Time to Diversify Internationally

[The Machine]

 

 

Savers need to invest & diversify across international border today...

 

I AM delighted to have Nick Giambruno, the senior editor of International Man, in our hot seat this month, writes Dennis Miller of Miller's Money from Doug Casey's research group.

 

As you might have guessed, Nick is a real expert on all things international. From international real estate to international government regulation to international business, Nick is the go-to guy. While my passport is good for another eight years, I'm sure he has to replace his annually. So, without further ado...

 

Dennis Miller: Nick, welcome. 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.

 

Dennis: Today I want to focus on the financial issues of seniors and savers. For the most part, our subscribers 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 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.

 

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.

 

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: Okay, 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.

 

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: Smart 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 with our subscribers?

 

Nick: I urge all of your subscribers 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. On behalf of all our subscribers, thank you for taking the time to share your thoughts.

 

If you want to learn more, Nick and his team have published an inexpensive special report, Going Global 2013. It is the best, most comprehensive report on internationalization I have ever read. Unlike most of the material on internationalization, which is written for ultra-wealthy investors (by someone who is trying to garner their business), this report is written for folks like you and me.

 

[toes1]

Thanks-- this was very interesting.

[vietnam1969]

Thanks Machine-----Enjoyed the read.

[skeetdog]

Thanks Machine, This's an interestin' angle...

[TheHyperLinker]

Here is the text of an I received from newsmax@reply.newsmax.com

"Starkest warning yet from world's leading 'Safe Money' expert:
SOS:
Get the heck OUT
while you still can!

INSIDE: A hidden time bomb threatens to push millions more out of jobs ... out of their homes ... and into dire poverty. You're not immune. New evidence suggests it could blow a gaping "hole" in your retirement portfolio — starting TODAY.

Build a virtually impenetrable wall around your portfolio — my
brand new eBook is guaranteed FREE today.
Just Click HERE ...

Dear Cautious Investor,

If you skip this, it may be too late to recover.

You see, a devastating reality is about to wallop millions of American investors. They'll be FAR POORER as a result ...

Mind you, this warning has NOTHING to do with idle speculation.

I see that it's inevitable — a near certainty. In fact, the wheels are already in motion.

God forbid you're relying on your 401(k), IRA or even your bank savings account to live comfortably in your golden years. They're shrinking in value — even as you read this.

And your home? The bedrock of your accumulated wealth?

Even that is in extreme danger.

Just to be clear, I'm talking about a brand new investment bubble that is ...

• 16.5 times larger than the dot-com bubble which burst with the collapse of tech stocks in 2000 ...

• 11.6 times larger than the real estate bubble, and ...

• 47.5 TIMES BIGGER than the government bailouts after the financial crisis began in 2008.

Yikes!

If you want to safeguard your family's standard of living, it is imperative you get rid of the assets that will go into freefall when this giant bubble bursts — what I'm calling the Great Hidden Crash of 2013-2014.

Do it now ... before it's too late. Full details in my brand new eBook, Beating the Bond Bubble — 6 Bubble-Busting Investments for Income and Profit ...

Claim your FREE eBook and escape the bloodbath ... Just click HERE!

Best wishes,

Mike Larson "

This bubble will be BIG and I am following the link, where Mike is giving me the eBook in chapters - hope he doesn't throw me a curve ball where I have to pay,(don't have money to waste) but want to protect my wife's IRA as it is all we have, apart from the elusive Dinar RV.

 

It all adds up to a nasty "POP".