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When you think about ‘insurance’, chances are you probably think about term life, home insurance, or liability insurance.

But one of the best insurance policies you could ever get your hands on is a second passport.

Like most types of insurance, it’s one you hope you never have to use.

No one wakes up in the morning and thinks “I hope my house burns down today so I can cash in on that homeowners policy…”

But if the day ever came where you felt like you needed to get out of Dodge, or political turmoil in your home country ever became extreme, or you felt your family’s safety was in danger, having another citizenship ensures a way out.

It means that, no matter what happens, you’ll always have a place to go.

In short, this Plan B gives you another option… which fundamentally means more freedom.

UNLIKE most types of insurance, though, having a second passport can also provide a lot of benefit even if nothing bad ever happens.

With a second passport, you have the ability to travel, invest, and do business in more places.

In many cases your children, and your children’s children, will also inherit the second citizenship you obtain, so future generations will continue to reap benefits from this no-brainer insurance policy.

As the world has gotten crazier over the past several years, the interest in obtaining a second passport is rising.

Entire governments are sliding into insolvency. Capital controls have been introduced. Interest rates are negative.

Terrorism, race violence, and mass shootings abound. Dangerous political candidates dominate.

And folks are starting to realize that a second passport is an excellent insurance policy against these threats.

The common misperception, however, is that a second passport is only for the ultra-wealthy.

And that’s simply not true. ANYONE can obtain a second passport.

Now, some people are fortunate enough to be a part of the lucky bloodline club.

In other words, their parents (or grandparents) hail from places like Ireland, Poland, etc., so they’re entitled to obtain nationality by ancestry.

This is, by far, the fastest, easiest, and most cost effective way to obtain a second citizenship.

But it’s not the only way.

Another option is to “buy” a second passport.

No, not from the shameful, unethical morons on the Internet talking about their ‘hookups’ in Mexico and Bulgaria.

I’m talking about legal “citizenship by investment” programs that have been established in a number of countries like Malta in Europe, to Antigua, Dominica, and St. Kitts in the Caribbean.

The rules for these programs vary, but the general idea is that you make an investment or donation, plus pay a bunch of hefty fees, in exchange for citizenship and a passport.

These are completely legitimate programs, and the passports themselves are very high quality (i.e. you can travel visa-free all over the world with them).

But the price tags on these programs can be anywhere from low six figures up to a few million dollars.

Investment-based citizenship programs are definitely for the wealthy.

If you have $100,000 or even $1 million, it doesn’t make financial sense in most cases to buy another passport.

If you have $10 million or more, dropping $250k on a passport is no big deal.

So what about folks who aren’t ultra-wealthy or part of the lucky bloodline club?

Easy. There are dozens of options for people who are of more modest means to obtain this ultimate form of insurance.

Establishing legal residency in a country is often the most straightforward way to eventually become a citizen.

Depending on each individual country’s specific rules, you first obtain residency (or an immigrant visa) which usually confers legal status to live AND work in a country.

And after a certain number of years of residency, you become eligible to apply for naturalization and citizenship.

This varies from country to country; it can be as little as two years (Argentina) to five years (Panama) to ten years or more.

So instead of “paying” for citizenship with money, you pay with time.

But here’s a secret: in many countries, you don’t actually have to maintain a physical presence in the country in order to qualify for naturalization.

In some countries, you can maintain your residency “on paper” without actually having to move there full time.

So you establish residency on your first trip down, take a few vacations there over the years, and eventually submit your paperwork for naturalization.

(Other countries only require a temporary presence, i.e. six months worth of residency, in order to qualify.)

In the meantime, you and your family still have full legal status to live, work, invest, and do business in the country.

So you are still receiving most of the “insurance” benefits of a second passport without having to fork over hundreds of thousands, or even millions of dollars.

And of course, in a few years, you can qualify to apply for naturalization, after which you’ll receive that second passport.

Residency-based citizenship takes a bit more patience, but it’s a very cost effective way to get a second passport.

This is a strategy that makes sense no matter what.

Again, even if nothing catastrophic ever happens with your bankrupt government or financial system, and it’s all rainbows and unicorns from here on out, there’s no downside in having the addition option to live, work, invest, and do business somewhere that you want to be anyhow.

But if something bad does ever happen, you’ll already have your Plan B in place.

