{"id":49010,"date":"2014-03-26T21:06:11","date_gmt":"2014-03-27T01:06:11","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=49010"},"modified":"2014-03-26T21:06:11","modified_gmt":"2014-03-27T01:06:11","slug":"peter-schiff-shares-offshore-strategies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/26\/peter-schiff-shares-offshore-strategies\/","title":{"rendered":"Peter Schiff Shares His Offshore Strategies"},"content":{"rendered":"<h4><span style=\"font-size: small;\">By Nick Giambruno, Casey Research<br \/>\n<\/span><\/h4>\n<div id=\"article-body\">\n<p>I\u2019d bet that most <a href=\"http:\/\/www.internationalman.com\/go\/vxtds-2\/PIP\" target=\"_blank\"><em>International Man<\/em><\/a> readers are familiar with Peter Schiff. He is a financial commentator and author, CEO of Euro Pacific Capital, and is known for accurately predicting the 2008 financial crisis.<iframe loading=\"lazy\" src=\"http:\/\/trk.caseyresearch.com\/f\/?content_id=792&amp;code=PIP&amp;editorial=peter-schiff-shares-his-offshore-strategies-1\" height=\"1\" width=\"1\" frameborder=\"0\"><\/iframe><\/p>\n<p>He also has a very keen understanding of internationalization. Peter shares with me his strategies in this must-read discussion below that I am happy to bring exclusively to <em>International Man <\/em>readers. (If you are not already a member, you can <a href=\"http:\/\/www.internationalman.com\/go\/vxtgt-2\/PIP\" target=\"_blank\">join for free here<\/a>.)<\/p>\n<p><strong>Nick Giambruno:<\/strong> Peter, do you see the potential for another financial crisis in the US playing out in the not-so-distant future?<\/p>\n<p><strong>Peter Schiff:<\/strong> Unfortunately, yes. I mean, how soon is very difficult to tell. In fact, right now you\u2019ve got a high level of complacency. The stock markets are rallying to new highs, nominal highs. People seem to be convinced that the worst is behind us, that the central banks of the world have solved their problems by papering them over. But, you know, I don\u2019t think they\u2019ve solved anything. I think they\u2019ve compounded the underlying problems that caused the last crisis, and so now the next crisis will be that much worse because of what the central banks did, in particular the Federal Reserve.<\/p>\n<p>The Fed is right now trying to prop the economy up, the housing market up with cheap money, and it is operating under the delusion that one day it can take that cheap money away and the economy and the housing market will just sustain on their own, but that\u2019s not possible. The Fed is building an economy that is completely dependent on that cheap money. And so if you take it away, the economy implodes, but if you don\u2019t take it away, then it\u2019s worse.<\/p>\n<p><strong>Nick Giambruno:<\/strong> So what measures do you see coming into place\u2014things such as capital controls?<\/p>\n<p><strong>Peter Schiff:<\/strong> Well, certainly as currencies depreciate, governments look to try to find ways to stop the bleeding. What\u2019s really is going on with inflation is that you have a huge transfer of wealth from savers and lenders to debtors, and of course the US government is the world\u2019s biggest debtor, but a lot of American voters are in debt too.<\/p>\n<p>If you\u2019re a saver and you don\u2019t want to watch your assets confiscated through the printing press, then you\u2019re going to try to protect yourself. You might do that by moving your dollars abroad, converting them to foreign currencies, trying to get out of harm\u2019s way, and that\u2019s when you have the government potentially coming in with capital controls.<\/p>\n<p>Putting taxes on foreign currency transactions or maybe outright prohibiting them altogether, that will make it more difficult for you or more expensive to take protective measures. I think we\u2019ve already got the beginnings of capital controls in the United States. The government is making it very difficult for Americans to do business abroad. Many foreign financial institutions, banks, and even bullion depositories are refusing to do business with American citizens for fear of retaliation by the IRS or other government agencies.<\/p>\n<p><strong>Nick Giambruno:<\/strong> So what can Americans and others living under a desperate government do to minimize this risk?<\/p>\n<p><strong>Peter Schiff:<\/strong> Well, the first thing that you could do is minimize your purchasing power risk. So you don\u2019t have to get your money into a foreign bank or foreign brokerage account to get out of the dollar. I help Americans diversify globally within a US account, but their portfolio consists of foreign assets, whether it\u2019s foreign bonds, government bonds, corporate bonds, foreign stocks, dividend-paying stocks, commodities, or precious metals. These are all things that will protect purchasing power in an inflationary time period, and things that the federal government\u2014the Federal Reserve\u2014can\u2019t levy the inflation tax on.<\/p>\n<p>If you\u2019re more worried about political risk\u2014about the US government seizing your assets\u2014then you want to take the next step. This is not just getting out of the dollar, but getting your money out of the country. But again, the US government is making that more difficult right now.<\/p>\n<p>I know personally. I set up a foreign brokerage firm as a subsidiary of my foreign bank, which I also set up, called <a href=\"http:\/\/www.internationalman.com\/go\/vxt3u-2\/PIP\" target=\"_blank\">Euro Pacific Bank<\/a>. I did this predominantly for foreigners who were having trouble investing with my US brokerage firm. The securities rules and regulations are now so onerous that it almost caused me to view any foreigner as a terrorist. So if somebody in Australia wanted to open up an account with me, there was so much paperwork involved that oftentimes they would just give up halfway through the process. So what I did is I set up this foreign bank so that I wouldn\u2019t have to operate under those confines, so I can be more competitive to a foreign investor, but I can\u2019t offer these services to Americans.