How safe is your money?

I’m not talking about your portfolio’s performance. I’m referring to its accessibility, its privacy, but most importantly, how vulnerable it is to other entities getting access to it, restricting it, or even confiscating it.

Did you know that more bank branches closed during Covid than in the previous recession? Many banks around the world closed during the Great Financial Crisis, too. Cyprus was the most notorious example: withdrawals were banned, closures lasted weeks, withdraws were severely limited when they did reopen, and transferring money out of country was forbidden. And they were considered a world class banking country!

• Whenever there’s a crisis, banks are not on your side. Neither are governments—they may say they are, but your money could be part of their “solution.”

You need a plan to get through crises, when your money is at its most vulnerable.

But it’s about more than the banking system…

Political Insurance

The whole idea behind international diversification with gold is that no one government has total control over your financial options. It allows you to escape the whims of a single governing electorate. It frees you from absolute dependence on any one political system.

Further, you’re not exposed to the breakdown of a single economy. If your home country encounters financial or economic issues, other countries may not.

Call it “Political Insurance.” It’s not much different than having life insurance and fire insurance.

• By storing some gold outside your political jurisdiction, you ease the ability to function—to carry on with life—if your government enacts a policy that restricts the finances of your country, or you personally, in any way.

Having a little (or a lot) of money overseas—i.e. international diversification—puts a little extra distance between you and your politicians. To be clear it is not a panacea and does not protect against every conceivable risk, but this extra layer could give you more time and flexibility to act or react when it is needed most.

Without it, yes, your money is naked! It’s not “clothed” to protect you against threats that you can shield against.

YOUR FIVE RISKS

There are five specific risks you are exposed to if you don’t have some gold stored outside your home country. Let’s gauge your personal vulnerability…

#1: Capital Controls

Capital controls exist when the government restricts capital (currency) from leaving the country.

You may think that since you don’t live or work or even travel outside your home country that you don’t need money outside of your borders. But you’re looking at the magician’s left hand, while the trick is happening in his right hand.

Cross-border controls almost always include, or lead to, other forms of capital control, precisely as Andreas and other citizens of Cyprus found out. The government could;

• restrict how much you can withdraw from your bank or ATM
• close banks and ATMs for days or weeks
• temporarily ban the use of cash
• limit the use of credit
• impose a wealth tax or any other kind of “special” or “one-time” tax
• dilute the currency by instituting a highly inflationary policy (for example, helicopter money)
• or any other creative restriction on the movement or use of your capital.

Enacting cross-border capital controls—the magician’s left hand—means that all wealth is trapped inside the country. Money cannot move, escape, or flee. Now the trick in the magician’s right hand can take place, because…

• Once the door is closed, your capital—all your capital, if you haven’t diversified internationally—is vulnerable to confiscation, taxation, regulation, inflation, or any other control the government deems necessary.

And don’t assume the laws of the land will protect you. What may be illegal today could easily be made legal, or even deemed “prudent” in a serious economic or monetary crisis. In fact, history shows that in times of crisis, governments have repeatedly changed the rules. Just look how frequently the tax code has changed!

In this scenario, you would be a victim of whatever policies and restrictions the government imposes. And you’d have no recourse. Who are you going to complain to?

On the other hand, if you have some gold and silver stored outside your political jurisdiction, you now have a layer between you and the trap.

#2: Asset Seizures

If you’ve never had your assets frozen or seized by a government or other legal entity, know that it’s a horrible experience. One day all your cards are turned off, and you have no access to your own money, yet you have to somehow come up with the funds to fight back!

Worse still, with the rise of civil forfeiture laws in the US, and reports of the IRS leaning on new laws for ‘flash seizures,’ it can happen from simply being suspected. No conviction, no indictment, no due process.

A “freeze or seize” comes with no warning. It’s standard protocol to give the victim no notice. If you’ve made no financial arrangements ahead of time, it’s too late.

If you have some gold and silver stored outside your political jurisdiction, however, you should have access to funds to fight back. And eat.

Our highly litigious society demands we all have a backup plan. Especially if you have a positive net worth.

#3: Confiscation or Nationalization

Gold is not part of the monetary system like it was during Roosevelt’s nationalization in 1933. But that doesn’t mean gold couldn’t be confiscated today.

