In 1906, Shaw could not have known the gold-backed money he praised was disappearing. Te British,U.S. and German governments couldnt nance war without abandoning the gold standard. Te U.S. passedthe Federal Reserve Act, empowering the newly created Fed to issue IOUs backed not by gold but by reasuryIOUs. Te German government simply began printing Reich marks. And the venerable British sovereign soondisappeared rom circulation.

Te gold standard crumbled, allowing the world to be inundated by paper money. Te 20th century wasits atermath.WorldWar I, the roaring wenties, German hyperination, the tari wars, the Great Depres-sion, Hitlers rise to power, Roosevelts outlawing o Americans right to own gold, andWorldWar II, are all theospring o the abandonment o gold-backed money.

oday rivers o dollars, pounds, yen, euros, pesos, yuan, rubles, ow reely rom central banks. Tey

nance government expansion and erode every citizens control o his or her uture. As sovereign individuals,we are relatively helpless to alter how gold rises and alls as money. However, we can devise a personal goldstandard or ourselves, by investing in gold. We can invest in companies that produce gold and diversiy intothe strongest o the a

Why a Few Misplaced Stronger Dollar Words Could Forcethe Buck Higher But It Will ake ime

July 2008

by Jack Crooks

Something youll learn once youve got a good amount o trading under your belt is the markets dontowe you anything. And i you ever come to a place where you think youve got them gured out, expect agood beating instead. Te last ew months have certainly dished out a air share o beatings to global inves-tors. Ater touching an all-time low on March 17, the dollars consolidation path is denitely oering upar more questions than answers. And the nancial market backdrop isnt shedding a whole lot o light onthe situation.

Is Tis a Sign o a Dollar Bottom?

On the bright side, there are signs that we could nally see the dollar bottom this time around.

Last month, President Bush got his two cents in about the need or a stronger dollar. But o course thesecomments have little clout, and merely mirror reasury Secretary Hank Paulsons agenda or a stronger dollar.Tats an agenda that has mostly been backed by empty words rather than substantive action.

However, the President was just over in the Middle-East trying to secure the current dollar pegs amongSaudi Arabia, the United Arab Emirates, and Qatar. Te potential or de-pegging among the Gul Coopera-tion Council (GCC) countries has been a talking point or dollar bears over the last year or two. Mr. Paulsonalso mentioned a possible dollar intervention. Easier said than done, but he may get help...

Last month Ben Bernanke sent the dollar soaring with ination comments aimed directly at the conse-


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Te Matter O Cash

quences o a weak dollar. Its VERY rare or central bankers to discuss oreign exchange rates. But Big Ben hasgone as ar as labeling a weak dollar as a major negative. alk about a change o heart.

O course, those comments were soon outdone by European Central Bank chie Jean-Claude richet. Hisremarks sent the euro soaring and the dollar reeling. Te dollar-rout continued and trumped the dollars pushto new near-term high.

Ten Bernanke came out ring again. His comments capped a strong dollar recovery and opened up thedoor or ollow-through strength. Bernanke stated simply that he and policymakers will strongly resist asurge in ination expectations.

Its airly clear where the Fed stands. In the ace o a struggling economy, policymakers may not be able toraise their Fed Funds rate. But with rapidly rising prices, its a good bet that the Fed

Funds rate wont be going lower than the current 2% any time soon.

Tese are welcomed developments that at least point in the right direction or the buck. But it could stillbe a bit too soon to schedule a pause in the dollars long road down.

More Dollar alk, Not Enough Action

Ultimately, a bearish ag pattern is emerging. Tis would imply an eventual break lower and then a power-ul breakdown to new all-time lows or the buck.

Until a there is clear resolution to the upside or downside, expect a lot o talk and a lot o whiplash.

I you dont have the stomach or the whiplash, I suggest you stay away rom the buck or now. Instead staylong the Aussie dollar and Japanese yen EFs that are currently in the SI portolio.

Te Tree Currencies Everyone Will Want When Oil Hits $150 a Barrel

Plus a FDIC-Insured Way to Own Tem All

July 2008by Erika Nolan

Its ofcial. Te historic run-up in oil prices now exceeds even the manic rise o tech stocks in the late 90s,when these shares shot up 640%.

Oil is now up 697% in the last seven years. But unlike tech stocks, oil has strong undamentals going orit. Tats why prices wont drop signicantly anytime soon.

But while were all moaning about higher prices and scurrying or ways to cut back on our energy bills,three countries are very quietly reaping all the rewardsand you can too.

