Peter Macfarlane & Associates

Regular Peter Mac readers will know that for some years (since 2004 to be precise) I’ve been visiting the landlocked South American heartland of Paraguay. It’s a de facto tax haven with no personal income or capital gains taxes. It’s possible to obtain a second passport from Paraguay after as few as two years.

So it’s with great pleasure that I see other financial newsletter writers are finally beginning to catch on! Here’a a recent article by Tom Dyson, reproduced by kind permission of Daily Wealth:

Yesterday I visited the world’s largest hydroelectric power plant. The name of this plant is Itaipu. It sits on the border between Brazil and Paraguay, on one of the largest rivers in Latin America, the Rio Parana.

A few months ago, I visited the largest coal-fired power plant in America, Plant Scherer. When Scherer operates at full capacity, it produces 3.5 gigawatts of power. A nuclear reactor produces around one gigawatt of power

Itaipu produces 14 gigawatts of power. In other words, it’s four times the size of America’s largest coal power plant… and 14 times the size of most nukes. Itaipu provides 93% of Paraguay’s power and 25% of Brazil’s power.

I can’t explain in words what a beast this dam is. It stretches four miles across and 65 stories high. The iron and steel used to build it would give you 380 Eiffel Towers. It’s one of the seven modern wonders of the world, alongside the Panama Canal and the Golden Gate Bridge.

According to their joint agreement, Paraguay gets 50% of the electricity from the dam. Brazil gets 50%. But Paraguay is a small country. It has a population of 6 million people… versus 200 million in Brazil. So Paraguay only keeps 5% of Itaipu’s power and sells the rest back to Brazil.

This makes Paraguay the largest exporter of hydroelectric power in the world.

Here’s the thing: Paraguay sells its electricity to Brazil at $3 per megawatt-hour. Right now, Brazil can sell the same unit of electricity to its private utilities at $150 per megawatt-hour. There is an electricity crisis in Latin America right now, especially in Chile, and electricity prices are very high. It’s immediately obvious Brazil is not paying Paraguay the right price for its power. And Paraguay is losing billions of dollars.Corrupt politicians set this low price in 1973… under a 50-year contract. The Brazilians bribed the Paraguayan government to sell them power at a rate that’s far too low. Now, there are calls to change this rate, but who knows if that’ll happen…

The thing is, Paraguay doesn’t have to sell its power to Brazil. It could consume the power itself. I think it would be a great business to set up an aluminum or zinc smelter here. These businesses are electricity-intensive. The problem is, Paraguay is a poor country and has absolutely no industry. It’s all agriculture here.

According to the people at Itaipu, the energy the dam creates every day is the equivalent to 433,000 barrels of oil. That’s about half of what Canada’s Athabasca oil sands produce each day. Except it’s renewable, it’s clean, and it takes no energy to produce.

This cheap electricity is one of the reasons I like Paraguay as an investment. But it’s hard to get your money into the country…

Paraguay has no stock market… only a small bond market. So to invest in Paraguay, you’ll have to go there yourself and buy assets from the locals. That’s a good thing. It means everything is cheap.

In Paraguay, for example, you can buy companies for book value… that pay 45% dividends, according to one broker I met. You can buy real estate with 10% rental yields. And cattle farms with 18.5% cash yields.

More to come from Paraguay in my next column…

Good investing,

Tom

P.S. The Three Gorges Dam in China will be the largest hydroelectric dam in the world by volume. It will operate at full capacity by 2011. China hopes it’ll produce 18 gigawatts. That’s bigger than Itaipu.

Our tour guide wasn’t convinced Three Gorges would be able to produce that much power. “The Yangtze isn’t as powerful as the Parana,” he said. “We’ll see…”

P.P.S. There is talk of a hydro plant twice the size of Three Gorges in Africa, on the Congo River. But it’ll never happen. For a start, only 10% of Africans have access to the grid… What will they do with all that power? And secondly, it will require cooperation from seven different central African countries… and hundreds of billions of dollars in loans.

