This article first appeared in the Sovereign Society Newsletter. For information on the Sovereign Society see sidebar. The website edition, copied here is from see EscapeArtist.com

The “offshore” world is a world where you can achieve greater profits… greater privacy…greater asset protection…and greater protection against unanticipated events than you can domestically.  Let me tell you about what may be the single most significant reason to invest offshore.   Profits! You wouldn’t know it from the financial headlines, but in the last 10 years, the U.S. stock market placed among the 10 best performing markets in the world only once! That was in 1997, when it was #4. Even though U.S. stocks have rallied for two years (after losing big for three straight years), the U.S. market was outperformed by many other stock markets —some of which more than doubled the S&P 500’s total return of about 35% in the last two years. Big winners for 2004 included:  Germany: +72% France:  +49%  Australia:  +43%  Turkey:  +96%  Profits 50%, 100% or Even 200% Higher than in the U.S. Market Unfortunately for many investors, buying foreign stocks through a domestic bank or broker carries some drawbacks. While it’s now possible to make some foreign investments in the United States—for instance, you can now purchase foreign currency CDs through domestic banks—doing so provides zero privacy and zero asset protection. Nor do foreign investments made through a U.S. financial institution provide investment continuity in the event of a shutdown of U.S. markets—a scenario that became all too real in the days following the terrorist attacks of September 11, 2001.  How can you gain access to these markets?  One way is by purchasing American Depository Receipts (ADRs) through a domestic broker. For the largest and most liquid foreign shares, ADRs are a great option. However, only a comparative handful of foreign shares are traded as ADRs.  Some U.S. full-service brokers will purchase securities traded on foreign exchanges for their clients. But buying—and especially selling—may be a nightmare. This is because most U.S. brokers aren’t equipped to take custody of foreign securities. You may discover that the offshore security you want to buy isn’t available to U.S. investors at all. That’s a consequence of the laws and regulations enforced by the U.S. SEC, which prohibit issuers of “unregistered” securities from marketing in the United States.

The Sovereign Society, headquartered in Waterford, Ireland, was founded in 1998 to provide proven legal strategies for individuals to protect their wealth and privacy, lower their taxes and to help improve their personal freedom and liberty. The Society's highly qualified contacts recommend only carefully chosen banks and investment advisors as well as financial and legal professionals located in select tax and asset haven jurisdictions around the world. The Society provides advice concerning the establishement and operation of offshore bank accounts, asset protection trusts, international business corporations (IBCs), private foundations, second citizenships and foreign residency, as well as practical safeguards for financial, Internet and personal privacy.  The Sovereign Society stands alone in fulfilling this singular, international offshore service role for its members. To learn more about our organization and how you too can become a member, Click the link below:

For more information on the Convenient Account program, see The Sovereign Society

The offshore banks we recommend offer all the services you would expect from a full-service stockbroker—and you may purchase any security in the world, not those just listed on a domestic exchange. The purchase price, less applicable commissions, is debited from your account. SEC roadblocks are no longer relevant, because the offshore bank purchases the securities in its name, not yours. You will also receive professional research with regular buy/sell recommendations. And, like a domestic securities broker, you may issue limit and stop orders. 

The Dollar Goes Down… but Foreign Currency Investments Win Big

Over the last three years, the U.S. dollar has lost more than one-quarter of its value against the euro and other major currencies. For most Americans, this is an invisible loss—you don’t notice it unless you travel abroad or import goods or services that are priced in terms of foreign currencies. 
But a relative handful of savvy investors have been raking in profits as the dollar declines. One of the ways this is possible is with foreign currency investments. And it’s easy to purchase foreign currencies through any offshore bank.

For example, at the beginning of 2000, The Sovereign Society recommended purchasing euro-denominated CDs. Let’s say that you did so, and purchased a one-year 4% CD denominated in euros for US$10,000 on January 1, 2000. At that time, US$10,000 purchased _10,050. You rolled the CD over at the beginning of 2001 at a 4% interest rate. You did the same in 2002, 2003 and 2004, for interest rates of 2.5%, 2% and 1%, respectively.
On January 1, 2005, your CD was worth _11,368. But since 2000, the euro has appreciated sharply against the U.S. dollar. If you cashed out your CD on January 1, 2005, and converted it back to dollars, you would have received US$15,650, less fees and commissions. Because of your currency gains, your total five-year return nearly quadrupled, from 14.8% to 56.5%.

Of course, the euro could have just as easily gone down against the dollar. But in an uncertain long-term economic environment, it only makes sense to diversify your currency holdings internationally—and foreign currency CDs are one of the easiest ways to do so.
Incidentally, it’s possible to purchase foreign currency CDs domestically through sources such as Everbank  But minimums are generally lower, and yields higher, when you buy them through an offshore private bank.

Offshore Investments Take Your Wealth Off the “Radar Screen” 

Your wealth, spending habits and almost every other detail of your financial life is under scrutiny in the United States. The website usuncover.com, advertises “Find Anyone and Find Out About Them.” Hundreds of other websites that advertise their services in “tracking assets” make similar claims. Sue-happy lawyers and anyone else curious about what you have and where you have it can easily invent a pretense to obtain access. Fraudulent access is common as well, as proven by the recent penetration by identity thieves of data brokers such as ChoicePoint and Seisint. 

