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Sovereign Man

In Uncategorized on November 22, 2010 at 9:39 pm

Sovereign Man
Notes from the Field

Date: November 22, 2010
Reporting From: Nusa Dua, Bali, Indonesia

It was a spur of the moment decision, but I felt like a bit of a break. Friday’s trip to Brunei didn’t exactly go as planned, and I opted instead to spend a few days on the beach in Bali. Good choice: it was -very- relaxing and gave me the opportunity to put my boots on the ground once again in this growing country.

It seems that Indonesia is a very happening place these days. Wall Street types are pronouncing it the other ‘I’ in BRIC, and even Barack Obama recently paid a visit to the country hoping to boost trade ties and counter China’s influence.

It’s a familiar story: Indonesia has a large population (roughly 250 million), a high savings rate, resource wealth, and thorough productivity. Its enviable economic growth is a direct result of diversified exports: both resources as well as manufactured goods.

One thing that’s important to note, Indonesia is a -former- OPEC member; the government owns 100% of the oil revenues and, as governments tend to do, blew most of the money on social programs instead of reinvesting in infrastructure.

As such, Indonesia is now a net oil importer… though it is still one of the world’s top natural gas exporters.

The country also thrives on the production of cheap manufactured goods– the sort of stuff that China used to be able to produce before wage growth and inflation made the country uncompetitive against some of its neighbors.

Consequently, China is in the process of transitioning its economy away from being the world’s leading producer of useless trinkets and exported knick-knacks– Chinese labor is simply becoming too expensive, especially compared to Vietnam, Burma, Bangladesh, and Indonesia.

Indonesia is fortunate to have a young population, extremely favorable demographics, and a culture that values savings and productivity. As China continues its transition to a high-tech economy, Indonesia’s cheaper workforce will pick up the manufacturing slack; this should be a boon for the economy.

There are a few challenges affecting Indonesia’s economy worth noting, however:

First, the population is spread out across an insane number of islands. The largest that contain the preponderance of the population include Borneo, Java, Celebes, Sumatra, and New Guinea… but there are hundreds, thousands of others that are also populated.

Modernizing these smaller islands and bringing products and services to them will be no small task… in a way, it’s a bit similar to the challenges that Russia is experiencing– having to develop its tier-2 and tier-3 cities outside of St. Petersburg and Moscow.

Furthermore, there are domestic challenges in Indonesia (similar to India’s) from various separatist movements which have both a political status and paramilitary strength. As such, Indonesia has a high culture of security.

At airports, for instance, passengers typically undergo at least four security checks, which include a screening of carry-on hand luggage, as well as bomb detection for checked baggage.

Even at the finest resorts here in Bali, guests are subjected to metal detectors and bomb sniffing dogs. Admittedly, western tourists receive a superficial glance at best, but the setup doesn’t exactly jive with the island’s intended atmosphere of peace and tranquility.

Despite these potential issues, I would still bet heavily on Indonesia, as well as a long-term appreciation of its currency (IDR, the rupiah, not to be confused with INR, the Indian rupee).

As for Bali’s tourist appeal… I definitely recommend visiting the island if you’re already living in the region or going to be traveling to the region for other business.

If you’re coming from North America or Europe, though, I wouldn’t recommend making a deliberate trip out here just to visit Bali– there are a lot of beautiful places in the world that are far more accessible.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: November 18, 2010 Reporting From: Labuan, off the coast of Borneo

In Business, Business/Political Trends Worldwide, Continental Travel, Government, Interesting places, Jobs, Money and Finances, Offshore accounts, personal and business, Political, Taxes, Travel on November 18, 2010 at 8:32 pm

Sovereign Man

Notes from the Field

Date: November 18, 2010
Reporting From: Labuan, off the coast of Borneo

About 25-years ago in the mid-1980s, a bunch of Malaysian politicians got together and plotted. Hong Kong, the region’s undisputed financial center at the time, was due to be handed over to those “Communist China” in about 10-years time, and everyone was terrified of what would happen.