After all, you don’t want to start thinking about where you’ll go and what you’ll do AFTER things have already gone bad.

Maybe that day never comes. And so what? In a few years you’ll have another passport, and all the freedom and benefits that go along with that.

And future generations will be able to enjoy those benefits based on the tiny effort that you made today.

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It started in 1946.

American Airlines, then the largest airline in the United States (and second largest airline in the world after the Soviet Union’s Aeroflot) created a bold, new technology to book flight reservations.

They called it the “electromechanical reservisor”, and it was the first machine of its kind.

Before the reservisor, American Airlines employees booked all reservations by hand using index cards and lazy susan filing systems.

Needless to say, the manual system was prone to substantial human error, and airline executives were keen to automate the process.

They went through several iterations of the technology until, in 1964, they completed the largest non-government data processing network in the world.

It was called Semi-Automatic Business Research Environment, or SABRE.

With its IBM 7090 mainframes, the system was able to process tens of thousands of tickets per day, pushing up-to-date seat inventory to more than 1,500 ticketing agents across the country.

Within the next several years, most major airlines (including Delta and United) followed with their own booking systems.

Fast forward a few decades, and those systems from the 1960s still form the core technology of airline reservation systems today.

Sure, they’ve managed to put on a few fresh coats of paint, building new websites and mobile apps to keep pace with the 21st century.

But deep down beneath the digital veneer, airlines are plagued anachronistic technologies that are barely held together with constant patches and reams of duct tape.

This is ultimately what caused Delta’s ignominious flight outage last week.

It’s also what caused American Airlines flight outage in late 2015. And 2013. Plus United’s 2015, 2011, and 2007 outages. Etc.

It raises the question– since old technology breaks down so easily, why not just start over with new technology?

It’s because these airlines are so dependent on the old technology that to completely replace it would mean having to press PAUSE on their entire businesses for weeks and weeks.

They’d have to ground all flights and cease making any new reservations while they replace the networks, migrate the data, retrain staff, test the system, etc.

For airlines that operate around the world 24/7, that’s an impossibility.

So, with their hands tied, they keep moving forward with patches and minor updates hoping to stave off technological catastrophe just a little while longer.

Here’s why I’m mentioning this today: it’s not just the airlines.

Nearly every legacy industry in the United States (and most of the West), including the electrical grid, nuclear, etc. runs on similar antiquated technology.

It’s the same with banks.

Retail banking is essentially a complicated assortment of accounting ledgers, and the technology that banks use to keep track of it all is called their “core software”.

Whenever you make a deposit, withdrawal, or account transfer, the bank’s core software updates your account and all the various accounting ledgers.

Thing is, some of the most popular core software platforms (like IBM’s AS/400) were introduced in the 1980s, way back before the digital revolution.

In other words, the most important financial transactions in our daily lives are driven by 30+ year old technology that’s no better than the original Nintendo Entertainment System.

Just like the airlines, this fragile patchwork of outdated technological platforms is prone to failure. Or being hacked.

Banks fortunately have a lot more money to throw around (namely your money, and my money), so they are able to recruit and retain very high quality IT talent to keep kicking the can down the road a little while longer.

But it does provide yet another major reason why banking, at least as we know it, isn’t going to exist in another decade.

Right now, at this very moment, all the tools and technology already exists to completely eliminate the need for banks.

Every single function of a bank, from deposits to lending to money transfers, can be conducted better, swifter, and cheaper outside of the banking system.

You can send money across the world, exchange currency, buy stocks, borrow money, etc. with a couple of apps and websites now, all without having to go through a bank.

Blockchain, social networking, and the shared economy have changed everything in finance, and the companies that bring these concepts to consumers are rocketing ahead.

Western banks, which are sorely lagging behind with their antique technologies, have absolutely no chance of catching up.

So while they may be able to kick the can down the road for a few more years, the long-term trend is pretty clear.

Banks are dying. And this not only has big implications for your savings, but also for your business and investment potential… because there are tremendous opportunities for anyone who focuses their capital and talents ahead of these big picture trends.

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[Editor’s note: This letter was penned by Tim Price, London-based wealth manager and author of Price Value International.]

“Negative interest rates are not the fault of central banks”
– Martin Wolf column for the Financial Times of 12 April, 2016.