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What bank recently set a record by processing transactions of more than $10 trillion per day?

This bank, founded in 1997, is owned by a Swiss company which in turns owns what the bank itself describes as a UK “shell” company, which in turn owns the bank itself, which is regulated in New York but has its back office operations outsourced to a company registered in England and Wales.

You could be forgiven for not having heard of this bank. It’s not exactly well known. If you go to its own website and click on Press Office > Media Coverage you get “No results found”.  Google doesn’t turn up much about it either, except for a few sites rehashing Press Releases put out by the bank itself.

This bank doesn’t have any bricks and mortar branches. I reviewed its website and looked at the “Contact Us” and “Offices” pages and I couldn’t even find a physical street address for it. The only address I could find on their site was a PO Box address in London for sending job applications. Of course it does have a physical office in London’s Docklands, but I’ll be darned if I could find it on their site!

I’ll tell you the name of this bank to see if it means anything to you: CLS Bank International

Even with today’s inflation figures and the dollar losing its value, $10 trillion is a hell of a lot of money. That’s just in one day! (19th March, 2008 to be precise, information from CLS Bank Press Release, source url below)

To put this in perspective, the average total amount that Citi Global Custody Services, one of the largest foreign exchange banks, holds in custody is  $13 trillion. So to oversimplify things a little so you get the jist, CLS Bank transacts in a day, not far off what Citibank holds on deposit.

Now, those of you who read my columns regularly are well aware that I’m a free marketeer. I certainly don’t believe that we should restrict currency flows around the world, although I believe there is a strong likelihood of the US doing so at some point in the fairly near future - most likely by the back door. I’m also not a believer in conspiracy theories.

But of course, that $10 trillion was not payments between the likes of you and me, or payments for tangible goods or services. It was the results of pure speculation using money created out of thin air by fractional reserve banking. However, there’s no doubt that volumes of money like this flitting around the globe do affect the stability of the financial system. Maybe it’s not a bad thing to bring operations like this more out into the open.

I’m not saying this will happen, but it’s certainly fair to ask the question, what would happen  to the world financial system if CLS Bank suffered a liquidity crisis along the lines of those recently seen at Bear Stearns, Lehman Bros et al?

I’ll be writing more about this bank, and another similar institution the Depositary Trust and Clearing Corporation, in an exclusive article for The Q Wealth Report edition 51, due for release at the end of August.  Click here to visit The Q Wealth Report.

Meanwhile, you might be interested to know if you can open an account at this bank, or get a credit card from them. Well, no, you can’t. They only deal with other financial institutions. CLS Bank conveniently published a Press Release earlier this month listing their clients, which I have pasted in below for your edification…