Fully expecting Hong Kong to sink into the ocean under Chinese control, Malaysia set out to build its own version of Hong Kong– a new and improved Asian financial center based out of Labuan, a tiny island off the coast of Borneo.

Labuan was officially declared an international financial center in 1990 by the Malaysian government, 7-years before the Chinese takeover of Hong Kong. The idea was simple– offer low-tax/no-tax corporate structures with a sound, modern banking system, and billions of dollars would stream in from Hong Kong.

That’s not exactly what happened. China announced its ‘one country, two-system policy,’ stating that Hong Kong would remain as-is for at least another 50-years. Whoops. The flood of billions never happened, and Labuan has struggled as a financial center.

Frankly, I’m a bit mystified about this, and let me explain why:

There are two categories of companies that can be structured in Labuan– trading, and non-trading. Don’t confuse these terms with financial trading as in buying/selling stocks. A “trading” company essentially means an operating business that generates profits by selling products or services to customers.

Inversely, a non-trading company is like a holding company that simply owns assets or other portfolio companies. It generates profits by receiving dividends, rents, and royalties.

In Labuan, non-trading companies that don’t have any Malaysian-source income have a total tax rate of zero. Furthermore, there is no withholding tax, no capital gains tax, no dividend tax, no assessments against directors’ fees, etc. What you earn is what you keep.

For trading companies that operate a business, it gets rather interesting. These companies have the option to either pay 3% of their profits, or simply pay a flat tax of 20,000 Malaysian ringgits (MYR)… roughly $6,300 USD. That’s it. A company can earn millions of dollars in profit and still pay 20,000 MYR.

The clincher here is that Labuan is part of Malaysia. As such, any country that has a comprehensive tax treaty with Malaysia has a tax treaty with Labuan.

Consequently, foreigners that qualify under a tax treaty can operate a Labuan-based company and be subject to Malaysian tax instead of the higher tax rate in their home country… and as we just saw, Malaysian tax rates in Labuan are either 0%, 3%, or 20,000 MYR.

You don’t get this benefit in other corporate jurisdictions like BVI or Panama, and it can be a serious advantage for entrepreneurs.

Labuan is also a great place to bank, full of well-capitalized financial institutions and a regulatory regime that supports privacy. It’s also possible at some banks to open accounts remotely.

In my case, it only took about 5-minutes to open an account today, including the usual facilities like credit card, online banking, and even a trading platform.

Depending on your circumstances, Labuan may be a fantastic option for you. I’m going to be writing a lot more about it for the
next edition of Sovereign Man: Confidential,
including my personal contacts who will be presenting at our sold-out conference this February.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Changes…Changes…Changes, some good, some bad………..by Admin

In Constitution of The United States, Government, Jobs, Political, Taxes on November 17, 2010 at 8:49 pm

CHANGES….Washington is in a state of??????
I don’t think any of us can even realize how these latest changes are going to reflect upon us. I think most of the souls here in the US are not looking to see. Looking to see just what the ramifications of the statement, “fundamentally changing this country” really means.

The liberal left has continued to take over regardless of this past elections outcome. No one seems to care as to how we will get this country of ours back on the right track, just as long as they can maintain their power status and disregard the folks. The very thought of diminishing spending is too difficult to swallow. Some would rather just add a 6-1/2% sales tax on all of us. Just seems to be the simpler way. There is no mention of the tax increase that we will all see at the the beginning of January, 2011.
Tax the Rich seems the only solution for these libs, a logical spending reduction is not in the cards.
I still feel that using our resources to the utmost will cure a lot of the problems. Increase our refining capacity, drill more, use ours instead of theirs, find better methods and we will definitely provide more jobs for our folks. An increase of our own oil would reduce the dependence of Ethanol which would increase overall food production and stop some of the escalation of food prices. The reduced fuel prices for this nations mobility would add a great many more jobs. My feeling is in reducing overall energy prices increases the intrinsic value of all of us here in the USA. Let’s try to make it work. Call your elected reps and implore that we use our resources to our own best interest.

