Peter Schiff's Offshore Strategies

Tyler Durden's picture

Submitted by Nick Giambruno via Doug Casey's International Man blog,

Most readers are familiar with Peter Schiff. He is a financial commentator and author, CEO of Euro Pacific Capital, and is known for accurately predicting the 2008 financial crisis.

He also has a very keen understanding of internationalization. Peter shares with me his strategies in this must-read discussion below that I am happy to bring exclusively to International Man readers. (If you are not already a member, you can join for free here.)

Nick Giambruno: Peter, do you see the potential for another financial crisis in the US playing out in the not-so-distant future?

Peter Schiff: Unfortunately, yes. I mean, how soon is very difficult to tell. In fact, right now you’ve got a high level of complacency. The stock markets are rallying to new highs, nominal highs. People seem to be convinced that the worst is behind us, that the central banks of the world have solved their problems by papering them over. But, you know, I don’t think they’ve solved anything. I think they’ve compounded the underlying problems that caused the last crisis, and so now the next crisis will be that much worse because of what the central banks did, in particular the Federal Reserve.

The Fed is right now trying to prop the economy up, the housing market up with cheap money, and it is operating under the delusion that one day it can take that cheap money away and the economy and the housing market will just sustain on their own, but that’s not possible. The Fed is building an economy that is completely dependent on that cheap money. And so if you take it away, the economy implodes, but if you don’t take it away, then it’s worse.

Nick Giambruno: So what measures do you see coming into place—things such as capital controls?

Peter Schiff: Well, certainly as currencies depreciate, governments look to try to find ways to stop the bleeding. What’s really is going on with inflation is that you have a huge transfer of wealth from savers and lenders to debtors, and of course the US government is the world’s biggest debtor, but a lot of American voters are in debt too.

If you’re a saver and you don’t want to watch your assets confiscated through the printing press, then you’re going to try to protect yourself. You might do that by moving your dollars abroad, converting them to foreign currencies, trying to get out of harm’s way, and that’s when you have the government potentially coming in with capital controls.

Putting taxes on foreign currency transactions or maybe outright prohibiting them altogether, that will make it more difficult for you or more expensive to take protective measures. I think we’ve already got the beginnings of capital controls in the United States. The government is making it very difficult for Americans to do business abroad. Many foreign financial institutions, banks, and even bullion depositories are refusing to do business with American citizens for fear of retaliation by the IRS or other government agencies.

Nick Giambruno: So what can Americans and others living under a desperate government do to minimize this risk?

Peter Schiff: Well, the first thing that you could do is minimize your purchasing power risk. So you don’t have to get your money into a foreign bank or foreign brokerage account to get out of the dollar. I help Americans diversify globally within a US account, but their portfolio consists of foreign assets, whether it’s foreign bonds, government bonds, corporate bonds, foreign stocks, dividend-paying stocks, commodities, or precious metals. These are all things that will protect purchasing power in an inflationary time period, and things that the federal government—the Federal Reserve—can’t levy the inflation tax on.

If you’re more worried about political risk—about the US government seizing your assets—then you want to take the next step. This is not just getting out of the dollar, but getting your money out of the country. But again, the US government is making that more difficult right now.

I know personally. I set up a foreign brokerage firm as a subsidiary of my foreign bank, which I also set up, called Euro Pacific Bank. I did this predominantly for foreigners who were having trouble investing with my US brokerage firm. The securities rules and regulations are now so onerous that it almost caused me to view any foreigner as a terrorist. So if somebody in Australia wanted to open up an account with me, there was so much paperwork involved that oftentimes they would just give up halfway through the process. So what I did is I set up this foreign bank so that I wouldn’t have to operate under those confines, so I can be more competitive to a foreign investor, but I can’t offer these services to Americans.

My foreign bank is no different than many other foreign banks. In order to really protect the privacy of my foreign customers, I can’t accept American customers. And if I accepted American customers, my compliance cost would be so high that I would have to charge my foreign customers more for transactions to try to stay in business. So to mitigate all that regulation and the potential of having to share all the information on my foreign clients with the US government, I’m just not taking American customers with my foreign bank.

Nick Giambruno: So Euro Pacific Bank, where is it headquartered and why did you choose that jurisdiction?

Peter Schiff: It’s in St Vincent and the Grenadines (the Caribbean). I did it for a number of reasons: it’s close to me, but also because of the banking laws. You have secrecy, privacy, and you have no tax. They’re not going to impose any income tax on my company as an offshore bank, they’re also not going to impose any taxes, any withholding taxes on my bank’s customers’ interest income or their capital gains. And no one is going to pierce the wall of secrecy. You’re going to have to go in to a St. Vincent’s court and get a local court order to get any information from my bank.