Debt levels are unsustainable in most developed countries. And current debt is only the tip of the problem: unfunded liabilities are an enormous overhang that have no chance of ever being fully paid (in current dollars), even in the most optimistic growth scenarios.

Overloaded debts and deficits necessarily means that heavy-handed solutions will have to be pursued in some degree. Even if they try to inflate the debts away, the sheer size of these liabilities will sooner or later force governments to enact policies to keep their economies afloat. And one way to grab some revenue could be to confiscate gold.

What about the US using their gold to pay off the debt? They are, after all, the largest holder of gold reserves, at 8,133.5 tonnes. If they sold their 261,498,100 ounces at $2,500 gold, they’d net $653.7 billion.

Sounds like a lot, but this would be woefully inadequate to pay off the debt, which is $36 trillion today, roughly 55 times bigger than all US gold reserves. They’d need more, a lot more. Where could they get it?

How about gold ETFs, gold pool accounts, and institutional and exchange holdings?

Confiscation of private holdings would be problematic, but if a government gets desperate enough it could certainly try, starting with funds, for the “greater good.” It’s happened before.

However, if you have some of your holdings allocated in a private, foreign depository, you have one extra layer between those holdings and the initial attempts at confiscation. It is no longer the “low hanging fruit.”

Last, confiscation may not be about gold at all, and yet internationally stored bullion could still save you. How would you handle:

• A bank bail-in?
• Pension confiscation?
• Mandatory IRA investments in government debt?
• Any other creative “solution” a government could enact in a crisis?

Foreign held gold could give you a little room to maneuver when everyone else is panicking.

#4 Limited or Unsatisfactory Medical Care

Medical tourism is a booming industry. Many people find they can get less expensive medical care, or quicker care, or higher quality care, in a different country than their own.

Offshore health care is generally less expensive than in North America. It is frequently quicker. And in some places it has progressed to the point where it is just as good or better.

If you have medical issues, or they develop as you age, or if you have parents you need to take care of and want to explore other options for them, you may find offshore medical care an attractive option.

But how will you pay for it if a national crisis forces capital controls? Bank bail-ins or freezes? A punitive tax for wiring money outside the country?

Internationally stored bullion keeps this option alive and kicking (pun intended).

#5 Diminished Investment and Pleasure Options

One of the first realizations many investors have when first internationalizing themselves is the new opportunities that are suddenly available to them.

By using an overseas depository for some of your gold, you’d have a ready source of funds for options that may not be available in your domestic location, such as…

• Business and entrepreneurial pursuits
• Investment opportunities
• Real estate opportunities
• Pleasure activities

The world is a big place, and there are many options for business, investment, and pleasure outside your home country. Many doors closed to you now could open—if you have assets outside your country when it’s in the throes of crisis.

Even if these things are not of interest now, would you like to have the option when you’re older? Or how about for your kids or grandkids? Or what if your country is financially locked down in some capacity?

• Remember, it’s about planning, about giving yourself future options in the middle of a crisis.

International Diversification, Here I Come!

As you can see, there are a number of likely scenarios where having some bullion stored outside your home country could put you at a real advantage, or even save you financially.

• It is paramount to prepare and have financial options before you need them, not end up scrambling when disaster strikes. The solution is to have some gold and silver in a facility that would be difficult for your home government to control, seize, freeze, or confiscate. And one that gives you greater freedom for future health care options, business pursuits, investment opportunities, or pleasure activities.

And here’s the kicker: even if nothing bad happens, you’re no worse for the wear… you’ve lost nothing, suffered no inconvenience, spent no more on storage than you would domestically, and yet have given yourself options you could potentially take advantage of someday.

How Much Gold Should You Store Internationally?

This is obviously personal decision, but the basic guideline is this:

• Not so much that you shift just as much risk to another country as you had at home, but enough to make a difference if some type of control or other lock-down is instituted in your home country.

For most investors, that’s less than 90% of your total gold holdings—but a lot more than 5%. Find what suits you and your family’s situation best and get started.

TRUE Offshore Storage

Where you store gold outside your country is just as critical as deciding to do so.

I know of a place—I use it myself, and yes, you could still buy/sell/take delivery during Covid, as the company had special permits that allowed to continue operating.