From ‘Human Action’ by Ludwig von Mises:

“But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against “real” goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

“It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German Mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.”

The masses, it seems, have been waking up for a while. Not only have we had state sanctioned
inflationism ever since the credit crunch, but the developed world’s central
banks have done their best to destroy faith in money altogether. It turns out that
hyperinflation itself wasn’t a necessary precondition for a crack-up boom – taking interest
rates into negative territory was quite sufficient to trigger a rush into real assets.
Everybody loves the early stages of inflation, writes Jens O. Parsson in ‘Dying of Money’;

“The effects at the beginning of an inflation are all good. There is steepened money
expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity, all in the midst of temporarily stable prices. Everyone benefits, and no one pays. That is the early part of the cycle. In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the later effects, but the later effects patiently wait.

In the terminal inflation, there is faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and ineffectiveness of all traditional remedies. Everyone pays and no one benefits. That is the full cycle of every inflation.”

Alasdair Macleod for The Cobden Centre points to the extreme overvaluation in equities
and bonds worldwide:

“Because today’s price inflation is mainly confined to assets, no one worries. Instead
investors rejoice in the wealth effect. Assets are excluded from the consumer price indices, so the danger of a fall in the purchasing power of money in respect of assets does not appear to exist. This does not mean that the problem can be ignored. But if the reason behind rising markets is a flight from cash, we should begin to worry, and that point in time may have arrived. If so, we should stop rejoicing over our increasing wealth, and think about the future purchasing power of our currencies.”

If you want to start a flight from cash, introduce negative interest rates – something that
would be impossible within an unfettered free market. Make depositors pay for the privilege
of being unsecured creditors to the banks. While you’re doing that, make sure – in the case
of the EU – that your banking system remains unreformed and chronically undercapitalised.
Sadly for most economists and all central bankers, human nature is not as tractable as a
policy rate. This leads the Wall Street Journal of August 8th to ask “Are negative rates
backfiring?”

Early evidence would appear to confirm the suspicion.

When the German greengrocer Heike Hofmann heard that the ECB was cutting rates below
zero in 2014,

“she considered it “madness” and promptly cut her spending, set aside more money and bought gold. “I now need to save more than before to have enough to retire.””

The article also cites the example of Lasse Bohman, a 63-year old newsstand worker from
Stockholm. Bohman

“said the concept of negative interest rates is “weird” and makes him want to save more for retirement rather than spend. “I am just going to keep on putting money in the bank,” he says, or “put it under the mattress at home.””

In December, Ms Hofmann used her Christmas bonus to buy two 10 gramme bars of gold.

“She has since bought more and has put it, and every euro she can set aside, into a safe at
home, saying she doesn’t trust banks. “Every time I check my savings account, it makes me
want to cry.””

Note that Ms Hofmann is bypassing the banking system entirely – as she should. (The
website Zero Hedge reported last week that the German economic research institute ZEW
had found that Germany’s largest bank, Deutsche Bank, using US stress tests had a potential
capital shortfall greater than its entire market capitalisation.)

The WSJ article also points out that consumers are saving more in Germany and Japan. In
Denmark, Switzerland and Sweden, three non-eurozone countries that now have negative
interest rates, savings are at their highest since 1995. It’s almost as if QE and ZIRP were
having precisely the opposite effect to that which the central banks intended. The article
also cites Hans-Gerd Wienands, CFO of the German industrial gas business Messer Group:

“This odd policy of negative interest rates hasn’t motivated us to invest more. On the
contrary, it’s a signal that the economic situation isn’t improving.”

When deposit rates fall below zero, even as counterparty risks are rising, it is entirely logical
to seek alternative homes for capital rather than sheltering meekly in cash. Bonds,
unfortunately, do not make sense when their yields are also negative.

That leaves the world of listed equities as the major alternative tradeable asset class. But the
awakening masses have been putting their money to work in the world’s stock markets for
some time already, making most markets overvalued in the process. The pragmatic response
to all of these challenges is surely to favour investments that still offer a margin of safety:
shares in high quality but undervalued businesses, generating solid operating profits yet
trading at attractive valuations. Which is precisely what we’re doing here.