Tree Countries Cheer Oil Prices On!

With oil prices steadily rising, you could say these three countries have already hit pay-dirt. Teir neigh-boring countries are paying hand over st or their resources. And all three countries are quietly tucking thoseassets away in their coers, and building up their economies in the process. And o course, long-term theircurrencies are also proting, rom these soaring oil revenues.

Tese ortunate countries are Australia, Canada, and Norway.

According to our Currency Expert, Jack Crooks: In a world with an insatiable demand or commodities,


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betting on the commodity-based currencies over the long-term does seem to stack the odds in your avor.

For starters, Australia benets rom the growing demand or raw materials rom emerging economies andspecically rom China. As a commodity-based currency, the Australian dollar is a popular currency withinvestors seeking to take advantage o the growing global need or resources.

Meanwhile, Canada has the second largest oil reserves in the world, and the oil-guzzling U.S. is one o its

best customers. As such, the value o the Canadian dollar or loonie is closely tied to the price o oil.And nally, Norway is the third largest net exporter o oil. Norways population enjoys one o the highest

standards o living and a generous pension program ueled by oil revenue. Historically, the Norwegian kronealso tracks the price o oil.

Introducing the Long-erm Way to Play Oil Currencies

EverBank has created a special new certicate o deposit (CD) that gives you exposure to each o thesecountries, and their dynamite currencies. Its called the NEW WorldEnergy CD.

Tis CD was specically designed to give you ultimate diversication across three currencies or a lowerprice. I you invested in each o these currencies individually, you would pay US$30,000. But this CD

packed with all three currencies is available to you or a minimum investment o US$20,000.Best o all, this CD is FDIC-insured. Tat means that any account you open at EverBank is insured up to

US$100,000, just in case.

O course, this NEW WorldEnergy CD has already enjoyed some impressive gains over oils recent run-up.In act, its jumped over 16% in just the past year. But these commodity currencies will still pump up yourlong-term currency portolio.

And its the best way to ght against those higher gas prices as oil prices head higher.

Tis CD is available in three to six-month terms. But I recommend you hold these currencies long-termor superior protection in your currency portolio.

For more inormation on the NEW WorldEnergy CD, you can view EverBanks page at http://www.ever-bank.com/001CurrencyCDIndexNewWorldEnergy.aspx?reerid=11961 or call EverBank at 1-800-926-4922.

Why Emerging Market Currencies From Argentina to South AricaOer Extraordinary Opportunities

August 2008by Jack Crooks

Teres no denying that some o the best investment opportunities on earth have been ar outside theUnited States over the last ew years. In act, up until the last year (when the credit crunch put a dent

in global investment values), investors were practically throwing money at the astest-moving emergingmarkets.

And even with the credit crunch, these so-called developing countries are still banking some seriousprots. According to Te Wall Street Journal, this market is growing millionaires like weeds, at a rate ve timesaster than just last year.

But honestly, thats old news. Im sure youve been introduced to emerging markets beore. But you maynot know about the incredible opportunities available to you in emerging market world currencies otencalled exotic currencies.


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Never heard o exotic currencies? Youre not alone. Tis market has almost exclusively remained the play-ground o large Wall Street institutions. In act, I would say the overwhelming majority o individual investorshave never even considered investing a single dollar in this exclusive market.

But now, thanks to the growth o many ne retail oreign exchange brokerage rms, really anyone

can invest directly in the hottest emerging/developing world currencies in every major region across the

globe, including Asia, Europe, the Middle East, and Latin America.O course, this opens up a whole new asset class opportunity to your portolio (which is a welcome devel-

opment considering how stocks and unds have been hemorrhaging lately). But Gmore importantly, exoticcurrencies give you a chance to dramatically enhance your returns EVEN during bear markets.

Te reason major Wall Street investors like these currencies is because you can add increasing amounts oleverage by trading exotics. Tis leverage simply isnt available when youre trading stocks. Tat means youhave the opportunity or huge returns in a very small window o time.

Why Exotics? Arent the Euro and Pound Good Enough?

Its true that most investors tend to stick to the seven major currencies. Tose include the big name cur-

rencies like the U.S. dollar, pound, euro, Canadian dollar, Swissranc etc. I, mysel, am also a huge an o theseven majors.

But the truth is: Tese currencies are not the only game in town. By expanding your portolio to the exot-ics, you can take advantage o the incredibly protable trends that will drive the currency markets years romnow. You could say youre investing in what COULD BE the next major currencies on the planet.