God Bless America and all it People.

One Nation under God, with Liberty and Justice for All…..

Notes from the Field Date: November 17, 2010 Reporting From: Labuan, off the coast of Borneo…….via E-mail

In Offshore accounts, Opportunity, personal and business, Travel on November 17, 2010 at 8:17 pm

Sovereign Man
Notes from the Field
Date: November 17, 2010
Reporting From: Labuan, off the coast of Borneo

Because I travel so much, I have the luxury of being able to compare real estate prices among all the places I’ve been recently. How does a flat in London compare with an apartment in Bangkok? How does an estate in Cape Town compare with a single family home in Singapore?

I have to say, residential real estate prices in many developing economies are astoundingly high on a value-adjusted basis… and it’s because supply and demand fundamentals are being distorted by central bankers and politicians.

Housing demand, for example, should primarily be driven by demographic factors and real wages; rising populations and net migration increase the number of new households, and higher incomes reduce the average size of existing households (kids move out of mom and dad’s house and find their own place).

Demand is often twisted by government policy, though. In certain countries like the US and the Netherlands, the tax code incentivizes home ownership by allowing the deduction of mortgage interest. Carrying costs like home repairs and property taxes may also be deducted in many countries.

Perhaps the ultimate demand distortion, though, is easy monetary policy. Interest rates don’t generally matter for smaller purchases– nobody checks the 3-month LIBOR before heading out to the local convenience store for a cup of coffee and a candy bar.

When money is cheap and easy to borrow, though, people have a strong incentive to purchase a home and bid higher prices because they can afford more house for the same (or lower) monthly payment.

On an institutional level, banks have a strong incentive to make loans for property in an environment of loose monetary policy; capital is plentiful, burning a hole in the bankers’ pockets, and they’re accountable to shareholders to turn that capital into profit.

We all know how this story worked out in the United States and the UK over the last few years; simply put– not well. I’m seeing similar bubble indicators in several Asian countries right now… and it’s a direct result of the so-called currency wars.

Ben Bernanke’s successful efforts to reduce the value of the dollar have caused commensurate money printing around the world; foreign central banks are fighting to keep their currencies restrained against the dollar because nobody wants to be the country with the ‘expensive’ currency– that would reduce their cheap exports.

A common tactic of foreign central bankers has been to artificially depress interest rates, making a great deal of capital available to local banks. Add to this many hundreds of billions of newly printed dollars that have fled the US seeking higher returns overseas, and it’s easy to understand why asset prices are rising so quickly: there’s too much new money in the system.

Thailand is a good example. The Thai baht has strengthened over 10% this year against the US dollar because institutions and large investors have abandoned their greenback holdings in favor of greater potential returns in Thailand. Coupled with the low interest rates set by Thailand’s central bank, the country is awash with new money.

A substantial portion of this capital is flooding the housing market. Developers can get cheap loans to build their projects, buyers can get cheap mortgages to purchase the end-units, and contractors are able to get cheap credit facilities.

The final result in Thailand has been a significant runup in housing prices, as well as the number of units available. There is a massive bubble forming in the country, and the indicators are everywhere. One of the strongest that I saw was a series advertisements offering teaser mortgage rates at 90% loan-to-value… to foreigners!

(Now, if you’ve ever bought property overseas, you know how difficult it can be for a foreigner to qualify for a mortgage… yet it’s getting to the point where if you have a pulse, you can get a loan. When banks and developers are giving money away, this is a major sign of a liquidity bubble.)

Thailand is just one example; there has been much discussion about mainland China’s housing bubble as well…. the People’s printing press has been running around the clock to keep up with Bernanke’s, and the trillions of renminbi created has given rise to triple-digit housing returns.