And if you share our view that QE is now doing more harm than good to the UK economy,
but is in fact actively detrimental to the interests of savers, investors and pensioners, please
sign this petition to end it, and circulate to friends and family. Thank you.

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On Friday morning, a gentleman named Thomas Hoenig wrote some rather unflattering comments about the US banking system in a little known publication called the Wall Street Journal.

In his remarks, Hoenig stated that “while the largest U.S. banks have increased capital since the [2008] crisis, their capital is still lower than the industry average and inadequate for bank resiliency.”

Think about what means. A bank’s “capital” is essentially its rainy day reserve fund.

If there’s a giant mess in the financial system and asset prices collapse (as they did in 2008), a bank with plentiful capital will be able to withstand the crisis.

Banks with inadequate capital will fail.

Hoenig is suggesting that many of the largest banks in the US fall in the latter category.

More importantly, Hoenig slammed the ridiculous accounting methods that banks use to report their financial condition, something he said “too easily allows banks to conceal risk.”

So Hoenig is telling us that banks have insufficient capital to be resilient in a crisis and can too easily hide their risks. Crazy.

So who exactly is this whack job Thomas Hoenig? What sort of social deviant would possibly question the sanctity and soundness of the US banking system?

Hoenig is the vice chairman of the FDIC, as well as former president of the Kansas City Federal Reserve Bank.

So, he’s not a whack-job. He’s the ultimate banking insider.

I’ve been writing about this for years, detailing how most Western banks have, at a minimum, questionable levels of capital, and they play all sorts of accounting tricks to mask their financial condition.

But as I often say, don’t take my word for it. Listen to the banks themselves.

Major banks report their numbers every single quarter.

And if you’re a financial wonk like I am, you can tear apart bank balance sheets and see for yourself how dangerously low their levels of liquidity are, and the almost comical ways they’re conveniently hiding huge losses in their bond portfolios.

Well, now you can listen to the #2 executive at the FDIC as well.

One of Hoenig’s major points is that bank accounting methods allow them to live in a pretend world where their assets carry ZERO risk.

For example, prior to the financial crisis, banks were allowed to assign a zero risk rating to all their toxic subprime mortgages.

It didn’t matter that this stuff was worthless. The banks were able to carry all these assets on their balance sheets at 100 cents on the dollar as if it were cash.

It’s not much different today.

Now, instead of holding subprime mortgages and pretending that they’re risk-free, banks are holding subprime government bonds.

They’ve loaned trillions and trillions of dollars of YOUR MONEY to bankrupt governments, in many cases at NEGATIVE interest rates where the bank is almost guaranteed to lose money.

And yet they continue to categorize these assets as “risk free”.

This means they don’t need to have any contingency plans or keep any additional capital in reserve in case of default.

This is an unbelievable level of deceit, and finally the FDIC is calling BS.

To hammer this point, just hours before Hoenig published his editorial, the biggest banks in the US requested a FIVE YEAR extension to comply with the Volker Rule.

The Volker Rule is part of a new regulation that forces banks to sell certain risky assets that have the potential to become toxic again.

This rule was born from the ashes of the 2008 financial crisis, and it was originally supposed to go into effect in 2014.

So they requested a 1-year delay. Then another one. And another one. And now finally a 5-year extension through 2022.

That’s an EIGHT YEAR delay to sell off these high-risk assets that they still own.

Why do they need an eight year delay?

Simple. Because there’s no market for these risky assets. No one else wants to buy them.

If the banks sell today, they’ll lose a fortune… reducing their capital levels even more.

So instead of selling, the banks just keep asking for an extension and pretending that these risky assets are worth full value (i.e. what they paid).

Again, it’s another scam designed to make you think the banks are much safer than they actually are.

Look, I’m not suggesting that your bank is going to collapse tomorrow.

But the reality is that your bank is probably nowhere near as safe as you think it is.

And this matters.

As I’ve written before, most people spend more time arguing about what they’ll eat for dinner tonight than thinking about the financial health of their bank.

A bank is your financial partner. Don’t simply assume that it’s safe just because everyone else does.

Be sure. And if you can’t be, it certainly wouldn’t hurt to reduce your exposure to the bank.

Buy a safe, withdraw some funds, and hold a month’s worth of living expenses in physical cash.

With interest rates at basically zero, there’s almost no downside in doing this.

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The year was 1986.

