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SOVEREIGN MAN

Questions: Gold in your retirement account, attitude, sustainable community

May 28, 2010
Chicago, IL, USA

Chicago is a really beautiful city– one of my favorites in the United States, actually, along with Austin, TX and Sheridan, WY. But while I enjoy being back in the US as a tourist from time to time, I’m itching to get out of here.

The travel I’ve just scheduled is a bit insane. Next week, I’m traveling to New York for an Atlas 400 event. Immediately after, I head to Panama… then Chile, Brazil, Madrid, London, Norway, Lithuania, Lebanon, South Africa, Zimbabwe, Kenya, India, Pakistan… and more.

I’m looking forward to the travel and meeting up with old friends on the road. Most of all, I’m looking forward to bringing you even more boots on the ground insights, especially as we gear up for our new premium service.

More to follow on this upcoming trip soon. For now, let’s jump into this week’s questions.

First, Gene asks, “Simon, I do alright, but the majority of my money is tied up in retirement savings. I’m afraid of what’s happening in the stock market right now, and I’m thinking about buying gold instead. Do you think that gold is a good buy at this price, and can I do this with my IRA?”

Great question. I mentioned a few weeks ago that it’s really difficult to ‘value’ gold as an investment speculation. Unlike a company whose balance sheet and management can be probed, or real estate that generates income and agricultural yield, it’s impossible to determine the fair price for gold.

As a speculation, I have a tough time chasing anything that has enjoyed a huge run-up, though I do believe that gold is seeing some breakaway fundamental changes right now in the way that investors are perceiving risk.

That being said, as a means to hold and protect your savings, gold probably makes a lot more sense, regardless of the price level. I hold physical gold, and I don’t really care what the spot price is. Why? Because it holds its value in relation to ‘stuff’ irrespective of the changes in paper currency.

This, after all, is the true nature of savings.

With your retirement savings, you can buy gold (and silver) through what my friend Terry Coxon calls an “Open Opportunity IRA”. This is a self-directed structure that puts you back in control of your own money and allows you to invest in just about anything, including most classes of bullion.

For US taxpayers, this Open Opportunity IRA is really a no-brainer for anyone with more than a few bucks in his retirement account… and if you haven’t already, I’d encourage you to give Terry Coxon’s book a try. It’s called Unleash your IRA, and he tells you exactly how to do it yourself.

For Canadians, the tax code now allows RRSP-ownership of certain gold coins. They must be of at least 995 purity and produced by the Royal Canadian Mint.

For Brits, the ISA retirement structure leaves few options for holding bullion.

Next, in response to my article about Uruguay no longer being a tax-free residency jurisdiction, ‘lf’ commented, “Unless Simon will come up with an idea how to get Martian passports, I doubt that a viable option really exists.”

I find this perspective troubling.

Countries change from time to time. It’s happened in the US, it’s happening now in China, it’s happened in Europe. Uruguay is no exception– they went from being a tax haven to jumping in bed with the OECD.

But to say that there are no viable options out there is simply an erroneous, defeatist attitude. Singapore is a great example– there are plenty of jobs and entrepreneurial opportunities available, the residency process is cheap and transparent, and you can become a citizen after 2 years.

I could cite several of other examples… but the larger point is that nothing is going to stay the same forever. You, your country, the environment, the society around you– all evolve and change over time.

The nice thing is that we can generally see major political changes coming years in advance. That gives us time to make preparations. Right now, you probably have a strong sense of the negative changes coming to the Western world, and that’s why we keep having these conversations.

Bob asks, “Simon, I was a bit confused about your article concerning Canadian citizenship. It seems more attractive to be a non-resident Canadian citizen. Is it possible to apply for this status directly without ever being a resident?”

No. You have to actually be physically present in Canada for 3 years out of a 4 year period. Then, and only then, can you apply for naturalization. If you take advantage of the offshore trust investor program, though, you can at least squeak by with a minimal tax burden.

Lastly, Jennifer asks, “Hi Simon. You haven’t mentioned anything about your sustainable community project in a while. Any update?”

Here’s the bottom line: I absolutely will develop a cost-effective, sustainable, offshore community where the amenities focus more on organic agriculture and livestock instead of golf courses and water parks.

Considering that I’m heavily involved in 3 operating businesses, multiple other investments, and I still write this letter each day, I simply don’t have the bandwidth to give a real estate development my 100% effort at this time… and I refuse to attempt something that I can’t give 100% to.

Given the upcoming offshore conference that we’re planning, as well as the pending launch of a premium service, I suspect it will be at least another 9-12 months before I’m ready to make that sort of commitment.

I appreciate all the emails expressing interest in the project, and I want to be clear that once I can allocate the time, it will be a top priority.

About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

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Comments on this entry are closed.

  • Arlean

    This has not passed the legislature yet and we are waiting to see if it will. Of course there will be a mass exodus of expats out of Uruguay if it does, taking their money with them. And yet Uruguay is not a difficult or expensive place to obtain a second passport. As you mentioned, it might be a good thing to get a passport here and then live elsewhere. As far as I am concerned, the main thing is that passport. Panama looks great but if you are not on retirement you have to deposit $200,000 in their bank and if you become a resident on the basis of retirement, you can never get a passport. So lots to consider here.