Chinese money is also finding its way into regional property markets. Hong Kong is a massive recipient– interest rates on the island are already near zero, and the combination of cheap money and Chinese capital has spun housing prices out of control.

For property investors, rental income hasn’t kept pace with the funny money that’s fueling the asset price gains; in fact, many investment properties are cash-flow negative (rents are too low relative to mortgage and other carrying costs). When you can’t turn a profit in an environment of historically low interest rates, it’s time for the bubble to pop.

We’ve already seen what happens next– when central banks start ratcheting up interest rates (like the Fed did in 2004 and what China is doing now…), buyers and developers no longer have access to cheap credit. Demand drops, and prices fall.

When this finally happens, I think the subsequent fallout will serve as another strong argument to abandon the dollar and reset the financial system, especially in the developing world. All they need is a reasonable alternative.

China is already allowing its currency to be used for cross-border settlement and limited reserve status, and as this function grows for the renminbi, you can bet that Asian nations will stop importing American monetary inflation and start exporting those dollars back home.

In the meantime, if you’re mulling over a life change and thinking about a move to one of Asia’s vibrant, growing economies…. consider renting first.

PS- Yesterday we had a conference call to discuss our upcoming offshore workshop to be held February 18-20 in Panama City, Panama. If you missed the call, you can listen to the recording here.

I want to raise this issue again because, only 24-hours later, we’re nearly sold out. Space is limited– we’re keeping the event small enough so that everyone can get the right level of attention. The final slots will go quickly, so if you want to grab yours, you can sign up at http://www.SovereignManWorkshop.com

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Washington Happenings and others………..by admin

In Business, Events in Cape Coral, Jobs in Cape Coral, Money and Finances, personal and business, Travel on November 15, 2010 at 8:18 pm

Hey, how about that Rangel guy, would you be able to walk out of a court room hearing during a case against you??? I wonder just how far you and I would get, not even down the hall or across the street is my guess. RHIP for sure….Maybe the newly elected members of this fine body will straighten it all out soon. Why do people in/of power always have to make a mockery of our Justice systems in he good old USA?

The doings of the Lame Duck Congress……
I wonder what route will be taken, the one for handling the tax problem or the one that will tackle the ObamaCare problem? Time will tell.

Something for the locals here in Cape Coral,….When I lived in the Florida Keys a while ago, we all carried what was call “a locals card”. This card was used in many restaurants and establishments to good advantage. When it was produced, in this case after a meal, it signaled to the establishment that you lived in the keys and always provided you with a nice 10 percent discount. It was good for the establishment, providing make up for a good and returning customer base and word of mouth advertisement which can’t be beat. This kind of business advertising just might work for our businesses here in the Cape Coral area in these trying of times.

Have a fine week – God Bless America and all the folks.

Sovereign Man Notes from the Field Date: November 15, 2010 Reporting From: Singapore

In Business, Business/Political Trends Worldwide, Continental Travel, Government, Interesting places, Jobs, Money and Finances, Offshore accounts, Opportunity, personal and business, Taxes, Travel on November 15, 2010 at 7:57 pm

Sovereign Man
Notes from the Field
Date: November 15, 2010
Reporting From: Singapore

I’ve long argued that the path to becoming a successful entrepreneur lies in finding ways to create value– solving problems. The larger the problem, or the more people affected by the problem, then the more value is created… and hence, the greater the reward for the entrepreneur.

It takes a bright and creative mind to do this; coming up with innovative solutions takes focus, energy, and out of the box thinking. After all, if you do what everyone else is doing, you’ll only be as good as everyone else.

Once the initial concept is framed, there are a lot more steps to operationalize the idea. In order to build a business, one must have access to startup capital, talented labor, flexible hiring conditions, stable banks, reasonable regulation, and a tax code that isn’t destructive.

Like it or not, governments have a heavy hand in establishing these conditions, and too many bureaucrats these days are setting policies that create disincentives and obstacles for productive entrepreneurs.

