It’s true what they say about the Autobahn… there really is no speed limit. I’ve been in the car all day with my close friend and business partner Matt, racing our BMW from Stuttgart to Monaco. Our goal is to reach Spain by the end of this week where we have some important meetings lined up on your behalf.
If everything goes as planned, I will be able to bring you some incredibly unique opportunities very soon… and you’ll see what I’m talking about in a moment.
To begin with, one of my missions on this trip to Europe is to investigate some new international brokerages; I’ve discussed Denmark-based Saxo Bank in the past, and I have had reasonably good experiences with them. Unlike many other financial institutions in Europe, they still open accounts for US citizens, which is becoming quite unusual.
I’ve looked into two other brokerages so far on this trip… and while I’m confident in their financial stability and execution, they are unfortunately NOT for US citizens.
The first is Luxembourg-based Internaxx, which is a joint venture between TD and BNP Paribas. Backed by roughly $50 billion in assets, Internaxx trades stocks, futures, and foreign currency from one account with reasonable commissions and instant execution.
The second is Cyprus-based FxPro; it is an online brokerage that, despite the name, trades a wide variety of products. Its bread-and-butter is currency transactions, for which the brokerage offers leverage up to 1:500. For example, with a $10,000 account, a customer can trade up to $5,000,000 in currency transactions.
Clearly this would be a tremendously risky move, but exercising a bit of leverage can multiply returns while avoiding significant downside. I use this technique frequently in my own trades.
FxPro’s currency transactions are also well-priced, with many spreads as tight as 0.5 pips with no commission, putting it among the lowest in the business.
In addition to currency transactions, FxPro also trades major US equity CFDs, or ‘contracts for difference’. A CFD is a financial contract whereby an investor receives the gains and losses from the value of a security, without actually owning the security. For example, if the value of CocaCola stock increases by 10%, an investor who has acquired a Coke CFD will also realize a 10% gain.
CFDs are commonplace among foreign brokerages that want to provide customers with the benefit of US stocks but without the unnecessary hassle of the US government or financial compliance. CFDs are generally offered for the largest blue chip stocks with lots of 100 shares each.
Similar to equity CFDs, FxPro trades futures CFDs for the most popular commodities like crude oil and natural gas. Personally, I don’t find CFDs very compelling as I would rather buy the underlying security if I decide to make an investment… but for some people, particularly based on tax situation, CFDs can be an excellent investment option.
Most importantly, FxPro trades in the spot market for precious metals; you can buy gold and silver 24-hours a day during the work week, with a maximum leverage of 1:50. Again, this means that you can leverage a $10,000 account to purchasing power of $500,000, borrowing the remainder from the brokerage at ultra-low rates thanks to Comrade Bernanke.
FxPro has offices all over Europe, and the brokerage is regulated by the Cyprus Securities and Exchange Commission under the EU Markets and Financial Instruments Directive. It is also part of the “Investor Compensation Fund,” which is sort of a European version of the SIPC.
You can fund an account with a wire transfer, credit card, and even Paypal… and opening an account is fairly simple; a short application and scanned copy of picture ID is required.
Again, though, neither Internaxx nor FxPro accepts US clients anymore… it has really become a black eye to carry around the blue passport. This is just one of the many, many reasons why you should consider second citizenship. In a way, it is the ultimate insurance policy, providing you a way to mitigate social, political, and economic risks.
Think about it– a US citizen who wants to move his money out of quasi-government controlled US banks is finding it almost impossible these days to find a foreign bank willing to work with him. Uncle Sam makes it too much of a hassle for them.
History is full of lessons that demonstrates that government is unequivocally fallible. The recent debt crisis in Dubai underscored this point further, particularly as it relates to finance. Having your entire security, livelihood, and future tied up under a single government is quite literally putting all of your eggs in one very frail basket.
There is nothing illegal about any of this. It’s completely legal to have foreign accounts (as long as you report them). It’s completely legal to obtain second citizenships. These are intelligent, sophisticated solutions that I would encourage everyone to consider… and it is exactly for this reason that we are heading to Spain at a very high rate of speed.
Stay tuned.
