Weekend Edition
The Best of The S&A Digest
September 05, 2009
 Money flows to where it is treated best, and as world governments are quickly realizing, people with money flow there, too... The world's super-wealthy are fleeing to Switzerland to avoid oppressive tax regimes in their home countries.
"We're not talking about thousands of people because we're talking about people with a certain wealth, but it's significant," said Alexandre Zeller, CEO of HSBC's Swiss bank. "They come above all from countries which have substantially increased taxes." Exhibiting a firm grasp of the obvious, Zeller adds, "There's a direct correlation between taxes and the desire of a wealthy person to want to establish themselves elsewhere."
Switzerland is already home to many expat millionaires, including Formula 1 racer Michael Schumacher, Ikea founder Ingvar Kamprad, and pop singer Tina Turner. Wealthy residents who don't have Swiss income can negotiate tax deals with the country.
But it could already be too late for Americans... Wegelin & Co, the oldest Swiss bank, is asking its clients to sell all their U.S. investments or find another bank. Wegelin wants no exposure to arbitrary U.S. tax and regulatory policies.
This isn't just a problem for the super-wealthy. If tax-friendly countries and banks around the world don't all snub U.S. citizens first, our government is sure to make any relocation efforts illegal... or at least very difficult and costly. (You already have to give up half of your assets if you renounce your U.S. citizenship.)
In this month's Retirement Millionaire, entitled How to Build Your Retirement Lifeboat, Doc Eifrig outlines a few steps you should take to protect your wealth from the government. Eifrig shares his favorite offshore bank, a way to legally own assets abroad without reporting them to the government, and his favorite way to own gold.
The money this one report will save you in the coming years far outweighs the $39 subscription fee. To sign up for Retirement Millionaire, and begin building your Retirement Lifeboat, click here.
If you want to know why we loathe government so much, one simple reason is we hate being lied to. Libertarian Walter Williams has some hard data on how Washington lied about Medicare, income tax, and Social Security.
Bond King Bill Gross released his September investment outlook... He says deleveraging, deglobalization, and reregulation ("DDR") will lead us to a sustained period of slow growth, or the "New Normal"...
Gross says DDR will permanently change business and economic models we take for granted... The rest of the world will no longer produce goods for the U.S. in return for our printed money. And unless other world powers develop a consumer ethic of their own, this will lead to slow growth.
Gross says his firm, PIMCO, has drawn the following conclusions:
- Short-term interest rates will remain low for an extended period of time.
- Following government stimulus efforts and guarantees are "keys to future investment returns."
- Asia and "Asian-connected" economies will dominate future growth.
- The dollar is vulnerable in the long term.
It seems, for once, Goldman Sachs' extreme self-confidence didn't pay off... Despite emerging from the financial crisis largely unscathed – and with record profits – the bank lost $6 billion trading its own stock.
From 2006 through early 2008, Goldman spent $18 billion buying 100 million shares of its own stock, paying an average $184 a share. When the financial crisis hit in September, Goldman had to replace the money, so it sold 94 million shares, raising nearly $12 billion (at $123 a share). Goldman thought it had enough capital to withstand the storm, but it was wrong, and the mistake cost the firm $6 billion.
T. Boone Pickens is back in the headlines... this time calling for $300 oil. Pickens says oil supply is permanently stuck at 85 million barrels per day, but by 2019, demand will reach 90 million barrels a day. "The only way if you peak on supply that you can kill demand is with price," Pickens said. That's what happened in 2007 when oil hit $147.
While Pickens' prediction of higher oil in the future is probably correct, he's talking his book in a big way here. Pickens has invested billions in natural gas and wind farms, and even started a special-interest group, Pickens Plan, to help stop U.S. dependence on foreign oil... and instead get us hooked on his alternative-energy projects. Take whatever this guy says with a grain of salt.
For our best ideas on how to play the energy market (and other commodity markets), check out Matt Badiali's S&A Resource Report. You can learn more about Matt's latest ideas here.
Regards,
S&A Research
Stansberry & Associates produces the daily S&A Digest, which comes free with a subscription to one of our premium products. To learn more about a risk-free trial subscription click here. |
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S&P 500 |
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Newmont Mining |
NEM |
+12.82% |
Textron |
TXT |
+8.63% |
BJ Services |
BJS |
+7.20% |
Countries |
|
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Taiwan |
EWT |
+6.30% |
South Korea |
EWY |
+1.44% |
Thailand |
TTF |
+0.86% |
Sectors |
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Gold Mining |
GDX |
+12.84% |
Transportation |
IYT |
-0.63% |
Basic Materials |
IYM |
-0.82% |
Commodities |
|
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Silver |
- |
+14.31% |
Lead |
- |
+13.42% |
Gold |
- |
+5.32% |
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S&P 500 |
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American Intl Group |
AIG |
-12.73% |
Masco |
MAS |
-12.73% |
McGraw Hill |
MHP |
-12.04% |
Countries |
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Chile |
CH |
-5.29% |
Spain |
EWP |
-4.18% |
Germany |
EWG |
-4.17% |
Sectors |
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Homebuilding |
ITB |
-6.99% |
Real Estate |
IYR |
-5.88% |
Financial |
IYF |
-3.93% |
Commodities |
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Natural Gas |
- |
-12.58% |
Crude Oil |
- |
-6.28% |
Gasoline |
- |
-5.66% |
Source: Bloomberg, Yahoo, StockCharts, XLQ 8/27–9/3.
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