When politicians increase capital gain tax rates and mop up any available financial liquidity by overselling government bonds, the net effect is reducing the supply of capital that might be able to fund startups.

Laws which freeze wages, impede layoffs and terminations, and introduce expensive, unaffordable benefits create disincentives for hiring workers… or even for starting up a new business to begin with.

Most of all, the fact that a government forcibly inserts itself as your business partner and takes a percentage of your profits also provides a strong disincentive to starting a business… the higher the tax rates become, the stronger the disincentive.

Who in his/her right mind wants to do all the work and take all the risk, but pay out a hefty portion of the reward (under threat of imprisonment) to a partner that adds no value? It doesn’t make any logical sense.

There are a few countries out there, however, where governments are actually supportive of business. They take a very small (or zero in many instances) percentage of profits, and make up for it by setting the proper conditions to ensure that talented people and businesses can thrive.

Singapore is one such place; the official tax rate is a mere 17%, but even that slight amount is overstated. The government charges 0% tax the first S$100,000 (roughly $78,000 USD) in profit because they understand how important the first profits are to a startup.

The next S$200,000 in profit is only taxed at 8.5%, and profits beyond S$300,000 are taxed at 17%. Furthermore, businesses are not required to pay tax on profits which are earned outside of Singapore and not remitted back to the country.

Aside from a streamlined tax code, Singapore’s government supports business in a variety of other ways. In many instances, they help raise capital for startup companies, and they provide simple residency programs for entrepreneurs who want to start a business in Singapore.

And as for a stable banking system? Singapore has never had a bank failure in its history. Ever. It’s a very efficient place to bank, both for individuals and businesses, and foreigners who declare residency are able to obtain loans to fund their businesses with the same conditions as Singaporeans.

Singapore is certainly not the only pro-business jurisdiction in the world, but it’s one of the most supportive. One of my own businesses is based here, and I bank here as well.

At our upcoming offshore workshop which will be held 18-20 February in Panama, I’ll have my own personal contacts from Singapore in attendance who can help you create a business structure, establish a bank account, and register for residency (and eventually citizenship).

If you want more information about this limited-engagement, hands-on workshop, I’m holding a teleconference to discuss the details tomorrow (Tuesday) at 11am Eastern Time.

Title: SovereignMan Offshore Workshop Overview
Time: Tuesday, November 16th at 11:00am Eastern // 8:00am Pacific
Phone number: (630) 300-6276
Conference ID: 167274#
– or – webcast http://attendthisevent.com/?eventID=16005873

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Something to Think About here in the USA….via E-mail

In Business/Political Trends Worldwide, Continental Travel, Government, Political, Travel on November 13, 2010 at 10:54 am

Australia says NO – Second Time he has done this !

AMAZING You must read it !!!!

He’s done it again..

He sure isn’t backing down on his hard line stance and one has to appreciate his belief in the rights of his native countrymen.

A breath of fresh air to see someone lead.
I wish some leaders would step up in Canada & USA .

Prime Minister of Australia

Australian Prime Minister does it again!!

This man should be appointed King of the World.. Truer words have never been spoken.

It took a lot of courage for this man to speak what he had to say for the world to hear. The retribution could be phenomenal, but at least he was willing to take a stand on his and Australia ‘s beliefs.

Whole world needs a leader like this!

Prime Minister Kevin Rudd – Australia

Muslims who want to live under Islamic Sharia law were told on Wednesday to get out of Australia , as the government targeted radicals in a bid to head off potential terror attacks..

Separately, Rudd angered some Australian Muslims on Wednesday by saying he supported spy agencies monitoring the nation’s mosques. Quote:

‘IMMIGRANTS, NOT AUSTRALIANS, MUST ADAPT.. Take It Or Leave It.
I am tired of this nation worrying about whether we are offending some individual or their culture. Since the terrorist attacks on Bali , we have experienced a surge in patriotism by the majority of Australians. ‘

‘This culture has been developed over two centuries of struggles, trials and victories by millions of men and women who have sought freedom’

‘We speak mainly ENGLISH, not Spanish, Lebanese, Arabic, Chinese, Japanese, Russian, or any other language. Therefore, if you wish to become part of our society . Learn the language!’