    • Mark

      Don’t forgot you can also apply for permanent residency in Panama for only $80,000 with a reforestation visa, and you can obtain citizenship and a passport after 5 years. And you likely will make money off the $80,000 investment after the trees mature (around 25 years from now).

  • http://www.facebook.com/hcarreiro Heather Carreiro

    Heading to Pakistan huh? I lived in Lahore for three years (just came back a year ago). Hope you enjoy your time there!

  • Chris W

    Re: Open Opportunity IRA. As I understand it, if you buy real estate in the OO IRA, you cannot, directly or indirectly, provide goods or services to your IRA. So if you buy rental property, and you personally find tenants, collect rent, etc., you’ve provided services & the IRS can consider the IRS terminated.

    • http://www.silver-investor-gold-investor.com SilverInvestor

      Hi Chris.

      My neighbours in Cotacachi, Ecuador, bought their house through her IRA. In fact, the developer (an Ecuadorian who had been living in the US for 25 years) used his IRA to fund his company, built 10 houses in our development, has two others on the go, and is now into property management as well.

      So if you have an IRA, it’s worth it to investigate using it to get out of the US sooner rather than later.

    • http://PassportIRA.com Terry

      ERISA (the law which created IRAs) generally provides statutory exemptions for individuals providing services to their IRAs which make it necessary for the operation of the plan. If you are only trading your IRA with an online brokerage, the time you spend to make educated investment decisions and making the trades are all volunteering your time and services. The same is true with if done through an Open Opportunity IRA structure. You can spend the time necessary to make it operate.

  • Dave

    I was just about to ask about South Africa, too. I can’t wait to read about your time there.

  • lf

    Simon,
    I lived in Singapore for a year quite recently. I would not dispute anything you said about the country. I like the place a lot and keep some of my assets over there. It is, of course, not accidental that Jim Rogers have chosen it as his new home. I noticed though that local IRS (inland revenue service) not only very efficient but also quite aggressive. Right now they do not tax
    citizens on any offshore income but what happens if they change it? I would not say that it is probable but I would not put it in the category of impossible (who could imagine that Uruguay would do it?). If it happens in Singapore, I assure you they will go after citizens in much more aggressive and efficient way than US IRS.
    Of course, second passport may be useful but with advantages
    new liabilities may easily emerge.

  • Saint

    Simon: Please move the Panama community as high on your priority list as soon as you can. Considering your travel schedule, would you do a comment on how you pack for such trips. It would I believe be informative for those who travel although not as much as you.

  • YC

    “For Canadians, the tax code now allows RRSP-ownership of certain gold coins. They must be of at least 995 purity and produced by the Royal Canadian Mint.” Which Canadian banks or financial institutions provide this service?

  • YC

    Any Canadians had any experience with QuesTrade to own gold in RRSP?

    http://www.questrade.com/trading/gold_rsp.aspx

  • Charlie

    “Here’s the bottom line: I absolutely will develop a cost-effective, sustainable, offshore community where the amenities focus more on organic agriculture and livestock instead of golf courses and water parks.”
    When you are in Panama, check out Hacienda del Mar on Isla Contadora in the Perlas. It comes close to meeting your criteria. I am not connected with them, other than that I have done some consulting work for them.

  • Notna

    “Brits ISA structure” – the ISA is actually an Individual Savings Account not a retirement plan. The SIPP (self invested personal pension) can hold bullion, property etc

  • Pete

    Hi Simon,

    I would like to keep in touch with regards to the Sustainable Living Community concept in Panama. In fact, I’d love to participate in making it a reality. I’m currently investing and working as part of a team in Central America that is building out this exact concept elsewhere. We are already in construction and have addressed the food production through organic vertical growing systems, fish farms and carefully chosen on-site livestock cultivation. The renewable energy has been resolved through a combination of solar power and hydro power (local river) and natural gas (bio-digestors). The natural resources on the site also lend themselves extremely well to this concept.

    We are building “green & sustainable” as well with prefab light gauge steel frame construction, light concrete panels and/or SIPs. Our cost of construction is between $55-85 per sq. ft. (depending on upgrades & finishes) for middle class to high quality U.S. standard construction. We’re also assisting buyers with having businesses on-site that contribute to the community.

    Please contact me to collaborate on your project. Anyone else on the forum interested in sharing ideas is welcome too.

    Regards,

    Pete Martinez

    p.martinez525@gmail.com

  • Charlie

    Regarding your idea of linking subscribers through Facebook- I suspect that will open the doors to scammers more than another option, which is LinkedIn. I won’t use Facebook, not because of privacy issues, but because of what appears to be a lack of control over who can do what with it (I get frequent Facebook invites from a whole lot of people I don’t know, and I don’t even bother to look at them any more).

  • Jusina

    Simon,
    Thanks for your daily letters! We are working on our Irish Passport. As far as Terry Coxon’s “Passport IRA” , is this the same as the IRA created with “Checkbook IRA”. We followed your advice earlier this year and created this IRA to hold most of our IRA funds. Now we are concerned, did we do the right thing?

    Thanks

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