Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Retirement Reboot - The Ultimate Layer of Financial Protection

Personal_Finance / Pensions & Retirement Jan 02, 2014 - 04:15 PM GMT

By: Don_Miller

Personal_Finance

From international real estate to international government regulation to international business, Nick Giambruno, the senior editor of International Man is the go-to guy. While my passport is good for another eight years, I’m sure he has to replace his annually. Nick has recently been traveling with legendary investor, Doug Casey, and I had the opportunity to ask him a few questions about this trip as well as tips for folks looking to protect themselves and their wealth by diversifying internationally. So, without further ado…


Dennis Miller: Nick, please tell us about your last trip. Cyprus, I believe?

Nick Giambruno: Thanks, Dennis. It’s great to be here. Yes, it was Cyprus, with the original “International Man” himself—Doug Casey. Cyprus is the best recent example of how a desperate government acts and how internationalization can protect us.

As you are no doubt aware, on a seemingly ordinary Saturday in March when people least suspected it, the government of Cyprus quickly closed the banks, imposed capital controls, and announced the confiscation of customer deposits. Doug and I went to see the fallout firsthand. The in-person perspective was helpful for learning when and how the next Cyprus will occur.

Political Diversification Is a Universal Need

Dennis: Today I want to focus on the financial issues of seniors and savers. For the most part, seniors are staying put geographically. So why should they invest in international companies? Why use a broker outside of their home country? These ideas make folks in my generation squirm a bit. So tell us why seniors—even seniors with modest portfolios—should internationalize some of their assets.

Nick: Seniors, savers, and others depending on fixed, nominal incomes should definitely consider internationalizing a portion of their assets. They often suffer the most from the predictable actions any desperate government may take as its fiscal health deteriorates. That includes capital controls, wealth confiscation through currency devaluations, one-off emergency “taxes” on financial accounts—which occurred in Cyprus—nationalizing retirement accounts, and various other means.

It is incorrect to assume this couldn’t happen in your home country. If history shows us anything, it’s that it could happen in any country. That’s why taking practical measures to protect yourself and your family is prudent.

These risks are particularly high under most Western governments, including the US. They have current debt loads and future spending commitments that all but guarantee that eventually they will try to unscrupulously grab as much wealth as they can.

This is why Doug Casey has said over and over that diversifying your political risk through internationalization is his single most important recommendation today.

Through internationalization, you place your money outside the immediate grasp of your home government. This diversifies your political risk. When wealth is outside of its immediate reach, it is much more difficult, if not practically impossible, for a desperate government to confiscate it on a whim.

For example, some Cypriots did their homework and concluded that their home country was not a safe place to store a lot of cash. These people moved their savings to different countries, and avoided the so-called one-off emergency levy.

The need for political diversification is universal. It does not just apply to Americans or Europeans, but to everyone in the world. Of course, there are varying degrees of protection. People with modest means can internationalize, often without leaving their own home. Whether it’s purchasing a foreign public company with your US brokerage account, purchasing real estate in a foreign country, or anything else in between, everyone can internationalize their assets to some degree.

Also—and this is critical—as long as you follow the reporting and other legal requirements, internationalizing your assets is completely legal. There are a lot of popular misconceptions about that, so it’s important to emphasize.

Retirement Accounts Are a Common Target

Dennis: So, when a desperate government can’t pay its bills, it just takes money from people who have it?

Nick: Yes, that is exactly correct. The methods and the rhetoric may vary, but the end result is always the same. Any government that gets sufficiently desperate will siphon off as much of people’s real purchasing power as it can.

Take IRAs and other retirement accounts, for example. They are often the next targets after a desperate government imposes capital controls and implements other broad wealth-confiscation measures, such as official currency devaluation.

Here’s how it usually happens. A government will forcibly convert assets held in retirement accounts into “safer” assets, such as government bonds. Naturally, politicians will slickly sell the idea to the public as “for their own good.” In reality, it’s a way for a government to finance itself—by forcefully dumping its unwanted debt onto seniors and savers.

Dennis: How can internationalizing your retirement account protect you?

Nick: It’s much more difficult for the government to convert your retirement assets if they are outside of its immediate reach. If you have a standard IRA from a large US financial institution, it would only take a phone call from the US government and poof, your dividend-paying stocks and corporate bonds could instantly be transformed into government paper.

It’s happened in Argentina and numerous other countries, and it is certainly an option on the table in the US. Heck, there are already whispers about the US government assuming some risk for US retirement accounts. That’s code for forced conversion of assets into government bonds.

Obviously, this is much harder for the government to do if your retirement assets are sufficiently internationalized. It is pragmatic and prudent to structure your IRA and retirement savings in an internationally diversified way. As a practical matter, international assets are not as easy confiscate.

For example, you can structure your IRA to invest in foreign real estate or certain types of physical gold stored abroad. If and when there is some sort of decree to convert or otherwise confiscate the assets in your retirement account, your internationalized assets ensure that your savings won’t vanish at the stroke of a pen.

A Multistep Strategy

Dennis: Does this really apply here in the US? What about Europe and Japan?

Nick: Absolutely. Political diversification makes sense for everyone on the planet. For people in debt-ridden countries, it’s doubly important.