<\/p>\n<p>My foreign bank is no different than many other foreign banks. In order to really protect the privacy of my foreign customers, I can\u2019t accept American customers. And if I accepted American customers, my compliance cost would be so high that I would have to charge my foreign customers more for transactions to try to stay in business. So to mitigate all that regulation and the potential of having to share all the information on my foreign clients with the US government, I\u2019m just not taking American customers with my foreign bank.<\/p>\n<p><strong>Nick Giambruno:<\/strong> So Euro Pacific Bank, where is it headquartered and why did you choose that jurisdiction?<\/p>\n<p><strong>Peter Schiff:<\/strong> It\u2019s in St Vincent and the Grenadines (the Caribbean). I did it for a number of reasons: it\u2019s close to me, but also because of the banking laws. You have secrecy, privacy, and you have no tax. They\u2019re not going to impose any income tax on my company as an offshore bank, they\u2019re also not going to impose any taxes, any withholding taxes on my bank\u2019s customers\u2019 interest income or their capital gains. And no one is going to pierce the wall of secrecy. You\u2019re going to have to go in to a St. Vincent\u2019s court and get a local court order to get any information from my bank.<\/p>\n<p>The bank is regulated, but it\u2019s not nearly as onerous as the type of regulations that I would face trying to do this business from the United States. In fact, some of the things we\u2019re doing offshore might be completely impossible because they would no longer be economically viable if I tried to do them in America, but I can do them offshore because the government doesn\u2019t impose these artificial barriers.<\/p>\n<p>(Editor\u2019s Note: You can find out more about <a href=\"http:\/\/www.internationalman.com\/go\/vxt6v-2\/PIP\" target=\"_blank\">Euro Pacific Bank here<\/a>.)<\/p>\n<p><strong>Nick Giambruno:<\/strong> Generally speaking, which countries are you particularly bullish on?<\/p>\n<p><strong>Peter Schiff:<\/strong> It\u2019s kind of like a monetary or economic triage; I\u2019m always looking around the world to see which countries are in the least bad shape, which countries are the least reckless and the least irresponsible. You really can\u2019t find any one country that\u2019s doing it perfectly. You just have to find the ones that are making the fewest mistakes.<\/p>\n<p>And I think high on that list are Singapore and Hong Kong. Those markets are relatively free of regulation, free of taxation. I mean, it\u2019s not nonexistent, but on a relative basis you have a lot more freedom there, and so you have a lot more prosperity there. You have much better economic fundamentals. And not just in those two places, but in Southeast Asia in general, in a lot of the emerging economies, you\u2019ll find a lot less government and a lot more freedom. People are working harder, they\u2019re saving, they\u2019re producing, and they\u2019re exporting. You don\u2019t have these trade deficits, budget deficits, and you don\u2019t have armies of people looking to retire on government entitlements. In Europe, we still like Switzerland even though they are making mistakes tying their currency to the euro. I think eventually they will change that policy. Scandinavia, we have been investors in Norway, we\u2019ve been investors in Sweden. Also Australia and New Zealand have been longtime favorites. We\u2019ve been investing down there or even closer to home in Canada. We do have some investments in South America. We\u2019re diversifying around the world trying to get into the right countries, the right currencies, the right asset classes.<\/p>\n<p><strong>Nick Giambruno:<\/strong> On a different note, we\u2019ve seen the number of US citizens renouncing their citizenship sharply increase. We have also seen high-profile people like Tina Turner and Eduardo Saverin give up their US citizenship. Would Tina be eligible to use Euro Pacific Bank?<\/p>\n<p><strong>Peter Schiff:<\/strong> Yes, once you renounce your US citizenship. The only people who can\u2019t bank with me are American citizens, or green card holders. So once you are no longer an American citizen, as long as you don\u2019t reside in the United States, then you are welcome at the bank.<\/p>\n<p>I think a lot of people are doing this obviously for tax reasons, although they can\u2019t necessarily claim it\u2019s for tax reasons. You have to fill out a form if you want to renounce your citizenship\u2014which, by the way, you can only get from a foreign embassy or consulate. Those forms used to be free. Now they\u2019re $500 apiece. So think about that. If they can charge you $500 for that form, they could charge $5,000, they could charge $5,000,000. They could basically make it impossible for you to leave. And they\u2019re trying to make it more difficult ever since Eduardo Saverin from Facebook went to Singapore. Now the government is trying to come up with all sorts of ways to punish Americans who try to give up their citizenship, and this really is the sign of a nation in decay. Fifty years ago, nobody would want to give up American citizenship. They would cherish it. The fact that so many people are paying tremendous amounts of money to get this albatross off their neck shows you how much times have changed, that an American passport is not an asset to be cherished but a liability that people are willing to <em>pay<\/em> to get rid of.