Top Gun was the #1 movie in America.

Halley’s Comet was visible with the naked eye.

Microsoft went public, instantly making Bill Gates one of the wealthiest people in the world.

And the US government took in $93.7 million through a little known authority called “Civil Asset Forfeiture”.

As you’re likely aware, Civil Asset Forfeiture is a legal process that allows the government to seize assets from private citizens without any due process or judicial oversight.

People can be deprived of their private property without ever having been even charged with a crime, let alone never having actually committed one.

The horror stories of its abuse are endless.

People who have never done anything wrong have had their life’s savings, homes, and business assets confiscated without so much as a warrant.

This constitutes theft, plain and simple.

And like most government initiatives, it started small.

Again, the statistics from 1986 show $93.7 million worth of cash and property was seized by the government.

By 2014, that figure had grown 4,667% to a whopping $4.5 billion.

And we learned in 2015 that the government stole so much private property from its citizens that the total amount exceeded the value of all property stolen by every thief and felon in America combined.

It reminds me of that sign Ron Paul used to keep on his desk during his tenure in Congress: “Don’t steal. The government hates competition.”

The public also learned about all the extraordinary incentives for state, local, and federal police agencies to steal from private citizens.

The entire idea behind Civil Asset Forfeiture is that they can confiscate your property, then put the burden on YOU to prove that you didn’t do anything wrong in order to get your property back.

So much for innocent until proven guilty.

It’s such an astonishing scam: how is someone supposed to be able to afford to prove his/her innocence after their financial resources have been confiscated?

Moreover, it turns out that these agencies are all sharing the wealth among themselves.

The US Department of Justice routinely doles out hundreds of millions of dollars of these stolen funds to local police in a corrupt sort of ‘proft sharing’ arrangement.

DOJ statistics show that between 2000 and 2013, federal “equitable sharing payments” to state and local law enforcement more than tripled, totaling an incredible $4.7 billion.

There are some sickening stories of police departments using this money to buy things like margarita machines, trips to Hawaii, concert tickets, and more.

Again, this is money that was stolen from private citizens without a warrant or any due process whatsoever.

24-year old Charles Clarke, for example, had $11,000 in physical cash on him when he was traveling through Cincinnati airport.

Clarke didn’t have a bank account; he had been saving money for his entire life, including his disabled mother’s VA pension from her time in the military.

He ordinarily kept the cash at home but was traveling with it because he and his mother were moving apartments.

Local officials at the airport saw the money, and, despite it being perfectly legal to carry physical cash, they thought it was suspicious and confiscated it.

His entire life’s savings was stolen by the government in an instant. And he hadn’t done anything wrong or charged with a crime.

There are countless more stories like Clarke’s.

But it turns out that was all just Phase 1 when Civil Asset Forfeiture was a type of ‘passive’ theft.

Law enforcement agencies would seize funds and assets as a target of opportunity, like Clarke’s money at the airport, or a cop who spots a few thousand dollars in cash at a routine traffic stop.

These are the normal stories.

But now we find out that federal agencies, led by the DEA, are now actively stalking Americans to figure out what they can seize.

Like sophisticated thieves who case a jewelry store before robbing it, the DEA has been trolling Americans’ travel records looking for ‘suspicious’ activity.

I’m not talking about past travel. I’m talking about upcoming travel.

Anytime you book a flight, airlines create a code called a PNR, or Passenger Name Record, with all of your travel details and personal information.

And what a surprise– the federal government has gotten its hands on this data.

So now it seems the DEA is combing through PNRs looking for suspicious activity like last minute, one-way tickets.

Because apparently only slimy low-lifes who carry treasure troves of illicitly acquired cash buy last minute one-way tickets.

This is amazing: you’d think that, with the obvious public backlash against Civil Asset Forfeiture over the past two years that the government would tone down the practice.

On the contrary, they’re taking it to the next level.

So now instead of passively waiting to steal from citizens as the opportunities arise, they’re actively casing our travel itineraries looking for potential targets.

This is truly banana republic stuff.

This trend serves as an obvious reminder: when you live in a place with such a corrupt system of justice, does it really make sense to keep 100% of your wealth and life’s savings within their easy reach?

The fact is that any court, police department, or government agency can seize your assets in an instant: your cash, car, bank account, business, and even your home.

