“From whence shall we expect the approach of danger? Shall some trans-Atlantic military giant step the earth and crush us at a blow? Never. All the armies of Europe and Asia…could not by force take a drink from the Ohio River or make a track on the Blue Ridge in the trial of a thousand years. No, if destruction be our lot we must ourselves be its author and finisher. As a nation of free men we will live forever or die by suicide.” ― Abraham Lincoln
This year has really started off with a bang. Never have I seen such strife in our country.
The initial response to uncertainty is often fear and worry. However, as we become more emotionally intelligent, we realize fear and worry do very little for us and actually hinder us.
So what is the proper approach? We need to accept what is out of our control and focus on what is in our control. Fully accepting what is going on around us can help us get through anything. Often we are discontent with our situation because we haven’t accepted it which drives destructive behavior. We are here now. So what are the realities we need to accept?
- There is chaos within the United States. Both ends of politics are become more extreme and more mainstream
- The Federal Reserve has increased the money supply by 20% in 2020 and will continue to do so
- The US nation debt is $28 Trillion (as of Jan 2021) which equates to $83,917 per citizen or 130% of national GDP.
- Individual Rights are being decreased
- Taxes are outrageously high
- The Democrats have the trifecta
I personally believe that money could be confiscated in the future if the US continues down the authoritarian path we are headed. So, if we insist on maintaining our own sense of personal freedom, actions must be taken to ensure that despite what the world is doing around us. So here is my list of places individuals can store money that will provide a level of protection from authoritarian regimes. One should note that you should never try to hide money from the government. This is impossible in today’s world and will result in grave penalties. Due to FATCHA (Foreign Account Tax Compliance Act) the US ensures that it has complete control over you and your money. However it does allow for items to not to be reported to the FBAR (Report of Foreign Bank and Financial Accounts).
Precious Metals
Gold has been valued by humans for millennia. Archeologists have found gold flakes found in paleolithic caves that date to 40,000 BC and the first record of gold exchanges were 3,000 BC in Egypt.
Precious Metals have held a unique place in our monetary system because they do not tarnish and are relatively rare. All elements heavier than Iron are born out of a collision of neutron stars, which makes them rare relative to the universe’s mass.
As humans we haven’t been able to create new elements out of lighter elements on any sort of significant scale. Gold, Silver, Palladium, and Platinum have a moderately stable mining source and consumption which makes them a very good commodity to hold.
It has only been for 50 years, a very very short time in the breadth of humanity, where humans have relied on FIAT currencies (money decreed by government without intrinsic value) which is about 0.8% of recorded human history. Yet this so called advancement has caused so much destruction to our society and financial structures. Not only can the government take half what you have made through taxes, they can also decrease the value of the other half you keep through by controlling the money supply.
However, not only is it again legal for US citizens to hold gold of their own, the buying and selling of it has become remarkably easy with technology. Here are the ways US citizens can hold precious metal.
Hold in a vault (international and domestic)
There are many companies that hold gold all over the world and can be used to easily exchange for any currency. They typically change a hold fee for the precious metal or an exchange fee. This is the easiest way to buy and sell precious metals. It is possible to hold precious metals internationally and not file and FBAR. However, it becomes an issue when there is an account linked to the precious metal.
Buy and Store Precious Metals Yourself
Although less safe, you have access to gold incase your accounts are all frozen or some cataclysmic event happens. There are really great options out there for pure element jewelry, coins, and Valcambi Combi Bars. Valcambi Combi bars are a cool product. They come in a sheet but are split into many elements that can break off in a smaller mass. For example, you could buy a 50g gold combi bar but break off a 1g gold piece to purchase an item.
Menē is a company that makes pure element jewelry. Instead of holding precious metal under your pillow and never seeing it, this jewelry provides a dual purpose. I would suggest checking them out if you’re in the market for both jewelry and precious metals.
Purchasing a precious metal ETF or Mutual Fund
These are precious metals securities that hold portions of precious metals and are traded just like stocks or bonds. Many IRAs have options to hold precious metals positions. There is incredible ease to hold gold with these but they can come with a higher cost. Look for what the annual fee is for the ETF or Mutual Fund.