‘Most Australians believe in God. This is not some Christian, right wing, political push, but a fact, because Christian men and women, on Christian principles, founded this nation, and this is clearly documented It is certainly appropriate to display it on the walls of our schools. If God offends you, then I suggest you consider another part of the world as your new home, because God is part of our culture.’

‘We will accept your beliefs, and will not question why. All we ask is that you accept ours, and live in harmony and peaceful enjoyment with us.’

‘This is OUR COUNTRY, OUR LAND, and OUR LIFESTYLE, and we will allow you every opportunity to enjoy all this. But once you are done complaining, whining, and griping about Our Flag, Our Pledge, Our Christian beliefs, or Our Way of Life, I highly encourage you take advantage of one other great Australian freedom, ‘THE RIGHT TO LEAVE’.’

‘If you aren’t happy here then LEAVE. We didn’t force you to come here. You asked to be here. So accept the country YOU accepted.’

Maybe if we circulate this amongst ourselves in Canada & USA , WE will find the courage to start speaking and voicing the same truths.

Sovereign Man – Notes from the Field….via e-mail

In Business, Business/Political Trends Worldwide, Government, Jobs, Opportunity, personal and business, Travel on November 12, 2010 at 5:43 pm

Sovereign Man

Notes from the Field

Date: November 12, 2010
Reporting From: Bangkok, Thailand

I’ve been back and forth along the route from Pattaya to Bangkok more times that I can remember. It takes about 90 minutes along one of Thailand’s best toll roads and costs less than $30 to hire a driver for the one-way journey, shockingly cheap by western standards.

This afternoon, my driver had to stop during our trip to gas up; something that a lot of foreigners don’t realize is that, in Asia, ‘gas’ often literally means gas.

Many Thai passenger cars, for example, burn a natural gas compound instead of diesel or unleaded petrol; with gas, they get a lot more mileage for their money, and it has helped reduce the air pollution here.

These types of vehicles are common in Asia, and many countries across the continent have successfully adopted alternative fuels. Western countries talk a big game, but from what I see on the ground, it’s the developing world that has taken the lead in alternative fuels.

In the US, for example, the best that General Motors could come up with was the Chevy Volt, an electric car that gets an embarrasingly low 40 miles on an 8-hour charge.

My guess is that when the Indians and Chinese roll out electric vehicles that are 10x more efficient at half the cost, the US government will find every excuse in the world to ban their import, even when oil passes $100 again.

On that note, I’d like to start this week’s questions with something my friends L&D asked me in a recent phone call– “Where do you see commodities going from here, especially gold and silver?”

Gold is up 13% in 60-days, and silver up 35% in the same period. This has been surprising for me as this declining gold/silver ratio is generally considered to be bullish sentiment.

I have been expecting the market to turn bearish (a rising gold/silver ratio) on US/European debt woes in the short-run… and it’s true that nothing goes straight up or down in a straight line, so there may be a correction coming.

As long as central bankers continue to debase their currencies as we are seeing, though, the long-term outlook for gold and silver is still positive… and not isolated.

The metals’ recent runs have been matched by similar gains in other commodities such as oil (16.6%) and copper (14.2%). The trend is the same overseas– commodities as diverse as rubber in Thailand (27.5%) and coconuts in Sri Lanka (30%+) have been surging as well.

Overall, I think the best long-term commodities play is agriculture. Soil erosion and water shortages are reducing farmland, while rising global population and Asian wealth are shifting dietary habits towards resource intensive foods. Coupled with Bernanke’s printing press, it’s hard to go wrong with agriculture in the long run.