But know this: Tese ast-moving currencies are not or the aint o heart. Tese currency plays are orhard-nosed investors who are ready to jump in the most volatile markets to grab the serious gains.

Legendary emerging markets und manager Mark Mobius trots around the globe digging out investmenttrends or the empleton Fund group. Recently, he identied three key major themes that will drive theemerging markets in the years to come.

I believe these key themes are the exact same reasons why well see much aster growth in the emerg-

ing world currencies compared to the seven major currencies rom the developed countries. Tat meansmore prots

Teme 1: Asian Consumers Finally Buy

Asian shoppers are nally starting to open their wallets. Already we are seeing a sign o vibrant consumer-ism taking hold as overall wealth, as measured by per capita income. But hang on to your hat...because we arejust at the beginning o this boom. Let me explain.

In an emerging world market, it has been shown there are key thresholds o per capita income. Onceconsumers break through those thresholds, it typically leads to huge growth in consumer spending.

For example, back in the beginning o the 20th century a French economist named Atalion showed that

i the average per capita income or a country is below US$1,000 no one buys a V. When it moves aboveUS$1,000 almost everyone buys a V.

We are seeing similar threshold levels or automobiles and other consumer items. So while market tim-ers are dismissing the small blips in per capita income, you and I know these small blips are a sign o a hugebooming consumerism to come.

I the Asian population is buying, the huge global international rms will rush there to grab a piece o themarket share. Tat means capital rom the developed world will ow into the emerging world in the next ewyears. Capital ow drives ree-oating currencies, so the exotic Asian currencies will also prot.


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CHAPER 5

Investments

What to Do When Your Stock Earnings Wont BeatInation or the Next 10 Year ........................... 33

How to Invest Where the Conservative Swiss Flyor Saety .......................................................... 35

Your Guide to Understanding Foreign Currenciesand Abandoning the Sinking Buck .................. 37

Diversiy Your Wealth with the Worlds op SixCurrencies and Gold (Existing ......................... 39

What o Do When Your Stock Earnings Wont Beat Ination or the Next 10 Years

September 2008by Eric Roseman

Mark my words: Te next decade will be a challenge or stock investors.

Over the next 10 years (and possibly longer) were all acing a deadly combination o rising goods ina-tion and accelerated asset deation. Tis two-punch combo could hit your portolio rom all sides i yourenot careul.

For the rst time since the 1970s, weve been rocked by two severe bear markets in the same decade. Amaz-ingly, over the last 10 years the S&P 500 Index has averaged a lowly 1.4% annualized return while the MSCIWorld Index has gained a paltry 2.5%.

Returns like these wont exactly nance a comortable retirement. And thats without ination. I youadjust or ination youll discover U.S. stocks have declined 3% per annum. In other words, stocks have notbeen beating ination or the last 10 years.

Te Pathetic Dollar Drags Down Prots

Even with the recent run-up in gains in August, long-term the dollar is still a pathetic monetaryinstrument.

A months worth o gains does not change the long-term picture or the dollar. Ination has literally eatenaway at the bucks purchasing power or the last century. Te dollar has sunk lower and lower under the guiseo the Federal Reserve since 1913. In act, the worlds reserve currency has shed a ormidable 96% o its valueagainst gold since 1971.

In short, Americans and all international investors holding dollars continue to suer rom a dramatic loss


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o purchasing power. Worse, the weight o the ongoing credit crisis and its astronomical costs will continue tosuocate the U.S. because the Fed will expand credit to pay or bulging decits and uture bailouts.

Admittedly, the uture looks pretty scary or U.S. and international investors. In this type o bear market,you need an arsenal o options to protect your downside exposure and minimize the risks in your portolio.

Here are my ve avorite strategies or protecting your portolio during this era o chaotic markets:

Selective deep value and income equities

Te SI Chaos/Market Hedge Portolio

Fine Wine Investing

Gold

Foreign Currencies

Its ime o Get Selective with Your Equities

As I said, many stocks will remain hostage to rising ination and a decline in domestic consumption overthe next several years.

However, that does not mean you should give up on EVERY single stock. On the contrary, you should stillkeep a handul o both major and emerging markets in your diversied portolio. Depending on your age andrisk tolerance, equities should represent no more than 35% o your portolio.

Mutual unds are one o the easiest ways to diversiy your portolio. Value-based mutual unds such asweedy, Browne Global Value Fund in the United States and Norways Skagen Global Equity Fund are excel-lent long-term products.