	03 June 2008 CLS third party participant list - 2817 now live In addition to the 61 CLS Bank Members, a total of 2817 participants are currently using the CLS Bank service. Included in this total are 378 banks, corporates and non-bank financial institutions and a further 2439 investment funds.* New third party users are highlighted in bold. Aargauische Kantonalbank, Aarau Abaxbank, Milan ABP (Stichting Pensioenfonds), Netherlands ADM Derivatives Inc., Chicago AIG International Inc, Wilton Aletti & C Banca Di Investimento Mobiliare Spa, Milan Alfa Bank, Moscow Allgemeine Sparkasse Oberoesterreich Bankaktiengesellschaft, Linz Amagerbanken, Copenhagen American Express Bank, Poole Anglo Irish Bank, Dublin Arab Bank PLC, London Arab Banking Corporation, Manama Axis Bank, Mumbai Baden-Wuerttembergische Bank, Stuttgart Banca Akros, Milan Banca Antonveneta, Padova Banca del Ceresio, Lugano Banca del Gottardo, Lugano Banca Del Sempione, Lugano Banca Fideuram SpA, Milano Banca Monte Dei Paschi di Siena, Milan Banca Nazionale del Lavoro, Rome Banca Nazionale del Lavoro, London Banca Nazionale del Lavoro, New York Banca Popolare di Sondrio, Sondrio Banca Transilvania S.A., Cluj-Napoca Bancaperta, Sondrio Banco Comercial Portugues, Lisbon Banco de Sabadell, Sabadell Banco di Desio e della Brianza S.P.A., Desio Banco do Brasil, Rio de Janeiro Banco do Brasil, Tokyo Banco do Brasil, London Banco do Brasil, New York Banco Espirito Santo, Lisbon Banco Popular Español, Madrid Banco Santander Central Hispano, Madrid Bangko Sentral ng Pilipinas Bank Cial, Basle Bank fuer Arbeit und Wirschaft AG, Vienna Bank fuer Kaernten und Steiermark, Klagenfurt Bank fuer Tirol und Vorarlberg, Innsbruck Bank Hapoalim, Tel Aviv Bank Hapoalim, Zurich Bank Internasional Indonesia, Jakarta Bank Julius Baer and Co., Zurich Bank Leumi, Tel Aviv Bank of Asia, Bangkok Bank of Ireland, US Bank of Ireland Treasury, Dublin Bank of Israel, Jerusalem Bank of Montreal, Toronto Bank of Montreal, London Bank of Nagoya, Nagoya Bank of New York - Inter Maritime Bank, Geneva Bank of Scotland, London Bank of Yokohama, Tokyo Bank Rakyat Indonesia, Jakarta Bank Sal. Oppenheim Jr. und Cie. (Schweiz) AG., Zurich Bank Sarasin and Co. Ltd, Basle Bank Sinopac Taiwan, Taipei Bank Von Ernst und Cie AG, Switzerland Bank Vontobel, Zurich Bankgesellschaft, Berlin Bankhaus Lampe KG, Duesseldorf Banque Cantonale de Fribourg, Fribourg Banque Cantonale de Geneve, Geneva Banque Cantonale Vaudoise, Lausanne Banque Carnegie, Luxembourg Banque Degroof, Brussels Banque Degroof Luxembourg S.A, Luxembourg Banque D’Orsay, Paris Banque Federative du Credit Mutuel, Paris Banque Franck, Geneva Banque Jacob Safra (Suisse), Geneva Banque Morval et Cie, Lugano Banque Nationale du Canada, Montreal Banque Privee Edmond de Rothschild, Geneva Banque Safra, Luxembourg Banque Syz and Co. Sa, Geneva Basellandschaftliche Kantonalbank, Liestal Basler Kantonalbank, Basle Bear Stearns Securities Corporation, New York Berner Kantonalbank, Berne BGC Brokers, London BHF Bank, Frankfurt Bipielle Bank, Lugano Biverbanca, Biella Blom Bank, Beirut Bremer Landesbank, Bremen Britannia Buiding Society, Leek British Arab Commercial Bank, London Brown Brothers Harriman and Co., New York BSI, Lugano Caixa Geral de Depositos, Lisbon Caja Madrid - Caja de Ahorros y Monte de Piedad de Madrid, Madrid Canara Bank, Mumbai Cantor Fitzgerald & Co., New York Cantor Fitzgerald International, London Cantor Fitzgerald Europe, London Capitalia, Rome Central European International Bank, Budapest Chicago Mercantile Exchange, Chicago Chinatrust Commercial Bank, Hong Kong Chinatrust Commercial Bank, Taipei Cho Hung Bank, Seoul