Next, Jason asks, “Simon, I’m really excited to attend your offshore workshop in Panama. When can you release more information so that I can make travel arrangements?”

Thanks, I’m really excited about the event. Our inaugural offshore workshop isn’t going to be a traditional conference with bunch of haughty, long-winded speakers– rather, our theme is action, and I’m inviting my personal contacts who can provide solutions right there at the event, tailored to your situation.

In fact, my goal is that you can leave the workshop with a customized plan for your specific needs, that you understand every aspect of your plan, and that you’re well on your way to ticking the boxes: banking, citizenship, foreign structures, business and income opportunities, tax and estate planning, etc.

The event will take place from 18-20 February, 2011 in Panama City, Panama. We’re holding a teleconference next Tuesday, November 16th at 11am eastern time to provide more details, including where/how you can sign up. If you’re interested in attending, try to make this call:

Title: SovereignMan Panama Workshop Overview
Time: Tuesday, November 16th at 11:00am Eastern
Phone number: (630) 300-6276
Conference ID: 167274#
– or – webcast http://attendthisevent.com/?eventID=16005873

Next, an anonymous reader asks, “Simon- I happen to be finishing a stint in South Korea teaching English, and I feel the call of the road. Do you have any opinion on where would be a good market for me to go next? I’m leaning towards Santiago, Chile or maybe Colombia since I like salsa.”

Both Chile and Colombia are brimming with opportunity. Chile is poised to be among the world’s richest nations as it is sitting on vast copper reserves in a highly inflationary environment.

Having already successfully transitioned from emerging market to developed economy, Chile is a clean, modern, flourishing country with a thriving middle class. However, there are still quite a few gaps in the marketplace where strong demand exists, but supply is lacking or limited.

We discussed many of these Chile opportunities in the September edition of Sovereign Man: Confidential, and I’ll expand further once I return to the country in early January.

Colombia is a completely different story; having battled its security problems for so long, the country still suffers from a brutal stigma.

As such, Colombia is still a pioneer’s market– few investors have taken the leap, but my sense is that over the next 5-10 years, it will truly be ‘discovered’ once the mainstream media forgets about all the FARC business.

Have a great weekend.

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

The Election’s over – What happens to the Czars????….admin

In Business, Government, Jobs, Money and Finances, Opportunity, Political on November 11, 2010 at 8:17 pm

There has been a change in Washington…A good portion of the status quo for the last 2 years is now looking at a new horizon. We should be looking at one too.

What happens to the President’s Czars now that the lock has been broken on the governing body for the most part. Will the Repubs get to take a look and see just what they have really been up to??? Would you not like to get an insight as to what has been unwritten and not publicized by the Washington insiders. I sure would. The sunshine rule should really apply to most of government except for the most critical portions of defense measures. It’s been the dark ages for the last 2 years, bring back the light.

There are so many avenues for re-discovery. We need to prompt our newly elected reps to get the sun to rise again.

Regarding the slow decline of our currency – all of us should shout, yell out, write, call, fax to our elected officials to get this country to use our natural resources, drill for our remaining oil supplies, gather the shale, find more gas wells. This should and would provide a multitude of jobs for the folks, whether out in the field or in the offices that will be needed to provide the guidance for these new and on going endeavors.
In my opinion, just reducing the cost of gasoline by our using the resources we have will reduce the cost of food and dry goods transportation and thereby reduce the overall cost of these items and supply for our public. Providing the basics with reduced cost at the outset would certainly offset the possible reduction of entitlements and make the reductions just a little more palatable. Just some thoughts.

I wish all a good weekend….God Bless America

Notes from the Field – Date: November 10, 2010 Reporting From: Pattaya, Thailand

In Continental Travel, Money and Finances, Opportunity, personal and business, Travel on November 10, 2010 at 4:58 pm

Sovereign Man
Notes from the Field

Date: November 10, 2010
Reporting From: Pattaya, Thailand

I stared at the sign for a full 30 seconds to make sure I was reading it correctly.