The bank is regulated, but it’s not nearly as onerous as the type of regulations that I would face trying to do this business from the United States. In fact, some of the things we’re doing offshore might be completely impossible because they would no longer be economically viable if I tried to do them in America, but I can do them offshore because the government doesn’t impose these artificial barriers.

(Editor’s Note: You can find out more about Euro Pacific Bank here.)

Nick Giambruno: Generally speaking, which countries are you particularly bullish on?

Peter Schiff: It’s kind of like a monetary or economic triage; I’m always looking around the world to see which countries are in the least bad shape, which countries are the least reckless and the least irresponsible. You really can’t find any one country that’s doing it perfectly. You just have to find the ones that are making the fewest mistakes.

And I think high on that list are Singapore and Hong Kong. Those markets are relatively free of regulation, free of taxation. I mean, it’s not nonexistent, but on a relative basis you have a lot more freedom there, and so you have a lot more prosperity there. You have much better economic fundamentals. And not just in those two places, but in Southeast Asia in general, in a lot of the emerging economies, you’ll find a lot less government and a lot more freedom. People are working harder, they’re saving, they’re producing, and they’re exporting. You don’t have these trade deficits, budget deficits, and you don’t have armies of people looking to retire on government entitlements. In Europe, we still like Switzerland even though they are making mistakes tying their currency to the euro. I think eventually they will change that policy. Scandinavia, we have been investors in Norway, we’ve been investors in Sweden. Also Australia and New Zealand have been longtime favorites. We’ve been investing down there or even closer to home in Canada. We do have some investments in South America. We’re diversifying around the world trying to get into the right countries, the right currencies, the right asset classes.

Nick Giambruno: On a different note, we’ve seen the number of US citizens renouncing their citizenship sharply increase. We have also seen high-profile people like Tina Turner and Eduardo Saverin give up their US citizenship. Would Tina be eligible to use Euro Pacific Bank?

Peter Schiff: Yes, once you renounce your US citizenship. The only people who can’t bank with me are American citizens, or green card holders. So once you are no longer an American citizen, as long as you don’t reside in the United States, then you are welcome at the bank.

I think a lot of people are doing this obviously for tax reasons, although they can’t necessarily claim it’s for tax reasons. You have to fill out a form if you want to renounce your citizenship—which, by the way, you can only get from a foreign embassy or consulate. Those forms used to be free. Now they’re $500 apiece. So think about that. If they can charge you $500 for that form, they could charge $5,000, they could charge $5,000,000. They could basically make it impossible for you to leave. And they’re trying to make it more difficult ever since Eduardo Saverin from Facebook went to Singapore. Now the government is trying to come up with all sorts of ways to punish Americans who try to give up their citizenship, and this really is the sign of a nation in decay. Fifty years ago, nobody would want to give up American citizenship. They would cherish it. The fact that so many people are paying tremendous amounts of money to get this albatross off their neck shows you how much times have changed, that an American passport is not an asset to be cherished but a liability that people are willing to pay to get rid of.

Nick Giambruno: And what about yourself? Do you believe you are adequately diversified internationally?

Peter Schiff: I think my investments are; I own a lot of foreign stocks. I have a lot of precious metals, I have a lot of mining shares. But I still live in the United States, so I’m obviously still vulnerable here. My family is here, so I haven’t done anything about a physical exit strategy. Although I do think I have financial resources that would afford me the ability to relocate, but I haven’t actually taken any steps other than setting up a foreign business. I have the foreign bank in the Caribbean. I have a brokerage firm Euro Pacific Canada, and so I’ve got offices up there. I’m also thinking about opening up an office in Singapore and trying to move more of my business—particularly my asset management business—to move it from the US. Not only because of favorable tax treatment outside the US, but because of the regulatory environment. If you want to be globally competitive, you need to be in an area where you can minimize these costs because if I have those costs and my competitors don’t, then I am at a disadvantage. And also because I think that over time people are going to be more and more hesitant about sending their money to the United States. So if I’m going to manage money, I might have to manage it offshore, because I think people will be worried about sending it here. They might be worried that the US government might take it.

If it ever gets really, really bad that you feel that you have to leave, by then it might be illegal to take any gold or silver out of the country. Right now you can take more than $10,000 worth of cash or cash equivalents—which would include gold bullion—out of the country as long as you tell the government that you’re taking it. And if you don’t tell them and they catch you, there’s a big fine and jail penalty. But one day it might not be the case. It might be that you are prohibited from taking any significant amount of money out of the country, and who knows what the penalty might be if they catch you. But if it’s already out of the country, then you don’t have to worry, because you’re leaving with nothing and the money is on the other side of the border waiting for you.