And with the data this obvious, it’s simply not worth the risk.

There are so many legal steps you can take to insulate yourself from this growing, ominous trend.

You can move some funds offshore to a safe, stable foreign bank. Or even hold some gold and silver abroad in a non-reportable safety deposit box.

But doing nothing in light of this trend is practically an invitation to get robbed.

PS- Click here for the most actionable, step-by-step blueprint for global asset protection, foreign banking, and international gold storage with a risk-free trial to Sovereign Man: Explorer.

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Heike Hoffman is a 54-year old fruit merchant in a small town in western Germany.

She has no formal training in finance. She’s not running a multi-billion dollar portfolio.

And yet, as the Wall Street Journal reported on Monday, “[w]hen Ms. Hoffman heard the ECB was knocking rates below zero in June 2014, she considered it ‘madness’ and promptly cut her spending, set aside more money, and bought gold.”

She’s right. It is madness.

There’s $13+ trillion worth of bonds in the world right now have negative yields, much of which is issued by bankrupt governments (like Japan).

Stock markets around the world are at all-time highs even as corporate profits have been in long-term decline.

And in a growing number of countries, even doing absolutely nothing and holding money in the bank means that you’ll be penalized with negative interest.

These risks are even worse for major “institutional” investors like pension funds.

Big investors have far fewer investment options than regular people like us. They need extremely large markets to deploy their capital.

Think about it like this: if you have $100 billion to manage, you wouldn’t even be able to consider a small investment, like a $200,000 town home.

$200,000 is just .0002% of your portfolio. It’s far too small to even think about.

A senior investment manager at one of China’s sovereign wealth funds once told me they only consider deals that are at least $1 billion or more.

Anything else is just too small, no matter how attractive.

This is why it’s so great to be a smaller investor.

We have recommended unique investments to members of our premium services, for example, that generate anywhere from 5% to 12% in very safe returns that are fully backed at a substantial margin by real assets (including gold).

But the market size for these investments is only around $20 million.

If you had $20,000, $200,000, or even $2 million to invest, your portfolio is the perfect size for these types of investments.

But if you had $200 billion to manage, you wouldn’t be able to consider them. The investments are simply too small.

That’s why large investors end up buying government bonds: the market is enormous.

The market for US Treasuries, for example, is $19 trillion.

So even if you’re managing $200 billion, the market size for US government bonds is big enough that you could easily snap up Treasuries.

It’s the same with stocks.

Wal Mart, Apple, Toyota, Samsung… the market size of large public companies is worth tens of trillions of dollars, big enough for major funds to invest.

But again, that’s precisely the problem.

Almost every single market and asset class that’s big enough for major institutional investors is at/near its all-time high.

The yields on government bonds are at the lowest levels in recorded history (and in many cases even negative).

Stocks are at record highs at a time when corporate profits are in decline.

Many funds around the world (especially in Europe) have been jumping into the US market as a “safe haven” against all the Brexit uncertainty.

Yet they’re doing so at a time when the US dollar is at a multi-decade high, and both US stocks and bonds are at all-time highs.

It’s generally not the greatest investment strategy in the world to buy assets at their all-time highs… you’re taking on a LOT of risk.

But major funds and institutions have very few options available.

Simply due to their massive size, they’re chained to these risky asset classes. Even doing nothing and holding money in the bank could mean paying negative interest.

But there is one very big exception: gold.

The total market size for gold, as estimated by the World Gold Council, is more than $7 trillion.

That’s a big market, more than sufficient for institutional investors to deploy billions, even tens of billions.

Central bankers have been doing it themselves, snapping up hundreds of tons of gold in recent years.

(The Chinese bought tens of billions of dollars worth of gold in the last year.)

Yet unlike stocks and bonds, gold is NOWHERE NEAR its all-time high, at least in US dollar terms.

In fact gold can still appreciate nearly 50% before it breaks its previous price record.

This means that GOLD is about the only major asset class that isn’t anywhere close to its all-time high, but still a big enough market for institutional investors.

Stocks are very expensive. Bonds are insane. Bank rates are negative for many large investors.

But gold is still historically inexpensive despite having appreciated substantially this year.

So gold should become much more attractive to large investors, especially since there will likely be more debt, more money printing, more capital controls, and more monetary insanity in the future.