Chugoku Bank, Tokyo Chuo Mitsui Trust and Banking Co., Tokyo Citadel Investment Group, Chicago Citigroup Global Markets, New York Clariden Bank, Zurich CMC Group Plc, London Compagnie Financière Edmond de Rothschild Banque, Paris Conrad Hinrich Donner Bank, Hamburg Co-Operative Bank, London Corner Banca, Lugano Corporation Bank, Mumbai Credit Industriel et Commercial, Paris Daegu Bank, Seoul Dah Sing Bank, Hong Kong Daishi Bank, Tokyo Dansk Supermarked, Copenhagen Dekabank Deutsche Girozentrale, Frankfurt Deutsche Postbank, Bonn Deutsche Postbank, Munsbach Deutsche Postbank International, Munsbach Deutsche Schiffsbank, Bremen Dresdner Bank, Zurich DVB Bank, Frankfurt DZ Bank, London DZ Bank, Frankfurt DZ Bank, Hong Kong EFG Bank, Zurich EFG Eurobank Ergasias, Athens Ehinger & Armand von Ernst, Zurich Erste Bank Der Oesterreichischen Sparkassen, Vienna Eurizon Capital SGR Export-Import Bank of Korea, Seoul Farmers Bank of China, Taipei Fideuram Bank (Luxembourg) S.A., Luxembourg Fimat International Banque, London Finter Bank Zuerich, Zurich First International Bank of Israel, Tel Aviv Firstrand Bank, Johannesberg Fonds de Compensation AVS/Ausgleichsfonds Der AHV, Geneva Forenings Sparbanken AB, London Forsakringsaktiebolaget Skandia, Stockholm Forstaedernes Bank A/S, Copenhagen GFX Corporation, Chicago Greenwich Capital Markets Inc., Delaware GlaxoSmithKline Finance PLC, Brentford Gulf International Bank, London Gulf International Bank B.S.C., Manama Hana Bank, Seoul Hauck und Aufhaeuser Privatbankiers, Frankfurt Hewlett Packard, New York Hewlett Packard International Bank, Leixlip HDFC Bank Limited, Mumbai Higo Bank, Tokyo HSH Nordbank, Copenhagen HSH Nordbank, Hamburg Hyakugo Bank, Tokyo IDBI Bank Ltd, India ICAP Securities Ltd, London Iccrea Banca, Rome ICICI Bank Ltd, Mumbai Indian Overseas Bank, Chennai Indonesische Overzeese Bank, Amsterdam Industrial Bank of Korea, Seoul International Bank of Asia Ltd, Hong Kong Intesa Sanpaolo, Torino Investec Bank, London Investec Bank Ltd, Sandown Investors Bank and Trust Company, Boston Islandsbanki, Reykjavik Israel Discount Bank, Tel Aviv ISS Finans, Copenhagen ISS Global, Copenhagen Ixis Corporate & Investment Bank, Paris Iyo Bank, Tokyo Jeju Bank, Jeju Jeonbuk Bank, Seoul Joh Berenber Gossler Co., Hamburg Joyo Bank, Tokyo Juroku Bank, Gifu Jyske Bank, Silkeborg, Copenhagen Kas Bank N.V., Amsterdam Kaupthing Bank Ltd., Luxembourg Key Bank, Cleveland Korea Development Bank, Seoul Korea First Bank, Seoul Kreditanstalt fur Wiederaufbau, Frankfurt Kwangju Bank, Seoul Kyongnam Bank, Masan La Caixa, Barcelona La Compagnie de Tresorerie Benjamin de Rothschild, Geneva Landesbank Baden-Wuerttemberg, Stuttgart Landesbank Berlin AG, Berlin Landesbank Hessen-Thueringen Girozentrale, Frankfurt Landesbank Saar, Saarbruecken Laurentian Bank of Canada, Montreal LGT Bank in Liechtenstein, Vaduz Liu Chong Hing Bank Limited, Hong Kong Lloyds TSB Bank, London Lombard Odier Darier Hentsch and Cie, Geneva LRP Landesbank Rheinland Pfalz, Mainz Luzerner Kantonalbank, Lucerne Macquarie Bank, Sydney Malayan Banking Berhad (Maybank Singapore), Singapore Malayan Banking Berhad (Maybank), Kuala Lumper Man Financial Limited, London Mashreqbank, Dubai Merrill Lynch International Bank, London Merrill Lynch International Bank, New York Merrill Lynch, Pierce, Fenner & Smith, New York Metzler B. Seel. Sohn und Co., Frankfurt MKS Finance, Geneva MM Warburg und Co., Hamburg Natixis Banques Populaires, Paris Natixis Captial Market, Paris National Agricultural Cooperative Federation, Seoul National Bank of Abu Dhabi, Abu Dhabi National City Bank, Cleveland National Federation of Fisheries