Purchase shares of Precious Metal Mining Companies
Instead of buying the element itself, mining companies can also match the gold market. However, it typical that this doesn’t match the value of the metal itself. Some of the larger mining stocks on NYSE are NEM, GOLD, and KL
Buy Foreign Real Estate
Real estate has made more millionaires than any other asset class. Foreign RE investment can come with higher risks but can have some much added benefits. Here are a few of the great things about foreign real estate
Residency or Citizenship Status
In many countries it will secure temporary or permanent residence or even citizenship.
Higher Asset Appreciation
50 years ago, no one would have expected what Singapore would look like today. Investing in emerging markets can allow your asset to move up as the country’s economy really picks up. One country that is in the spotlight in today’s age is Georgia. They have a lot of the tells of a free and prosperous nation.
FBAR Non-Requirement
The FBAR excludes international properties that are owned directly by an individual. If part of an REIT or business it does need to get reported. Furthermore, any income made off the property is foreign earned income and will need to reported on and sometimes taxed.
Offshore Bank Accounts
Definitely the sexiest sounding method of all. When we hear of Offshore Bank Accounts, we dream of international spies and heists, but really it is like having any other bank account. The only difference is the bank is located in a foreign country. As I am writing this, the FBAR minimum limit of reporting foreign held currency is $10,000. So you don’t need to report if the value goes more than that. You certainly need to be careful if the currency you are in is volatile. It could be that during one day of the year a $9,000 deposit could be valued more than $10,000 in USD.
Many of the more well known countries like Switzerland and Singapore have very high account minimums such as $250k. However, Georgia has very low minimums and has so far shown to be a stable currency.
Many of these banks offer debit cards like any other bank here in the US.
Cryptocurrency
Crypto isn’t quite a FIAT currency but it isn’t gold. It is based off purely what the market determines. You could see this as good or bad. There are definite advantages of the technology that limit the amount of currency out there. However, because it is not backed by anything real, it isn’t stable. Well, maybe not yet. We have seen a huge rise in evaluation but it could see a meteoric fall. It all depends on what the market does.
Cryptocurrency provides the scarcity and stability that gold has done to currency for millennia – it provided a scarcity of resource. Because gold is rare, the amount of gold that is dug up is very little relative to the total quantity that is held in the world. Therefore, the value of it is moderately stable. Bitcoin and other cryptocurrencies have fixed numbers of coin. There can never be any more of them.
The two biggest players are Bitcoin and Ethereum. Ethereum has a technological advantage over bitcoin. However, both struggle with the same issue that the other 7,000 other cryptocurrencies have – they are replaceable. Because there isn’t an underlying value in the held position. Unlike Gold that has inherent value to manufacturing and jewelry industries, crypto has no such value. It only is valued by what the market dictates which is what makes it unstable.
Foreign Assets
Foreign securities held in offshore brokerage accounts provide protection against domestic currency issues and confiscation. However, there is risk as the US does drive a large portion of the world’s economy. This would result in international currencies also struggling as well as securities
Farms and other agriculture businesses will be around forever and provide the owner with not only cash flow but an asset that will appreciate over time. Like any good realtor will tell you, “they aren’t making more land”
Summary
There are many assets on the market that can provide a safe secure. It is important for each of us to look at what we think are potential risks through a risk matrix and determine what action steps are needed to mitigate that risk.
| Danger | Cash | Domestic Assets | Privately Held Precious Metals | Foreign Held Precious Metals | Offshore Bank Account | Cryptocurrency | Foreign Assets |
| Confiscation | Low | Low | Low | Low | Low | Low | Low |
| Devaluation of USD | High | High | Low | Low | Medium | low | low |
| Higher Taxes | High | High | Low | Low | Medium | Medium | Medium |
| Risk of Destruction | Medium | Medium | Low | Low | Low | Low | Low |
Slamas Llamas 