At the very least, you can diversify into a foreign currency or foreign company—steps you can take using most US brokerage accounts. However, these steps only internationalize your savings to a small degree. If your foreign investments are in a US brokerage account, they are still within the immediate reach of the US government.

Holding assets in a foreign brokerage account—say, in Singapore or Hong Kong—creates a much higher level of protection. Plus, if some of your cash and savings are in a foreign brokerage account, they won’t be trapped if your home country institutes capital controls.

Again, think about Cyprus. Doug Casey and I met with several Cypriot business people who said they were unaffected by the capital controls and confiscation because they kept cash in banks outside of Cyprus. Had they kept their money in Cyprus, it would have been subject to strict limitations on withdrawals and sending money abroad.

By holding their cash in Switzerland, for example, Cypriot companies diversified some of the political risk associated with their home country. Internationalizing part of your assets is like an insurance policy—one you are no worse off holding.

Dennis: OK, you’ve sold me. Keeping all of your money in your home currency and in your home country is risky. You could lose a lot, either through high inflation, heavy taxation, or outright confiscation.

At the same time, many folks with more modest portfolios want their money close by. What can they do to protect themselves?

Nick: Storing some physical gold in a foreign country is one of the best ways people with modest means can internationalize their savings. A number of service providers can help you do this from your own home. In some cases, you can also open foreign bank and brokerage accounts remotely without meeting high minimum-balance requirements.

A private, non-bank vaulting company is perhaps the best way to hold gold abroad. They allow you to rent a small safety deposit box in places like Singapore, Switzerland, Dubai, or Hong Kong.

Dennis: Our regular readers know that part of my Roth IRA is offshore. Many readers were surprised to learn that was legal. Are there easy ways to internationalize part of your IRA?

Nick: Yes, there are turnkey ways to do it. I touched on some of the details above. With a couple of important exceptions and limitations, it is possible and practical to structure your IRA so that it can open offshore bank and brokerage accounts denominated in foreign currencies, and invest in assets like foreign real estate and certain types of physical gold held abroad.

Success Demands Immediate Action

Dennis: Nick, I know you are a boots-on-the-ground type of guy. You’ve traveled to countries like Cyprus to learn how people have protected their money. Is there any common thread among those who successfully protect themselves?

Nick: Savvy people who live in countries like Cyprus and Argentina took action before it was too late. They saw the writing on the wall and didn’t wait. When you’re trying to protect yourself from the destructive actions of a desperate government, internationalizing a year early is always better than one day too late. When the window of opportunity closes, it shuts tight.

In order for these destructive measures to be effective, they have to be sudden, surprise attacks. That was the case in Cyprus. On a seemingly ordinary Saturday morning, Cypriots awoke to find that the banks had been indefinitely closed and capital controls had been put into place. Their savings were no longer safe, and it was a surprise to most.

The critical lesson here is: act before it is too late. To me, the financial direction of the US government and its implications are crystal clear. The window of opportunity to internationalize and insulate yourself is still open, but it gets verifiably smaller with each passing week. Now is the time to start developing and implementing your strategies.

Dennis: Nick, beyond protection from a desperate government, I think of internationalizing your assets as the ultimate investment diversification. Even if a Cyprus-type event never happens to us, it’s still the best way to hedge against inflation or deflation. Am I overstating my case here?

Nick: No, not at all. If one country is suffering an economic downturn, others are growing. If one currency is going down in value, others are rising. We used to credit air travel with making the world a much smaller place. The Internet has facilitated that ten times over. While Americans are used to investing in American companies, many people, even those with smaller portfolios, are now looking for the best investments in the world. If protecting your portfolio through diversification is important to you, then looking at worldwide opportunities is the way to go.

Dennis: Any final ideas you want to share?

Nick: I urge everyone to look at the worst-case scenario. No one knows for sure how far our government will go to confiscate wealth. At the same time, even if our government does not go to extremes, we are still ahead. If an investor diversifies internationally and takes advantage of worldwide opportunities, he will still be better off financially, and his portfolio will be much better protected.

Dennis: Nick, it’s been a pleasure. Thank you for taking the time to share your thoughts.

Nick: My pleasure, Dennis; thank you for asking me.

In my book Retirement Reboot, I discussed how easy the decision to go international was for my wife Jo and me. On the one hand, the thought of sending part of our hard-earned money to a country we had never visited to be looked after by a highly recommended person we had never met sounded absurd.

But on the other hand, we looked at the direction our country was headed. The annual deficit had doubled, and it was about to double again. We could see that sooner or later, this could destroy our wealth through high inflation. For us, going international was portfolio insurance, plain and simple.

You can learn more about how we did this in Retirement Reboot, which you get free with a risk-free subscription to Miller's Money Forever. In addition to the book, you get interviews with other experts like Nick to help guide you through very important niche topics. Recent interviews include:

  • Maximizing Your IRA with Terry Coxon, senior economist and editor at Casey Research;
  • Energy Profits with Marin Katusa, senior editor of Casey Research's energy publications and frequent commentator on BNN and other major media outlets;
  • Juniors for Seniors with Louis James, globe-trotting senior editor of Casey Research's metals and mining publications; and
  • Other esteemed colleagues.

Gain access to everything our portfolio has to offer, as well as access to these top minds through occasional interviews and input, with your risk-free 90-day trial subscription to Miller's Money Forever.

© 2013 Copyright Casey Research - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Casey Research Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules