by Simon Black: The
Most Dangerous Woman in America
a lot to cover today, so let’s dive into this week’s questions.
asks, “Simon, when you write about international diversification,
I appreciate that you have so much personal experience. Multiple
passports, overseas business,
foreign bank accounts, storing gold abroad, etc., you’ve
actually done it all yourself. For newbies, which of these do you
think is the most important?”
I think everyone
ought to consider opening a foreign bank account and moving a portion
of their savings there. This is the most important step, for four
western banks are sitting on hundreds of billions of dollars in
losses to their asset portfolios, not only from the sub-prime debacle,
but also from sovereign default issues.
there has really been no positive change in asset quality…
and rather than update their balance sheets to reflect this grim
reality, governments have simply authorized funny accounting tricks
to hide the truth.
To put it bluntly,
the bank which holds your money in the US or Europe is probably
insolvent. And your government, which theoretically guarantees the
deposit, is insolvent too.
banking systems are much, much healthier. Singapore has never had
a banking failure. Ever. Banks in the Middle East (such as Abu Dhabi
Islamic Bank) are extremely well capitalized. Other foreign banks
(like Capital Security Bank in the Cook Islands) hold their deposits
in cash and don’t make loans.
are much more secure stewards of your hard-earned savings.
banks typically make it easier to diversify your currency exposure.
If you want to get out of the dollar or euro, for example, a single
bank account in Hong Kong lets you diversify into over a dozen different
options – Chinese renminbi, Singapore dollars, Aussie dollars,
When I was
in Mongolia a few weeks ago, I opened up a bank account there in
the local currency (the tugrik). It’s been one of the best
performing currencies in the world for the last few years, and what’s
more, my account pays a whopping 13.5% interest just to hold cash.
Not too shabby.
banks are often much more innovative. Banks in the west think they’re
innovative when they launch a Facebook fan page. Asian banks let
you hold gold bullion in your savings account… or buy into
the next big IPO at an ATM machine.