http://www.lewrockwell.com/casey/casey19.1.html
Q: Good morning, Doug. This week, I'd like to ask you about diversifying your assets outside of your home country. What is the danger for investors who keep all their assets at home, and what are the alternatives? It looks like there’s a real risk of exchange controls blocking capital from leaving the U.S. The Obama tough talk on tax havens is one sign. What should people do, while there’s still time, to avoid getting trapped?
Doug: Well, investment risks are huge in today's world. But political risks are even greater, and most Americans are completely unprepared. The biggest danger to your wealth isn’t the markets, as ugly as they are. The biggest risk today is your own government. The only way you can protect yourself is by internationalizing your assets.
So, while it is still possible – and I don't think it's going to be possible for very much longer – you should get as much money out of the U.S. as you can and put it into something that will be hard for them to force you to repatriate. If you open a foreign bank account or brokerage account, that's a step in the right direction, and you may be grandfathered somehow, but those things are liquid, so you could be forced to bring the assets back before you want to.
I think the best thing that you can do is to either buy foreign real estate or to buy gold coins and put them in a foreign safe deposit box.
Q: You mentioned something that Americans aren’t familiar with, political risk. You’ve traveled and done business in a lot of countries. What kinds of negative policies are common in other parts of the world that you think are coming here?
Doug: Well, governments are capable of absolutely anything because they consider their citizens a national resource available for exploitation, almost like cattle. There are numerous things that the U.S. government might do, now that it has become so much like all the other governments. They could put a tax on foreign investments, to discourage you from buying them. You’d still be able to send money out of the country, but you’d be charged an exit tax of 10% or 15%, or whatever the government wants. There might be a tax on foreign travel to cut down on Americans sending money abroad. There might be a prohibition on opening up new bank or brokerage accounts outside the U.S. There are all kinds of possibilities.
It would probably be politically popular; the average guy thinks that foreign investment is somehow unpatriotic, and foreign travel is frivolous, something for only "the wealthy."
Q: If you have assets outside the United States but you’re a U.S. citizen, aren’t you at risk anyway?
Doug: Yes, you absolutely are. It's unfortunate that the tax laws have turned U.S. citizenship into an albatross.
The United States is the only major country that demands taxes from citizens living outside the country. And even if you renounce your citizenship, they still want taxes from you.
First of all, they tax you at the time you expatriate, as though you had sold everything you own. Second, they still tax you on any income you earn in the U.S. for the next ten years. And they levy a special tax on anyone in the U.S. who receives a gift or inheritance from you. So, over the years, America has become a roach motel for capital.
Q: Planning can help, but it is getting more complex?
Doug: Yes. It is becoming very complex, and setting up a foreign company is subject to all kinds of reporting requirements. It's quite problematic. Really, the simplest and best way to gain some measure of political insulation is to buy gold and put it in a safe deposit box and/or buy foreign real estate. Neither move triggers any special reporting requirements.
Q: Let’s talk about your first recommendation, buying gold and storing it abroad. How do I go about it?
Doug: We had an article recently in BIG GOLD (New name: Casey’s Gold & Resource Report), one of our letters, that covers that question pretty thoroughly.
Q: Over the years, you’ve bought real estate in many places – Spain, New Zealand, Hong Kong, Africa, South America, and elsewhere. I understand that you’ve recently invested in Argentina and Uruguay. Aren’t you also at the mercy of the governments there?
Doug: The Argentine government has been amazingly stupid over the last 60 years, destroying the currency repeatedly, among other things. Now the U.S. government seems to be taking lessons from them.
But on the plus side, the average Argentine has little love or respect for the government; most of them are transplanted Italians who seem to have a natural aversion to taxes. It’s demographically about the most European country in the world and socially very stable.
Further, Argentines long ago learned how to deal with the nonsense the government specializes in; Americans have just enrolled for what’s going to be an unpleasant learning experience.
One of many things I like about Argentina – and I’ve been to 175 countries and lived in 12 – is its extremely low cost of living, combined with a very high and sophisticated standard of living. That’s why we chose Argentina to build what I intend to be the finest residential resort in the world. Check it out at La estancia de Cafayate.