July 2, 2014
There’s an old joke here that Austria is famous for two things: convincing the world that Adolf Hitler was German (he was Austrian); and convincing the world that Beethoven was Austrian (he was German).
Frankly one of the things that Austria should be more famous for is its banking. But it probably won’t ever be because the culture here is far too discreet to shout it out for the world to hear.
Switzerland is traditionally associated with private wealth management and conservative financial stewardship. But as the saying goes, when the Swiss wanted private banking, they would come across the border into Austria.
Granted, those days are long gone. Switzerland’s banks have completely rolled over for the US government (and just about everyone else who’s come calling), and Austria has joined up to curtail banking secrecy.
But the culture of discretion and privacy here is as pervasive as it ever was.
This is one of the primary reasons why Austria excels as a place to hold certain physical assets. Because while you might not be able to have any financial privacy across the global banking system anymore, you can still securely and privately hold physical assets.
Consider gold, for example. We all know the story of how private gold ownership was criminalized in the Land of the Free back in the 1930s (a severe form of capital controls).
Would this happen today? Possibly. And there are a number of realistic scenarios which might cause this (like major foreign holders dumping US Treasuries.)
But what’s far more concerning is the prospect of civil asset forfeiture… something that has been on the rise for the past several years.
In the Land of the Free alone, there are hundreds of federal, state, and local agencies that have all the firearms and legal authority they need to kick in doors, freeze accounts, and seize assets.
You don’t even have to be doing anything wrong. Hell you don’t even need to be anywhere in the vicinity. If your ‘stuff’ just happens to be in the wrong place at the wrong time, it can be confiscated.
Almost every week, some government agency is holding an auction of other people’s confiscated property.
And at nearly every one of them is some poor guy’s collection of gold eagles and Canadian Maple Leaf coins.
This is reason enough to consider holding at least a portion of your physical assets abroad.
Think about it– gold is really an anti-currency. It’s an investment you make because you don’t have confidence in governments and central bankers.
Gold is something that cannot be printed at will or conjured out of a policy meeting. And it’s a lot easier to carry around than an acre of farmland.
But what’s the point of trading out the paper currency issued by a desperately bankrupt government if you’re just going to store your gold in the same desperately bankrupt country?
It makes a lot of sense to move some physical assets abroad. And this includes much more than gold.
I was recently reading the findings of one US government agency that was proudly listing all the items they had recently confiscated from people merely suspected of victimless crimes. And I noticed that one gentleman had been relieved of roughly $2.7 million worth of Perth Mint Certificates.
If you’re not aware, the Perth Mint in Australia stores gold on behalf of its customers, and then issues certificates that are redeemable for gold at the mint.
So this particular gentleman had the right idea to store gold overseas. Unfortunately he didn’t do the same with his certificates. So now he’s effectively had his gold stolen even though it’s 10,000 miles away.
No one ever thinks it’s going to happen to them. Until it does.
I just found out that this actually happened to my own parents; they recently had some funds frozen (wrong place, wrong time) because a guy they did business with twenty years ago (and haven’t heard from since then) ended up on the wrong side of the Treasury’s Office of Foreign Asset Control.
My pops was actually flown to New York under subpoena, and they pummeled him with questions about some obscure business transaction that took place in 1993. I can’t think of a more absurd situation.
Civil asset forfeiture is clearly on the rise. And it makes sense to take prudent steps to protect what you’ve worked for.
Gold bullion. Stock certificates. Jewelry. Rare coins. Collectibles like wine and art. Just about anything that’s physical and portable can be stored abroad.
(Das Safe remains my favorite place to do this in Vienna… though they are starting to run out of space. And there are plenty of other options in the world, including Hong Kong or Singapore.)
Rational people have a Plan B. And this is one of those things that you won’t be worse off for doing.
But if the worst happens, it just might make all the difference in the world to have a small cache of real assets stored in a safe, stable place away from your bankrupt government.