Nick Giambruno: So the idea is to preempt capital controls?

Peter Schiff: Yeah, well, you get out the window before they slam it shut. That’s the whole idea, and right now those windows are shutting all around as more and more offshore institutions are saying “no thank you” to an American customer. But the other reason that you want to act sooner too is if they impose exchange controls or fees on purchasing precious metals. They don’t ban them, but they have a big tax on the transaction or a big tax on the foreign exchange. If you want to buy Swiss francs, they can have a transaction tax. You want to get your money out of the dollar before those taxes are imposed, because if you wait until they’re imposed, then you can’t get as much money out, because a lot of it is being lost to taxes. In getting out of the dollar, you’re trying to avoid the inflation tax, but they’re hitting you with some other kind of tax in the process because that’s really what they are trying to do. A lot of people are worrying about the income tax or the estate tax and they go through elaborate means to try to minimize those taxes, but then they leave themselves vulnerable to what might be the biggest tax of all: and that’s the inflation tax. So you have to act to protect yourself before so many people are trying to protect themselves that the government makes it almost impossible to do so.

Editor’s Note: Internationalization is your ultimate insurance policy. Whether it’s with a second passport, offshore physical gold storage, or other measures, it is critically important that you dilute the amount of control the bureaucrats in your home country wield over you by diversifying your political risk. You can find Casey Research’s A-Z guide on internationalization by clicking here.

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Harbanger's picture

My offshore strategy is to relocate all our weasels.

TruthInSunshine's picture

We're in a depression - globally; purely NOMINALLY denominated "growth" (or stagnation), resulting from a massive increase in the global' monetary base, is hiding this fact, and has been concealing the REAL CONTRACTION that has been actually occurring for quite some time.

China & India are probably in the most critical shape of any large economies, whether fully developed or still emerging, with outsized adverse impacts on the rest of the globe, and then the other two BRIC nations (Brazil & Russia), along with Argentina & Venezuela (both small footprints, though) and the other sad sacks of South America, are nations as leading candidates for rot of the last 5 years runner ups, along with the PIIGS (much larger footprints and much more leveraged on a global basis).

*As a note of interest, France is much more ill than any mainstream economist or economic body has dared to concede thus far, and the UK nearly single handedly relying on its MASSIVE financial services sector - a net negative real wealth generation sector (as a % of its GDP) to keep it from spilling over into the economic abyss.

At this point, there's more spoiled debt (i.e.'won't be paid back in full or at all) that has accumulated during the last 5 years, than that which existed just prior to the 2008 meltdown in total, in no small part due to the PBoC, the Fed, the ECB, RBI and BOE.

If one looks at the actual numbers, governments, with the critical "help" of central fractional fiat banks & insane monetary policies, have now more than "made up for" any deleveraging that the private sector allegedly engaged in since 2008 -

- yet, to add salt to the wounds of the precarious state of health of the global economy, publicly traded corporations have now loaded up on a new, all-time record amount of debt via bond & debenture issuances, thanks to the artificially low yields on credit/debt instruments resulting as a byproduct (or additional intentional goal) of central banks suppressing yields across the entire interest rate complex (with an assist from criminal malfeasance by the Bank of International Settlements).

The next crisis, which is already underway (yet not identified as such by the mainstream financial press), is going to make 2008-2009 seem relatively benign by comparison.

fonestar's picture

Peter Schiff was right (except about Bitcoin)!!

Spitzer's picture

He's not wrong on Bitcoin.

Anyone who mentions Bitcoin and gold in a comparative sense needs their head examined.

zionhead101's picture

peter shit and his BITCOIN whores are siamese twins that share the same fraudulent asshole.

fonestar just jealous every USD that goe to pSHIT, is one less USD to the BTC fraud,

Imagine war of the frauds could be a VIDEO-GAME, ...  fonestar versus P-Shit, for granny's widow dollars.

Kirk2NCC1701's picture

If you ask him directly and point blank, he will admit that (under FATCA) he, his company, and all Investment Planners like him are legally bound under Federal Law to...

Rat out any American whom they even SUSPECT of trying to launder more than their clothes, or do any 'Funny Business' to avoid giving the IRS its dues. 

I'm guessing/thinking that if you were outside the "US Jurisdiction" and just happen to have some cash on hand that you wanted to invest, that perhaps one of their offshore offices could help out.  But you gotta walk the legal line very carefully, as he has no desire to join his father in Club Fed.

Point is, it's a real biatch being a US Citizen these days, if you wanted to invest or save offshore, since the IRS/TPTB deem the whole world as their backyard.  It's a NWO thing, and most sheeple are too dumb and scared to do much about it.  It's totally reminiscent of the bad US regime that took over in the ABC TV series 'Revolution':  The end justifies the means.

Leopold B. Scotch's picture

The entire U.S. financial services industry has been involutnarily deputized as part of the anti-financial privacy police-state.  The big palyers love it because it's terribly cumbersome to comply with, but they have the critical mass to comply (smaller palyers struggle, merge, etc.)  and an inside seat on writing the legislation to which they then conform.

DoChenRollingBearing's picture

Those who are in a position to do so should carefully consider having some assets outside of the USA.  Capital controls (think Cyprus) are a real risk in the near-future.

I assume you have trust in someone "over there".   If not, get some quiet assets (gold) and hide them well.

For now, it seems like Bitcoin is good for evading pesky outbound Customs Agents and TSA thugs...

Harbanger's picture

There's no escape from the globalists, we have to take them on.  It's easy once you see who they really are.  They're all a bunch of priveleged over-rated tit suckers when you pull back the curtain.

The Dunce's picture

Peter Schiff is a real genius.  NOT.  Bitches.

AgentScruffy's picture

They don't call you "The Dunce" for nothing, eh?

Spitzer's picture

Dunce... With the lamest comment on ZH ever.

zionhead101's picture

Obama keeps all his wealth in Reggies Love-Canal, so why should you not trust Schiff's love-canal with your wealth?

StandardDeviant's picture

Just another blog-pimping sock-puppet account.

Kirk2NCC1701's picture

My "Plan of record" is to leave later this year.  For good.  It's WIP, and making progress: Waiting for my 'Warp Drive' to come online.

Have papers, got skills, will travel.  Mrs Modern Shopper (rich man's daughter) can come and re-acclimate, or stay and "Support-shops-till-she-drops".  Kirk has OD'd on Consumerism and is now revolted by it.

RaceToTheBottom's picture

DoChen, thanks for posting, you are one of the few who really know the way to leverage internationalization.  Please continue.

Rock On Roger's picture

DCRB is cool.

Everyone needs a good bearing.


Stack On

zionhead101's picture

Al-queda and ZIO-'s

The both launder with DIAMONDS,

Aren't detected, and a small condom can be worth 100's of K's or M's $'s of USD up the ass,... its how real CIA/MOSSAD move wealthu


You can't move money with BTC, because once you BUY BTC you will NEVER see your real-money again,

So yep, whether its peter-shit, or bitcoin either one is great way to DESTROY wealth, but not a smart way to preserve or protect

Yen Cross's picture

     XAU breaking out.  I'll take pause and diversify.

Grande Tetons's picture

1420...with follow through... seems like a nice land in the sand. 

Mind you, I do not trade paper Gold...but I have to watch. 

Yen Cross's picture

  Short aud/jpy going into N.Y.  "intraday"

   @ Grande Tetons

Grande Tetons's picture

Long AUD/NZD after today's epilleptic news cycle.

 Traded the Yen twice today in its range...came home with a goose egg. 


Yen Cross's picture

 NO!  short aud & NZD vs usd/jpy / or long nzd vs aud intraday for 50 pips.

Grande Tetons's picture

Could be, bro. I like my new AUD/NZD is in the money..not by much. Fucking, RBNZ is priced to perfection and then some.  

Holding off the Yen for a bit.  Too much indecision within the channel...USD/JPY. 


Spitzer's picture

Hey guys... This isn't the Dennis Gartman chat room.


Just sayin

fonzannoon's picture

I like Schiff, always have. But look at this realistically. From 2006 on everytime he was on one of the major networks he was screaming like his hair was on fire. It took a few years but he nailed it. The point is though, he was screaming that the shit was just about to hit the fan. 

What he was not screaming was " I mean, how soon is very difficult to tell."

Back then he was schooling some ZH favorites

Nowadays he has shifted from the shit is about to hit the fan to "how soon is very difficult to tell".

This may go on a while longer than we expect.

Grande Tetons's picture

Fonz, I think he knows this is the last bubble, and, as a result, the rules or ease of prediction have long been thrown in the dumper.  He can not afford to be as brash as he was 6 years ago. Justifiably so. 

One day, after the market crashes...for the last time...he can simply state...hey....the markets' balls were tired. 

fonzannoon's picture

Grande his firm sells "Fdic insured CD's" linked to different commodities and indexes. I wish he would stand a bit moar on principle and avoid products he knows damn well are an illusiuon. But biz is biz. I get it. Kind of sends a mixed message though.....

slightlyskeptical's picture

You mean the CD's where you can only participate partially on the upside but fully on the downside? I can't believe they are allowed to sell them.

