Justin's note: It’s now more important than ever to have a “freedom insurance” plan in place. In today’s featured interview, Crisis Investing editor Nick Giambruno and Chris Lowe, editor of Bonner & Partners’ Inner Circle, take a deep look at this subject—and share the four concrete steps you can take today to safeguard your freedom.
Chris Lowe: What’s the first step someone can take to insure their freedom?
Nick Giambruno: The first step is to place some of your savings beyond the easy reach of your home government.
This is the best way to ensure you can get to your money if your home government implements capital controls or seizes some of your assets outright. Any government can do either without warning.
The ultimate way to diversify your savings is to put it into something tangible—something that can’t be easily confiscated, nationalized, frozen, or devalued at the drop of a hat or with a couple of taps on the keyboard—while retaining as much privacy as legally possible.
You want to own something that’s universally valued and not controlled by any government. Gold and silver fit the bill perfectly.
Gold has always been an inherently international asset. There’s nothing American, Chinese, Russian, or European about it. Different civilizations have used gold as money for millennia.
When you buy gold, you trade paper money—which the government can devalue and confiscate at will—for a hard asset that’s been a stable store of value for thousands of years.
Gold is universally valued. Its worth doesn’t depend on any government. This is why buying gold is the easiest way to lessen the political risk to your savings.
Chris Lowe: What form of gold are we talking about—bullion, gold coins, ETFs?
Nick Giambruno: Physical gold is your best option. Then you don’t have any counterparty risk.
Having some gold in your possession in your home country is good. But having another stash in a foreign country is even better. You can either store it at a foreign property. Or you can store it in a non-bank safe deposit box.
Chris Lowe: Why not a safe deposit box in a bank?
Nick Giambruno: When President Roosevelt criminalized the possession of gold in 1933, federal agents went through bank safe deposit boxes searching for undeclared gold.
Today, bank safe deposit boxes fall under the regulations and jurisdictions of banks. If there’s a bank holiday, like the one in Greece… or a bail-in like the one in Cyprus… or any event that shuts down or otherwise affects the banking industry, your bank safe deposit box is at risk.
That’s not the case with non-bank vaulting and storage companies.
Chris Lowe: What about gold ETFs? What role do they play?
Nick Giambruno: If you’re buying a lot of gold, that’s where ETFs come in. That’s because storing a lot of physical gold can be expensive and inconvenient.
You want to look for a fully allocated physical fund. They carry less counterparty risk than non-allocated funds.
The Sprott Physical Gold Trust is one example. It trades under the ticker symbol PHYS, and it stores gold on your behalf in the Royal Canadian Mint.
Chris Lowe: What about gold coins? Can you just hop on a plane to Colombia or Argentina with gold coins in your pocket?
Nick Giambruno: Well, it’s a gray area. And because it’s a gray area, I wouldn’t recommend taking more than a couple of gold coins with you when traveling abroad.
The average TSA agent has probably never seen a gold coin in his life. He probably wouldn’t know what it was if he found one. But, if he thought it was something suspicious, he would confiscate it and let the courts sort it out. And that’s no fun.
You’d have to go to court to get your metal back, and that would involve costly legal fees.
I’ve taken gold coins across numerous borders, and I haven’t had a problem. But I’ve heard horror stories. And from personal experience, I can tell you that gold coins set off the X-ray machine. So there’s a decent chance the TSA folks—or their foreign counterparts—will find them.
And remember, if you take more than $10,000 of “cash” in or out of the US, you need to file a “Report of International Transportation of Currency and Monetary Instruments” with FinCEN, a branch of the Treasury Department that deals with financial “crimes.”
These are not really crimes, but rather violations of the law. It’s an important distinction that few people understand. A real crime involves harm or the threat of harm to a person or property. Think murder, theft, or arson.
When someone breaks the law, it’s often not because they’ve committed a real crime. They may have merely violated a particular government’s law without threatening or harming anyone.
This is the case with most of what FinCEN handles. In my view, it’s a completely unnecessary and destructive organization. I think it’s one of the largest threats to your financial privacy.
Of course, I am not suggesting anyone break the law—even if they’re not harming people or property. As a practical matter, it’s foolhardy to violate any government’s laws while you’re within its reach.
You wouldn’t want to crack a joke about Kim Jong-un while in North Korea—a supposed “crime.” Likewise, you wouldn’t want to break one of FinCEN’s Orwellian non-crimes while you’re under its jurisdiction… which is unfortunately almost everywhere, as long as the US financial system is still king.
But back to your question about gold coins…
If you have more than $10,000 on you, you’re asking for extra attention from the authorities. So, again, this is where it gets into a gray area.
Gold coins have a low face value. But they have a high metal value. For example, a 1-ounce American Gold Eagle has a face value of $50, but a metal value of about $1,300 at today’s gold price.
So some people might say, “Oh, yeah, well, I’m taking 100 American Gold Eagles with me. The face value is less than $10,000. So I should be okay.”