However, if you look carefully, you’ll notice that these services can only locate assets in the United States. There’s an important reason for that. The United States is one of the few nations lacking a federal statute that protects bank or securities accounts from disclosure except under narrowly defined circumstances.1 Many disclosures that would be illegal in other countries, either under international agreements such as the European Privacy Directive,2 or under national laws guaranteeing bank secrecy, as in Switzerland, are commonplace in the United States.

The practical consequence is that once you move your money outside the United States, it drops off the domestic “radar screen” and becomes virtually invisible to information brokers and private investigators. If someone is sizing you up as a target for a lawsuit—or a government agency is looking for property to seize—these assets won’t show up without some digging. 

The Right Offshore Investments—and Legal Instruments—Can Make You Virtually Judgment-Proof

No doubt, you’ve read the horror stories and are familiar with the litigation explosion in the United States. Many hard-working Americans who have accumulated wealth over a lifetime have tragically discovered they are “easy pickings” for legal predators. This is simply a fact of life in our legal system where justice is incidental to lawyers successfully recovering huge judgments under such nebulous theories as “emotional distress.” Even burglars breaking into homes have been awarded damages against the homeowner if they are injured!
True, there are domestic asset protection laws and instruments—homestead provisions (state-legislated tax breaks on your principal residence), limited partnerships, trusts, annuities—but in most cases, the protection they provide is a matter of state law. And there are very wide variations between states. For instance, Florida law provides an unlimited homestead exemption to an owner occupied home. New Jersey, by contrast, has no homestead exemption at all.

In contrast, prudent offshore asset protection techniques, jurisdictions and programs can offer enough wealth preservation barriers to send most litigants and lawyers after Americans without offshore structures and protection.  Even if a creditor discovers your offshore assets, those monies ordinarily won’t be retrievable without a judgment. In that event, a U.S. court can order the repatriation of any foreign assets controlled by a U.S. debtor. Failure to comply may lead to a civil or criminal contempt citation.3 However, in some offshore centers, such an order won’t be honored against certain investments or structures, such as an insurance policy or trust.4.  Indeed, an offshore investment such as a Swiss annuity—available for an investment as low as US$20,000—can offer virtually ironclad asset protection in the event of a lawsuit or bankruptcy, with no additional attorneys’ fees. For more information on The Sovereign Society’s Swiss Asset Protection Programs, click on sovereignsociety.com

The Hidden Terrorist Risk of NOT Investing Offshore

The world has changed since the attacks of September 11, 2001. One risk that has not received much attention by the news media—most likely because Wall Street doesn’t want you to know about it—is the threat to your wealth and portfolio should another attack target America’s financial infrastructure. 
After the September 11 attacks, U.S. financial markets were closed for four days. During that time, you were locked out of buying or selling any of your U.S. stocks, bonds or mutual funds. In contrast, if you had assets safely stowed away in a secure, neutral country such as Denmark, Austria or Switzerland, you could continue trading any foreign securities you owned, as markets in these countries were not affected by the attacks. 
If there are future attacks on the U.S. financial markets, they could be conducted with weapons of mass destruction with even more devastating impact. It’s possible that U.S. markets could be shuttered for days or weeks. In the meantime, the U.S. dollar could be decimated and the vast majority of U.S. investors would be powerless to protect themselves financially. Read the case study, “Nightmare On Wall Street,” to learn what could happen to your Wall Street wealth and your U.S. domiciled investments when terrorists strike America again. Link: www.wolflaurelnews.net

What About the Risks? 

Wall Street, regulatory agencies and probably your own broker have long warned about the so-called risks of “going offshore.” They claim that offshore investing subjects your portfolio to foreign currency risk, but say nothing about the potential for currency gains in today’s weak dollar environment. They warn that the regulatory and accounting standards outside the U.S. are not as strict as in America, but conveniently forget about the dot-com, technology and Enron accounting scandals that cost investors billions. Financial pundits continually harp on the importance of diversification as the safeguard for every investment risk and scenario, but say nothing about the benefits of diversifying outside the U.S. market and the U.S. dollar. 

Why are the government and the financial establishment so opposed to offshore investments? One reason is that when money leaves the United States, it’s much harder to track because of the privacy laws I’ve already described. In addition, money going offshore means less profits and commissions for U.S. firms—and they will do anything they can to avoid this loss.

Sure, the offshore investment industry has its share of sharks and charlatans. On the other hand, the jurisdictions The Sovereign Society recommends have regulations to protect investors from fraud that are just as strong—and sometimes stronger—than in the United States. To avoid offshore frauds and scams, it’s important to work only with established institutions and quality jurisdictions. Second, always deal with competent tax, legal and accounting experts in the United States, who understand U.S. tax laws and foreign investment reporting requirements. Finally, if an investment or recommendation, offshore or domestic, sounds too good to be true, then it probably is. Hang on to your wallet when you hear outrageous claims of “guaranteed” profits. 

In the final analysis, it is up to you to educate yourself and take the steps necessary to defend your wealth. You’ve already taken the first step by becoming a member of The Sovereign Society. Now, it’s time to take action! 

Ronald Holland is a retired financial consultant and global advisor who developed the first gold IRA, Swiss franc IRA and the first Swiss franc denominated U.S. variable annuity portfolio for Pioneer Mutual Funds. He has written extensively on offshore investments and the terrorist threat to U.S. investors and markets. He lives in the mountain resort of Wolf Laurel, North Carolina, where he is a realtor and broker with Wolf Laurel Realty for this gated retreat community with 5,000 acres almost totally surrounded by national forests and the Appalachian Trail.

**Note any specific product information in the above article was added by the editors at The Sivereign Society.