SI continues to recommend a host o companies and securities worldwide that trade at discounts to theirpeers and averages. Companies like Nestl and Krat Foods are highly protable multinationals that will con-tinue to eed the world and grow earnings.

For stocks, concentrate on securities that pay dividends. Even in a tough market, dividends can make a bigdierence. Stock prices can shit daily but dividends give you real money no matter what. Youll need those

dividends long-term as equity markets come undone.

Prot rom a Decade o Chaos!

One o the best ways to hedge your market exposure is to buy investments that dont ollow the generaltrend o the stock market.

In our December issue, we recommended the SI Chaos/Market Hedge Portolio to help your portoliozig when the markets zag. Since January 1, the SI Chaos Portolio has gained 9.55% while the MSCI WorldIndex lost 15.6% the S&P 500 Index dropped 14.9%.

Right now, the Chaos Portolio includes the Japanese yen, short-term reasury bonds, a reverse

index und and the Prudent Bear Fund. Over the next ew months, Ill introduce other chaos investments

that can potentially thrive amid market mayhem.

Fine Wine: Te Anti-Stock

Want something completely disconnected rom the stock market? ry ne wine.

Te London International Vintage Exchange (Liv-Ex) is an index o leading vintages around the world.Just since 2004, this index has gained a cumulative 162%. Plus, its already up 9.5% in 2008.

Fine wine has smashed the returns generated rom major market stocks over the last several years. In some


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While weve been monitoring these difcult markets rom our ofces here in Zurich, youve had your ownront row seats to watch these markets rom the center o the sub-prime mayhem in the United States.

O course, in the asset management business, you cant just wait around to see where the world economywill go next. Tats why over the last year, weve created our best short-order, anti-stock portolios or all ourclients. Tis short-order portolio has included an overweight o precious metals, cash and high-quality, short-term bonds.

Our strategy has worked. Im happy to report our company has posted a positive perormance so ar or 2008.

Why Stocks Are NO the Best Idea Right Now

But o course, everyone wants to know what lies ahead in the next ew months. Our clients keep asking usi its time to aggressively start investing in stocks again.

Honestly, I believe you should sit this one out. Im a conservative asset manager, so I dont try to outsmartthe markets. Id rather preserve your capital and be ready or the next big up move in the markets. I youagree, I humbly suggest you avoid risky stocks or now. Instead, Ive ound two stronger alternative plays hid-ing in a relatively unknown area o the currency markets.

Te Best Anti-Stock Plays on the Market Right Now

So whats the alternative to stocks? Usually, when markets are sinking, asset managers recommend buyingshort-term U.S. reasury or euro bonds. Unortunately, ination has climbed so high recently that you cantnd a decent yield on either one o these options.

But imagine a global play that has both the strength and security o a bond, but it lets you actually beatination. Tis play lets you earn income so you can oset the current high ination rates. Plus, it puts you inthe best position to dive back into the stock markets when the time is right.

Its all possible with AAA rated currency bonds rom the right nation o course.

Te wo Strongest Commodity Currencies in the WorldYoure looking or high-quality, short-term currency bonds that oer the best yields. All over the world,

some o the highest bond yields are located in two nations: Australia and New Zealand.

Both the Australian and New Zealand economies have held their strength right through this sub-primedebacle. In act, while the Fed was slashing rates to the bone, both the New Zealand and Aussie Central Banksmaintained some o the highest interest rates in the world.

Australia has an amazing growth story right now. China has been buying up all o Australias goods, whichhas orced more unds into this countrys already robust economy. As this emerging market continues to grow,the hungry Chinese consumers will just demand more Australian goods.

Wealth-wise Checklist: What I Look or When Im Buying Bonds

Is your prospective bond backed by a strong economy? Tis is the most important actor when youre1.shopping or bonds. I search or countries that have high interest rates, rising ination and a unda-mentally strong currency.

Whats the yield? As Ive oten said, Im a conservative investor, so I look or yields that are 4% or2.higher per year.

Is this a short-term or long-term bond? In these unsettling markets, its better to buy short-term bonds3.with two-year maturities or less to protect your capital.


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How liquid is your bond? Can you nd many alternatives to your prospective bond? I so, that means4.youll have more liquidity.

Does it carry the coveted AAA rating? I dont invest i a particular bond carries less than an AAA rating5.rom both Standard & Poors and Moodys.

I that wasnt enough, Australia just recorded its best trade surplus in the countrys history in the rst

quarter. Tat will only strengthen the Australian dollar and the overall economy even urther in the c

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