Technically, they might be right. But don’t bet on winning that argument with a TSA agent (or a judge later on). He’ll find it suspicious. At best, he’ll take your coins and let you deal with the courts. At worst, he might arrest you.
You’re better off buying coins when you’re already in your destination country. Taking gold coins with you is just too risky.
Chris Lowe: What about cryptocurrencies such as bitcoin? How do they factor into an international diversification plan?
Nick Giambruno: I’m glad you brought that up. Cryptocurrencies in general—and bitcoin in particular—are a new tool in your internationalization toolkit. In fact, bitcoin is now an important part of this strategy. It’s another inherently international asset.
Bitcoin has incredible value as an international currency transfer mechanism. You can take any amount of bitcoin in and out of any country. You don’t need permission from any government. You can send it—or take it with you—across borders as often as you want. And there’s nothing anyone can do about it.
I’ve seen this firsthand in Latin America. Governments there use capital controls to trap money within their borders so they have more to confiscate. Bitcoin helps people get around capital controls because governments can’t freeze, seize, or block bitcoin transactions.
This is why bitcoin is such a disruptive and exciting technology. Just look at the surge in the bitcoin trading volume in crisis-ridden Venezuela recently.
When you buy bitcoin, you’re exchanging US dollars—a fiat currency controlled by the government—for a private currency that no government controls. That makes it a true international asset. It’s similar to gold and silver in that way.
Chris Lowe: Let’s say someone already owns some gold… and maybe even some bitcoin. What next?
Nick Giambruno: There are four core areas to consider—your savings, your citizenship, your income, and your digital presence.
Chris Lowe: Let’s go through these one by one. What other ways, outside of buying gold and cryptocurrencies, can you diversify your savings?
Nick Giambruno: There are two other ways to diversify your savings—foreign real estate and foreign bank accounts.
Foreign real estate is especially helpful. I call it a diversification “grand slam” because it accomplishes a number of key goals at once.
Owning real estate in a foreign country moves a good chunk of your savings into a hard asset that’s outside of your home government’s immediate reach. It’s basically impossible for your home government to confiscate your foreign real estate.
In fact, owning foreign real estate is one of the few ways you can still legally maintain some financial privacy. In that sense, it’s the new Swiss bank account.
Also, foreign real estate often opens up other diversification options. In many cases, owning property in a foreign country makes it easier to open a bank account there. It can also put you on the road to a foreign residency. In some cases, it can even put you on a shortened path to citizenship.
And of course, owning foreign real estate gives you a second home, vacation hideaway, or place to retire. So ideally, it’s located somewhere you would enjoy living.
Foreign real estate gives you an emergency bolt-hole if and when there’s trouble back home. This is why I own real estate in Colombia and Argentina. It’s also why Doug Casey and Bill Bonner own foreign real estate.
Chris Lowe: What about diversifying your citizenship? How does that work?
Nick Giambruno: A second passport is one way to diversify your citizenship. Unfortunately, there is no route to a second passport that is simultaneously easy, fast, cheap, and legitimate. But that doesn’t negate the benefits.
Among other things, a second passport allows you to invest, bank, travel, live, and do business in places you wouldn’t otherwise be able to.
But there’s another important reason to get a second passport. No matter where you live, your home government can revoke your passport at any time and under any pretext it finds convenient.
Your passport doesn’t belong to you. It belongs to the government. Having a second one means you can escape your home country without having to live like a refugee.
Chris Lowe: What about diversifying your income, the third point on your list?
Nick Giambruno: Income diversification means structuring your cash flows so you’re less dependent on any one country for your income. The goal is to create multiple sources of revenue from international investment opportunities and trends. Bonus diversification points if you do all this through your own offshore company domiciled in a favorable jurisdiction.
Then, finally, you want to diversify your digital presence. Moving your digital presence to foreign jurisdictions also adds significant political diversification benefits. This often includes your email account, online file storage, and the components of personal and business websites.
Iceland and Switzerland stand out as some of the friendliest countries for your digital presence. They have the strongest and most tested digital privacy provisions in the world. They also have a strong tradition of independence. Neither rolls over easily for any foreign country.
The US, on the other hand, is one of the least friendly places. It has very weak digital privacy protections.
Chris Lowe: We’ve covered the “why” and the “how” of internationalizing. What about the “when”?
Nick Giambruno: That’s easy. Now.
The window of opportunity to protect yourself closes a bit more each week. If history is any guide, it won’t be open forever. So it’s essential to act before the government slams it shut indefinitely.
It’s much better to have developed and implemented your game plan a year early than a minute late.
International diversification is a time-tested route to freedom. Wealthy people around the world have used it for centuries to effectively protect their money and their families.
You should start implementing the four steps we’ve talked about immediately.
Justin’s note: There’s probably much less time to prepare than you think. As you read this, a historic crisis is brewing in America… one that will touch every aspect of your life. Click here for more concrete ways to protect your financial freedom.