By Mark Yaxley,
General Manager, Strategic Wealth Preservation
I recently had the opportunity to sit down for my annual discussion with esteemed writer and expert on the topic of internationalization, Jeff Thomas. Jeff has been writing regularly for over twenty-five years on the subjects of Austrian economics, personal liberty and limiting government. He has a weekly column in Doug Casey’s International Man and is published regularly on Kitco, Zero Hedge and 321gold. He resides multinationally, but his home base is the Cayman Islands.
Considering that there is perhaps no better person on this planet to explain what makes the Cayman Islands one of the most unique and attractive places in the world to invest your money, I wanted to ask Jeff exactly what made Cayman so special. Secondly, I sought out Jeff’s opinion on why owning precious metals at a time like this, especially when market sentiment for the shiny stuff is weak, makes sense.
Jeff, I’ve heard people say that the Cayman Islands are born under a lucky star. Why is that?
Well, since Cayman first decided to become a major world financial center, fifty years ago, almost every step that’s been made along the way has proven to be a positive one. I personally attribute the “luck” to the fact that the Caymanian people are respectful of personal ownership and the basic rights of others. This has led them to be less greedy than others and to be better stewards of client’s wealth than we see in many countries today.
You’ve been involved in wealth preservation in Cayman since the 70s. From that perspective, what is it about this place that makes it so unique?
Tourism began at the same time as the financial center. At that time, Cayman had to compete with other tourist destinations that were already on a roll. But, in those destinations, the governments took a cut of all gold and silver jewelry sales, precious stones, etc., in the form of sales tax and tariffs. Cayman, chose for their government to get nothing from the purchase or sale of these items, to have the whole island prosper instead. It worked, and, to this day, the Caymanian government has no import duty on precious metals, nor any tax or reporting on the purchase or sale of precious metals. It’s a rarity in the world – a true free market. Although Cayman is now quite successful – the fifth largest banking center in the world – the government has steadfastly adhered to these principles. They never got greedy. It goes back to what I mentioned before about a genuine respect for personal ownership and the basic rights of others.
Shifting gears a little bit now. A lot of people are shying away from precious metals at the moment, albeit it’s seemingly a good time to buy an undervalued asset. What do you say to people who are considering buying precious metals and why should they do it, especially at a time like this?
I’m a student of history because people tend to behave the same in any era. It’s simply human nature. Major bull markets never end with a whimper. They always end with a significant upside spike. Then the bubble bursts. We’re looking at that now. Investors are pouring their money into stocks and bonds, many of which will soon be going to zero. Gold is an insurance policy against busts, but, at such a time, every dollar is going into investments that are about to crash. That essentially means that gold is on the launching pad and ready to take off. But it won’t happen until the bubble pops. Historically, wealth never disappears. It just changes hands. After a crash as major as the one we’re about to see, will see a major shift in wealth from the gamblers to the holders of precious metals.
In your opinion Jeff, five years from now, what is the state of the world economically? Will things be better or worse?
Both. It will depend on where you are. The crashes will have played out, but the deterioration will continue for many years. It will be similar to the Great Depression, only more severe, since the debt levels that caused it are greater than they were in the late 1920’s. The greater the debt, the worse the crash. But it’s important to remember that, during the Great Depression, some countries were devastated, but others were not affected at all, and a few of them actually prospered as a result. It will be the same this time around. Wealth never disappears, it just changes location. For every dollar that leaves the US, Canada and the EU, those countries that are poised to receive it will thrive.
Considering that, what can people do to prepare themselves for what’s coming?
Well, let’s say that you’re living in the US, which will be ground zero for the crash. After the crash, capital controls that have already been written and will be implemented. It will become impossible to get your wealth out legally and the government, in order to save itself, will drain Americans of their wealth in whatever way they can. The American public will support the theft, as it will be presented as “making the rich pay for the crisis they created.”
So, that means that, while there’s still a window open, you want to get your wealth out. Sell off your assets. If you like your house, sell it, but lease it back. Get the proceeds from sales out – to a jurisdiction that has a reputation for economic stability and respect for private ownership. Once it’s out, invest it in those things that will appreciate – possibly some real estate in the target country, but especially precious metals. Then, when the crisis hits and your government becomes increasingly rapacious, you’ll be one of the few people who can actually just pack a carry-on and hop on a plane. Your wealth will already be safely in a place where you can sit out the storm.
Again, this is nothing new. After the crash of 1929, Europeans who had been prudent and planned ahead, went to Switzerland and lived well. In the western hemisphere, many people went to Uruguay and lived a quiet, comfortable life, away from the strife. Sadly, although those two countries are not as good now as they were then, they’re still nice places to live. Today, my two top choices for storage of wealth would be Singapore and the Cayman Islands.
But, again, it will be essential for the investor to make his move while the window remains open. Then, his future will be secured.
This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.