Harbanger's picture

He's one of the few guys I know who puts his ass on the line to teach economics 101 to the fools.  Most AT HIS LEVEL just watch the destruction and plan accordingly. 

AgentScruffy's picture

Seems Jim Rogers does the same thing. Why does he do endless interviews, even with tiny websites? (He sometimes does these while walking on his treadmill and puffing a bit. This is how many he crams in to his incredibly busy life.) My conclusion: in compassion he's trying to do everything possible to reach the common man to spare him ruin.

Spitzer's picture

I don't know how he does it...

He starts a new company up every couple years...

First Europac

Then Sound media

Then Europac Canada

Then Europac precious metals

Then Europac bank

Now Digital Offering

Crazed Smoker's picture

Don't mean to burst anybody's bubble but...  i believe these guys get paid for each and every interview.  You are seeing them because you want  to make money and they are born money grubbers.

Urban Redneck's picture

SOP industry-wide.  Whether they they themselves are taking or cashing the checks is another matter, and completely beside the point.  Schiff is a slightly different boat than Soros and Rogers, because there is the potential to drive more business to EuroPac.  However, it directly costs ALL these guys more both in direct and opportunity costs to do these interviews, than they may be collecting from from them.  

kito's picture

im not sure if he demonstrates less principles by giving his time to cnbc or by giving it to doug casey

Grande Tetons's picture

I sell whatever clients want to buy.  

You wanna buy the shitmaster 2000, Mr. Johnson. Yep, that is one of our best sellers. Good eye, Mr. Johnson. 

AgentScruffy's picture

At a recent small dinner, I was introduced to an individual fairly up in a major financial services firm. She's certain there's going to be a dollar collapse but said there's no way to say for sure when it would happen: it could happen 20 years from now, she commented. More to the point, in her opinion, it's at minimum a few years off and the big bull market in equities isn't nearly over. I was at another event where Victor Sperandeo mentioned a 10-yr window for hyperinflation. Any extra time to prepare is a godsend, yet it's prudent to have a plan in motion now and not count on "extra time."

Max Cynical's picture

I would like to know what others think about timing.

With all that's going on around the world, I just don't see how they keep this going another 18 to 24 months.

N2OJoe's picture

Well to quote the man of the decade, John Maynard Keynes:

The market can stay irrational longer than YOU can stay solvent.

As wrong as he was on so many other things, he nailed that one on the head. I never would have thought they could hold it together for the last 5 years but they did, and probably will for another 5 or 10. Hell I may die before the big one but it WILL happen eventually.

Seasmoke's picture

I didn't expect to see Biderman on the receiving end of that !!!  

AgentScruffy's picture

Maybe b/c when he is on the air media interviewers press him for an exact timeline.

NoDecaf's picture

This is why when the going gets tough, the tough will take over Canada. Back in the days of prohibition they used rum-runners and donkeys to move contraband. Today we have ATVs and snowmobiles... Capital flight from the USSA will be doing about 60mph across the snow covered fields in the opposite direction.

max2205's picture

This time he is bought and paid for

Gyoza Mimi's picture

Peter Schiff has been right ones and wrong for the rest of his career. Jim Cramer at least randomly right. Why would anyone listen to Peter now? Just in case he is right the second time in his career?

Spitzer's picture

What has he been wrong about ?

He's not guessing you moron. Austrians don't guess.  This isn't guesswork

Stanley Lord's picture

I like Peter too, but how about we stand and fight and take the country back from the elites instead of running away?

We know how to have a revolution, the French mapped it out for us.


booboo's picture

"We know how to have a revolution, the French mapped it out for us."

Well, not really, I don't think some elites deciding who's head to whack off is the answer and don't think they would stop at bankers and politicians. Once the bloodletting begins it's anyones guess where it goes from there. Men are funny like that, especially when they have a few pigs in the parlor if you know what I mean.

damicol's picture

If you have money a business ans assets that are cash producing then you really need to not only get some assets off shore but   cut US costs too.

It is the only company working with ofshore attorney that does not get involved in poetentially risky deals like simply hiding cash in a foreign bank account.

There is a right way and a wrong way to do these things but those that  just idly by will be the ones get hot the hardest.

When they come for the money, they will go where the money is.


 And that is the middle class smal business owning segment, the ones who provide 80 % of US employment.

 They wont go for the 55% that pay no tax, and they won't got the 0.01% because they are bought and paid by them.

Go figure where the money is when the obummer scummer and the fed decide to call for your assets



kurt's picture

fuck internationalization

fuck Shill I mean Schiff