I am an American citizen and have both a bank account and a financial account in New Zealand. Is the banking and financial secrecy good in New Zealand or not? Or do you see it deteriorating like the rest of the world?

Thank you.

Best regards,
Mike

Can I pay you for your services in a recommendation that is good and reliable?

I suspect that mass referals via a newsletter may not be the most efficient.

Regards,

Mr. Henry

Europe has a massive banking crisis looming. The problem in Europe is far greater than that in the US if you can beleive that. They will be lucky if the currency manages to survive. Store your gold where no one knows about it and use your initiative for that. Forget about Swiss banks or any other banks or vaults. The whole point of insuring our future with gold against inflation, crashing currencies and government seizure of savings is to have some “insurance”. Its for the dog eat dog bottom line scenario.

Another word of warning. I read gold bug commentators who talk about their own sizeable holdings of gold. In doing this they expose themselves to potential kidnap and who knows what unpleasant treatment to follow. Just don’t tell anyone you are storing gold. There is no point in putting your physical being at risk in this way.

David.

I’ve read you since Without Borders.

Great work

Do you have a paid newsletter for investment reccomendations?
Rgds
Victor.

I think Austria is a viable place but have some concerns….possibly unfounded, hopefully not. The reason for my concerns lies in what I’ve seen happen in Switzerland, with them succumbing in part to International pressures. I’ve seen all sorts of articles about why they are afraid of OECD black lists and afraid to not cooperate blah blah blah.

Thing is they have managed for 75 years to tell the rest of the world where to go with these sorts of pressures, so my take on it, rightly or wrongly is that the real reason is not that they wish to cooperate with any of these foreign aggressor governments that are trying to claw back some un-stolen wealth, the real reason is that they are in a bind financially. Swiss banks are the biggest player in offshore banking. UBS for example showed an $18b loss for 08, which included the $780m fine for assisting Americans dodge tax. The largest in Swiss history.

Switzerland is stable and prosperous, but in relative terms their economy is pretty small. Based on a Purchasing Power Parity, estimates of Swiss GDP are around $309.9 billion for 2008. That’s less than what the U.S. Fed and Treasury have already pumped into Bank of America, AIG and Citibank.
So, in that context, an $18 billion loss (UBS) is pretty shocking.

I wonder what Switzerland’s central bankers thought about this. The Franc was dangerously strong relative to the euro. All the risk averse money had been pouring back into the CHF as part of the deleveraging of Emerging markets.

In economic contractions exports become all the more important and anything that hurts them is akin to the devil. This is why I guess all current competitive devaluations are taking place. A strong currency makes it harder for exporters to compete and bring in revenue.

By relaxing the bank secrecy laws this would have the effect of driving exports to try and stave off a version of what happened to Iceland, and secondarily to devalue the currency which would have the same effect. Two birds with one stone.

My concern is that Austria has a similar risk with all the aggressive risk taking that many of the Austrian banks undertook posing a similar risk.

Maybe it’s a wild speculation as to why the Swiss have relaxed as they have but the underlying financial facts worry me nevertheless.

I’ve been banking off-shore for about 6 years now, and have some comments that may be helpful.

I am in full agreement with your macro assessment of global politics, economics, central banking, etc. In fact, what drove me to open a Swiss account 6 years ago was fear of the failure of the U.S. banking system. Exactly what I feared would happen did – the thing I didn’t see or expect was the outright bailout and nationalization of our biggest banks.

My point though, as you brought up in today’s missive, the institutional AND sovereign safety of your off-shore bank and its location is paramount. My private bank in Zurich has been rated highest in the world for institutional safety based on liquidity ratios and the balance sheet risks of the bank’s investment portfolio (no derivatives, no real estate, low exposure to equities and long dated bonds, etc). Then you have the sovereign safety of Switzerland backing that. There is an organization in Switzerland who conducts the bank safety ratings which I can provide if of interest.

My offshore account has and always will be completely above board. I filed with the IRS when I opened it, and have paid taxes on gains every year since. My banking experience has been delightful. I receive much more attention from my Swiss private banker than I do from my U.S. broker where I hold all domestic funds. I have access to securities and other financial instruments that are not available here. My greatest success investing was by simply allocating 70% of my account to 4.5% Euro Treasury paper when it was at 1.05 to the dollar, then following key signals of an advisor who said to go back into US$ after the Euro had peaked at ~ 1.60 and come down to 1.54. The 30% balance I put in gold bullion safely stored in a Swiss vault. Purchasing bullion was as easy as a phone call with transaction fees of 0.5% on the buy plus 0.75% per annum.

The problem I guess most subscribers will likely have is the minimum funding to open an account which is now 1 million Swiss Francs. It sounds like Austria opens much smaller accounts, but I would have serious concerns over the sovereign and institutional safety of Austrian banks. I am in agreement with you that we will see continued deleveraging of global economies resulting in Round Two of global financial crisis. Austria’s very heavy exposure to private and commercial real estate in Eastern Europe could make for alot of pain and suffering for holders of an Austrian bank account.