Cooperatives, Seoul Nationwide Building Society, Northampton Nykredit Bank, Copenhagen Nedbank, Johannesberg Nektar Asset Management New York Clearing Corporation, New York Nike Australia, Abbotsford Nike Canada, Thornhill Nike European Operations, Hilversum Nike Hong Kong, Kowloon Nike Inc, Beaverton Nike International, Beaverton Nike International Limited, Kowloon Nike Japan, Tokyo Nike New Zealand, Auckland Nike Singapore, Singapore Nike USA, Beaverton Nomura International, London, London Nomura Securities, Tokyo Norddeutsche Landesbank, Luxembourg Norddeutsche Landesbank Girozentrale, Hannover Norddeutsche Landesbank Girozentrale, Singapore Norddeutsche Landesbank Girozentrale, London Oberbank, Linz ODL Securities Ltd, London Oman International Bank, Muscat Oppenheim Sal Jr und Cie, Duesseldorf Oppenheim Sal Jr und Cie, Zurich Parex Banka, Riga PB Financial Services Inc, New York Pictet and Cie, Geneva Penson Financial Inc., Dallas PKB Privatbank, Lugano Privredna Banka Zagreb, Zagreb Privatbank Ihag Zurich, Zurich Prudential Bache Global Markets, New York Prudential Financial Derivatives Llc, New York Pusan Bank, Seoul Raiffeisen Landesbank Suedtirol, Bolzano Raiffeisen Zentralbank, London Raiffeisen Zentralbank Oesterreich, Vienna Raiffeisen Zentralbank Oesterreich AG, Singapore Raiffeisenlandesbank Oberoesterreich, Linz Raiffeisen-Landesbank Tirol, Innsbruck Raiffeisenlandesbank Vorarlberg, Bregenz Rand Financial Services, Inc., Chicago RBA-Zentralbank, Berne Refco Capital Markets, New York Renault Finance, Lausanne Resona Bank, Tokyo Ringkjobing Bank, Ringkoebing Roskilde Bank, Roskilde Sabanci Bank, London Sampo Bank, Helsinki Sanpaolo, Torino Sanpaolo Bank, Luxembourg Saraswat Co-Operative Bank Ltd, Mumbai Saxo Bank, Gentofte Seng Heng Bank, Macau Shanghai Commercial Bank Limited, Hong Kong Shinhan Bank, Seoul Shinkin Central Bank, Tokyo Shinsei Bank Ltd, Tokyo Shizuoka Bank, Shizuoka Skandia Capital, Stockholm SKF Treasury, Goteborg SMBC Capital Markets Inc, New York South African Reserve Bank, Pretoria State Bank of India, Calcutta State Bank of Travancore, Ernakulam Sucden (UK) Ltd, London Sunlight, Cham Swedbank, Stockholm Swiss Post - Postfinance, Berne Sydbank, Aabenraa Syndicate Bank, Mumbai Tai Fung Bank, Macau The Bank of Fukuoka., Tokyo The Bank of Kyoto, Kyoto The Clearing Corporation, Chicago The Gunma Bank, Maebashi The Hiroshima Bank, Tokyo The Minato Bank, Kobe The San-In Godo Bank, Matsue The Shoko Chukin Bank, Tokyo The Yamanashi Chuo Bank, Kofu Thurgauer Kantonalbank, Weinfelden Timber Hill Europe AG, Zug Top Danmark, Ballerup Toronto Dominion Bank, London Toronto Dominion Bank, Toronto Travelex America Inc., US Travelex, London Travelex, Peterborough Travelex, Sydney Trust and Custody Services Bank, Tokyo Unilever, Rotterdam Union Bancaire Privee, Geneva Union Bank of Israel, Tel Aviv Union Bank of Taiwan, Taipei Unipol Banca, Bologna United Mizrahi Bank, Tel Aviv Volvo Treasury, Goteborg VTB Bank Europe plc., Singapore Vseobecna Uverova Banka A.S, Bratislava Wachovia Bank, Charlotte WestLB, London WGZ-Bank, Duesseldorf Winterthur Einzel Treasury, Switzerland Winterthur Insurance, Switzerland Winterthur Kollektiv, Switzerland Winterthur Life and Pensions, Switzerland Winterthur Market Unit CH Treasury, Switzerland Woori Bank, Seoul Yamaguchi Bank Ltd, Tokyo Yes Bank Ltd., Mumbai *Investment funds are not listed here and some institutions have asked for their details not to be published. In certain cases some banks, corporates and NBFIs may have multiple locations, branches or subsidiary companies submitting instructions to CLS Bank. Author: CLS Corporate Communication