In fact, I provided some of the input that helped form their program.

Having researched a lot of storage facilities over the years, I was asked by management what I would like to see in my ideal offshore depository. So I gave them a list—a rather long list.

And they incorporated every single recommendation.

As a result, I became their very first customer. In my view they are THE top choice for offshore storage.

Let’s take a look at this exciting, world-class bullion facility with a brand-new vault and why it deals directly with the five risks above, starting with some photos.

STRATEGIC WEALTH PRESERVATION (SWP)

SWP’s new vault is located near the main airport on Grand Cayman. It is a highly secure facility.

Once you enter, you’ll be greeted by a receptionist.

Then you’ll be escorted to the Client Viewing Room, where you wait while they retrieve your metals for viewing.

You can see this is a beautiful, state-of-the-art facility.

There are numerous benefits to this facility, let’s walk through them…

Strategic Location and Accessibility: For starters, it’s close! Due to their proximity to North America, they’re able to reduce shipping times and costs. Major international airlines such as British Airways, American Airlines, and Delta regularly service the Cayman Islands, making it highly convenient for you to personally visit your holdings.

Unmatched Tax Benefits: One of the most appealing aspects of storing precious metals in the Cayman Islands is the favorable tax environment. The jurisdiction is tax-neutral, meaning there are no income or capital gains taxes, no sales tax on storage fees, and no import or export tariffs on precious metals.

Strong Privacy Protections: The Cayman Islands are well-known for robust privacy laws. These strict financial privacy protections ensure that investors can enjoy a high level of confidentiality, while the jurisdiction fully complies with international standards, including the Financial Action Task Force (FATF) requirements. This balance between security and compliance makes the Cayman Islands a trusted and reliable option for investors worldwide.

Political and Economic Stability: Another key advantage of the Cayman Islands is its political and economic stability. Unlike many other jurisdictions, it has a long history of consistent governance and economic resilience. This makes it a safe haven for long-term storage, free from the risks of government confiscation or sudden regulatory changes that could impact your investments.

State-of-the-Art Security: In 2023, SWP unveiled a cutting-edge 6,000 square foot facility featuring two impenetrable Class III vaults, equipped with a security system that exceeds industry standards. Clients have the option to personally inspect their holdings with just 48 hours’ notice.

Comprehensive Services: SWP offers a full range of services: global logistics and transportation of assets, fully insured deliveries to the island, and transactions both online and in person, self-directed IRAs for U.S. investors, and even cryptocurrency settlements and loans against metal holdings. They provide segregated, allocated, and fully insured storage, meaning holdings are stored separately, maintaining complete ownership and control over their precious metals.

Diverse Product Offering: SWP provides access to a wide range of investment-grade precious metals, including gold, silver, palladium, and platinum bullion from reputable mints such as the United States Mint, Royal Canadian Mint, Perth Mint, The Royal Mint, and PAMP Suisse.

Global Recognition and Membership: SWP is recognized as one of the top offshore storage facilities in the world and is among a select few precious metals storage providers approved for membership by the London Bullion Market Association. It is also a member of the Singapore Bullion Market Association, the International Precious Metals Institute, and the Industry Council for Tangible Assets. SWP already has over $1 billion in assets under management.

Privacy, Security, and Compliance SWP places great importance on maintaining the privacy of its clients. Located in the Cayman Islands, a jurisdiction known for its strict financial privacy laws, SWP guarantees a high level of confidentiality. Moreover, the company adheres to international regulations, including the Financial Action Task Force’s (FATF) stringent standards, offering clients both security and compliance.

The Ultimate Diversification Strategy

Offshore storage in the Cayman Islands is an ideal diversification strategy. Storing precious metals at SWP allows you to mitigate geopolitical and jurisdictional risks while benefiting from a tax-neutral environment. With no import or export tariffs on precious metals and no income, capital gains, or sales taxes on storage, SWP offers a cost-effective and efficient solution for safeguarding wealth.

And it’s a short flight away if you want to visit the vault and the island.

SWP delivers unmatched service and security. Join me and thousands of other customers at this unparalleled facility.

DISCLOSURE: Jeff is not currently an affiliate for SWP and received no renumeration for this article. He is on the advisory board, unpaid.

Courtesy of the Gold Advisor