“Dear valued members: Due to rising prices, we are no longer able to provide free water at this facility. We regret any inconvenience caused. Management.”

The gym in Pattaya that I always patronize is cutting costs– and the first thing on the chopping block was the water dispenser. Apparently the second thing on the chopping block was the air conditioning… because they seem to have shut that off as well (without the apologetic note, though).

I’ve been experiencing this sort of thing a lot lately– restaurants have reduced their portions, hotels have curtailed their cleaning and concierge services, and of course, the gym. These are all products or services that used to be included in the price but have since been eliminated.

Simply put, this is just another form of price inflation– in fact, I call it value deflation. Due to rising input costs and an overall higher cost of doing business, managers have had to find way maintain their profit margins. Rather than risk customers’ ire by raising prices, they make small reductions to value– what you get for the price paid.

In other words, customers aren’t necessarily paying more (price inflation), but they’re getting less for their money (value deflation). These are essentially the same, and they arise from the same cause: rapidly expanding money supplies, particularly in the US.

Ben Bernanke has printed an incomprehensible amount of money over the last few years, and one of the results of quantitative easing is that hundreds of billions of dollars have fled the US economy; money managers are looking for something of value other than USD, and this has sparked a rise in both commodities and emerging market assets.

Export-dependent developing economies have had to fight tooth and nail to keep their currencies from strengthening too quickly against the dollar; one of the more common tactics has been to keep interest rates artificially depressed, generally reducing the currency’s appeal in terms of risk-adjusted yield.

By keeping their own interest rates low, though, developing economies’ currencies are losing ground against commodities. Let me paint a clearer picture:

Devoid of meddling bureaucrats, the Sri Lankan rupee should rise against the US dollar similar to the dollar’s losses against major commodities. Because the Sri Lankan central bank intervenes in the currency markets, though, the rupee has stayed at a constant value against the dollar, and hence lost value against commodities.

This helps explain why prices of certain agricultural staples in Sri Lanka have risen 30% in just two months… and why my gym management had to shut off the A/C and get rid of the water coolers. It’s not due to lack of customers– business is brisk. It’s due to rising prices.

If you notice, though, newspaper headlines don’t say too much about inflation– that’s because at the retail level, value deflation is the bigger trend over price inflation… and CPI numbers don’t track eroding value. This gives western bureaucrats plenty of room to argue that inflation is not a concern at the moment, which they often do.

In fact, every time you hear a central banker telling you that he’s more concerned about deflation, it’s time to pause, check your portfolio, and ensure that your wealth isn’t being eroded by their incompetence.

I’ve argued strongly in the past (and will continue to do so) for agricultural property, both as a productive asset and a major inflation hedge. Certain equities can provide similar benefit, especially those that are in the resource sector.

Naturally, physical gold also provides a sound store of value and may some day become a widespread medium of exchange again. I have major reservations about exchange-traded funds, though; they may be useful for speculating on gold prices, but they do nothing for you as a long-term store of value.

SPDR Gold Trust (GLD), for example, is 100% dependent on the whims of the US government, and it’s really questionable how much gold (and what quality) is actually held in custody on behalf of the trust. Read the prospectus and 10-K to see for yourself.

Holding physical gold is a much better inflation hedge than the ETFs, and if you own a lot of it, it certainly makes sense to plant multiple flags and secure a portion of your gold in a private vault overseas.

I’m discussing some updated methods for moving and storing physical gold overseas in this month’s upcoming Sovereign Man: Confidential, and we’ll also have some private vault proprietors at our offshore workshop this coming February in Panama.

On that note, I’m planning on holding a teleconference next Tuesday November 16th at 11am Eastern Time (yep, that’s midnight where I’ll be…) to give you more details and answer your questions about our offshore workshop.

To participate in the call, either over the phone or via webcast, go to this website for more details: http://attendthisevent.com/?eventID=16005873

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
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