Sources used in this article:

http://www.cls-services.com  (various pages)

http://www.citi.com/citigroup/press/2008/080402d.htm

http://www.synthesisbank.com/en/node/593321

While many in the world are either worrying about the impending collapse, or gloating about the recession in the US, here’s a new perspective (mostly the observations of a bright friend who from time to time mails things like this out to his list…) who is doing just what he says the last paragraph.

There are about 75,000,000 single-family houses in the US today. A third of these are fully paid and free and clear. That leaves 50,000,000 mortgaged homes. Over half of these properties were been bought pre-2000 at a much lower cost that their current book values. The vast majorities of these owners have either not dipped into their ‘home equity’, or did so early in the housing boom. The vast majority have serviced their mortgages ever since.

That Leaves 20,000,000 mortgages. About three quarters of these are owner-occupier mortgages in the heartland and small town America. The loans are being serviced just fine.

In other words, 5,000,000 houses MIGHT be the sub-prime crisis generators. Of these at least half are investment properties, or vacant properties that were to be “flipped” They will be foreclosed and resold at below market prices resulting in losses for the investors & lenders, but will not result anyone being homeless. That leaves a maximum of 2 million owner occupied homes purchased at grossly inflated prices and with little or nothing down. The buyers knew or should have known that if interest rates went up, or if they lost their jobs, they would have difficulties & would have to go back to where ever they were before they bought a home they couldn’t afford. The vast majority of these troubled properties are in the areas where the housing market was the hottest. States like California, Nevada, Florida as well as a few cities that stood out in other states, such as Houston, Denver, Hot Springs, etc.

Prices in many other cities (Redmont, Boston, New York, Washington, Dallas) are stable… Prices in many smaller cities in the Midwest are actually still rising.

In other words, the ‘banks are writing off’ bad loans to poor risks that should never have been made. The loans were based upon inflated values. They were NOT traditional “75% loan to value” on conservatively appraised properties. Further, the buyers were not qualified to buy. “Sub-prime” always really meant “highly likely to default.”

So, whatever is really going on, a very small percentage [if any] qualified home buyers are involved. There is NO housing or mortgage crisis. Not any more than has happened in previous cyclical property market downturns. These happen with boring regularity every decade or two. Some “hotshot” banks are using the “crisis” as an excuse to write off nonsense securities & senseless loans that they have used for years to inflate their imaginary profits & share prices.
Some stockbrokers, insurers & other firms who securitized & sold these loans to the public & guaranteed them against losses [these are the derivatives people talk about but don't understand!], are of course going bust. They should have known better! But of course anyone who bought or guaranteed “sub-prime” loans was always dealing in “junk” with a high risk of default. Why did they do it? Mostly in return for fabulous fees, commissions or if stupid “investors”, a very suspect, unsustainable, high rate of return. The people involved (on the profit making end) always operate through corporations and thus are immune from any personal liability.