<\/p>\n<p><strong>Nick Giambruno:<\/strong> And what about yourself? Do you believe you are adequately diversified internationally?<\/p>\n<p><strong>Peter Schiff:<\/strong> I think my investments are; I own a lot of foreign stocks. I have a lot of precious metals, I have a lot of mining shares. But I still live in the United States, so I\u2019m obviously still vulnerable here. My family is here, so I haven\u2019t done anything about a physical exit strategy. Although I do think I have financial resources that would afford me the ability to relocate, but I haven\u2019t actually taken any steps other than setting up a foreign business. I have the foreign bank in the Caribbean. I have a brokerage firm Euro Pacific Canada, and so I\u2019ve got offices up there. I\u2019m also thinking about opening up an office in Singapore and trying to move more of my business\u2014particularly my asset management business\u2014to move it from the US. Not only because of favorable tax treatment outside the US, but because of the regulatory environment. If you want to be globally competitive, you need to be in an area where you can minimize these costs because if I have those costs and my competitors don\u2019t, then I am at a disadvantage. And also because I think that over time people are going to be more and more hesitant about sending their money to the United States. So if I\u2019m going to manage money, I might have to manage it offshore, because I think people will be worried about sending it here. They might be worried that the US government might take it.<\/p>\n<p>If it ever gets really, really bad that you feel that you have to leave, by then it might be illegal to take any gold or silver out of the country. Right now you can take more than $10,000 worth of cash or cash equivalents\u2014which would include gold bullion\u2014out of the country as long as you tell the government that you\u2019re taking it. And if you don\u2019t tell them and they catch you, there\u2019s a big fine and jail penalty. But one day it might not be the case. It might be that you are prohibited from taking <em>any<\/em> significant amount of money out of the country, and who knows what the penalty might be if they catch you. But if it\u2019s already out of the country, then you don\u2019t have to worry, because you\u2019re leaving with nothing and the money is on the other side of the border waiting for you.<\/p>\n<p><strong>Nick Giambruno:<\/strong> So the idea is to preempt capital controls?<\/p>\n<p><strong>Peter Schiff:<\/strong> Yeah, well, you get out the window before they slam it shut. That\u2019s the whole idea, and right now those windows are shutting all around as more and more offshore institutions are saying \u201cno thank you\u201d to an American customer. But the other reason that you want to act sooner too is if they impose exchange controls or fees on purchasing precious metals. They don\u2019t ban them, but they have a big tax on the transaction or a big tax on the foreign exchange. If you want to buy Swiss francs, they can have a transaction tax. You want to get your money out of the dollar before those taxes are imposed, because if you wait until they\u2019re imposed, then you can\u2019t get as much money out, because a lot of it is being lost to taxes. In getting out of the dollar, you\u2019re trying to avoid the inflation tax, but they\u2019re hitting you with some other kind of tax in the process because that\u2019s really what they are trying to do. A lot of people are worrying about the income tax or the estate tax and they go through elaborate means to try to minimize those taxes, but then they leave themselves vulnerable to what might be the biggest tax of all: and that\u2019s the inflation tax. So you have to act to protect yourself before so many people are trying to protect themselves that the government makes it almost impossible to do so.<\/p>\n<p>Editor\u2019s Note: Internationalization is your ultimate insurance policy. Whether it\u2019s with a second passport, offshore physical gold storage, or other measures, it is critically important that you dilute the amount of control the bureaucrats in your home country wield over you by diversifying your political risk. <a href=\"http:\/\/www.internationalman.com\/go\/vxt9w-2\/PIP\" target=\"_blank\">You can find Casey Research\u2019s A-Z guide on internationalization by clicking here.<\/a><\/p>\n<div class=\"clear-me\"><\/div>\n<\/div>\n<div id=\"xvMdV95u77zU\" style=\"clear: both;\">The article <a href=\"http:\/\/www.internationalman.com\/go\/vxtux-2\/PIP\" rel=\"permalink\">Peter Schiff Shares His Offshore Strategies<\/a> was originally published at <a href=\"http:\/\/www.internationalman.com\/go\/vxtxy-2\/PIP\">internationalman.com<\/a>.<\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>By Nick Giambruno, Casey Research I\u2019d bet that most International Man readers are familiar with Peter Schiff. He is a financial commentator and author, CEO of Euro Pacific Capital, and is known for accurately predicting the 2008 financial crisis. He also has a very keen understanding of internationalization. Peter shares with me his strategies in &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/26\/peter-schiff-shares-offshore-strategies\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Peter Schiff Shares His Offshore Strategies&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-49010","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/49010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=49010"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/49010\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=49010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=49010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=49010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}