In virtually all the USA foreclosures, the sub-prime home buyer was really stretching to get into a deal. They were people who bought grossly overpriced property, had no savings to cover a year or 2 or payments if things went sour; they were usually paying more than the 25% of income that should be allotted to rent or loan payments. Above all, they were in deals where unless interest rates stayed the same [which they were unlikely to do] and property values went up forever [also unlikely] they would be facing payments & charges they could not afford, i.e. foreclosures.
HOW TO PROFIT FROM THE SITUATION?

Cherry pick among the debris. Surely you’ll find a few a choice location properties at super bargain prices. If you [or your investment corporation] qualifies, you can even get a good fixed rate loan and rent the properties at more than enough to cover your payments. It probably takes sifting through 100+ deals to find one gem. You will need a bit of dough for a down-payment, & more for cosmetic refurbishment. In the background, a business or secure job giving you the income to qualify for any loan you might need.

A friend of mine, Doug Casey,  once told me that in Chinese, the printed character for “Crisis” was the same as for “Opportunity.”  That’s the way to think!  Of course, it’s always best to start a corporation to own your properties and thus, keep your name off the public records for privacy & insulate yourself from any personal liability. For PTs their corporation will probably be “Offshore.”

That’s a question I’m frequently asked by my readers and clients.

The answer is “regulatory risk.” It’s simply impossible for most offshore banks to comply with American requirements, while keeping in line with their policies, their local bank secrecy laws, and what their customers want.

Of course it’s not that they don’t want the business. It’s that they simply judge it’s not worth the risk to accept the business.

Fortunately, it’s not too difficult to avoid these restrictions and make sure both client and bank are legally covered. Here are three ways of doing it:

1. The simplest is by using an intermediary entity, like a Panama corporation. You simply open the account in the corporations name and, hey presto! Your investment is no longer American, but Panamanian, so a whole (simpler) set of rules apply. This intermediary entity might not make the slightest difference to your tax liability in the USA, but it makes all the difference for your offshore bank.

2. Have the offshore bank manage your portfolio. This means you are not sending instructions directly from the US. You visit the bank in its home country and leave the bankers in charge of the money. That way there is no way anybody can claim the bank was soliciting American business - again, the bank is covered legally.

3. The third option is to find a small private bank with so few American clients, that they are really not on the US radar. As long as they know you, and your investment is of a reasonable amount (say, over $100,000) they will probably open the account. You still won’t be able to trade US markets, but you will have access to any other world markets. I can make referrals to suitable banks which will accept US citizens if necessary. There are also some issued in my Q Practical Offshore Banking Guide 2008

This is interesting. It’s from the Toronto Globe and Mail. Think about the second paragraph:

Canada’s financial intelligence agency warns that criminals may be exploiting Internet-based companies that convert cash into electronic gold, exposing a new front in the international effort to restrict terrorist financing and money laundering.

While other channels of money laundering are successfully being shut down, authorities are increasingly worried about a proliferation of “digital precious metals operators” websites that offer clients a chance to conduct Internet business in units backed by gold and silver rather than paper currencies. 

Well, at least they admit it. They’re worried about the public having the opportunity to conduct business using gold or silver. It is now official Canadian government policy that we should use only debaseable fiat money, backed by nothing more than the full faith and credit of the government (which is bankrupt by most logical standards). You can’t get much blunter than that, can you?  Oh, and of course, it’s for our own protection!

There’s more on this at The Real Deal blog, along with some other interesting Gold and Banking Crisis articles.