These trends are pretty clear.

And if you understand them, the case for owning at least a small amount of gold is obvious.

Don’t fall in love with gold. Don’t maintain a religious devotion to it. And don’t dive in headfirst with your entire life’s savings. Accumulate slowly.

But do recognize that there’s no other global, highly liquid asset that increases in value as governments and central banks decline.

So having even just a little bit of gold can be an excellent insurance policy.

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Long ago in the Land of the Free, if you wanted to start a saloon, you rented a space and started serving booze.

You didn’t have to go through years of petitioning a bunch of bureaucrats for permits and licenses.

If you weren’t qualified or good enough at your job, your reputation would suffer and you’d go out of business.

This is the way it used to be for just about every industry and profession.

It wasn’t until 1889 that the US Supreme Court ruled in Dent v. West Virginia that states had the right to impose “reasonable” certifications or licenses for various professions.

At first, most states only licensed physicians, dentists, and lawyers.

In fact, by 1920, only about 30 occupations in the US required any sort of licensing.

By the 1950s, about 5% of US workers required a license to perform his/her job.

Today that number has risen to 30%, and climbing.

Some of our modern examples are completely insane.

According to the Brookings Institute, the state of Nevada requires 733 days of training and a $1,500 fee for a license… just to become a tour guide.

Over in Michigan, it takes 1,460 days of education to become an athletic trainer.

45 other states have license or certification requirements for athletic trainers. All fifty states have licenses for barbers and cosmetologists.

36 states require licenses for make-up artists. 34 states license milk samplers. And a mere 33 states license auctioneers.

These license requirements continue to grow, along with the overall level of rules and regulations in the Land of the Free.

Just this morning the US government published an extra 227 pages of rules, regulations, and proposals.

This happens every single business day in America.

Last week the government published over 2,000 pages of new rules, many of which border on absurdity.

To give you an idea, USDA’s Agricultural Marketing Service proposed a rule about minimum and maximum diameters of potatoes that are sold in the State of Colorado.

Yes I’m serious.

This is the sort of madness that government bureaucrats churn out on a daily basis: more rules, more licenses.

Needless to say, the more of these rules they create, the more difficult it becomes for people and businesses to produce.

So it wasn’t exactly a big surprise when the US Labor Department released statistics a few days ago showing that, for the third straight quarter in a row, productivity in the Land of the Free declined.

In other words, US workers are producing less than they did before.

We haven’t seen this trend since 1979. And it’s the exact opposite of what’s supposed to happen.

As workers get more experienced and technologically advanced, productivity should grow.

But it’s not. US production is buried under countless pages of regulations and licensing requirements. And the trend has been negative for quite some time.

From 2000 through 2007, US productivity was about 2.6%.

Between 2007 and 2015, it shrank by half to about 1.3%, barely keeping up with population growth.

Now productivity is actually shrinking. America is going backward.

But there’s another side to this story.

Because while US economic growth has practically halted and productivity is shrinking, DEBT CONSUMPTION is up. Way up.

Americans are once again indebting themselves, often to buy useless things they don’t really need.

Auto loans and credit card debt are just two categories registering significant upticks.

(Not to be left out, the US government is leading with way with an absolute explosion in federal debt…)

So what we’re basically seeing now in the Land of the Free is people going into debt to consume more, while simultaneously producing less.

This is a pretty dangerous trend.

Human beings realized 10,000 years ago that if they wanted to survive, they had to produce more than they consumed.

During the Agricultural Revolution our early ancestors learned that, instead of constantly hunting for game, they could plant seeds in the ground and produce more food than they could possibly eat.

You and I wouldn’t be here if they hadn’t figured out this simple principle.

I call it the Universal Law of Prosperity, and it applies to governments, businesses, and individuals alike.

Any nation that fails to produce more than it consumes is in for serious trouble. And the government’s own data is showing that this is happening.

They create countless rules, regulations, and licensing requirements to make it more difficult to produce… and we can already see the results with (lack of) GDP growth.

Meanwhile they’ve slashed interest rates down to zero to incentivize people to consume.

It’s not hard to see where this trend is going.

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It started with an illegal wiretapping scandal.

Jean-Claude Junker, after spending nearly 18 years in office as Prime Minister of Luxembourg, was forced to resign in 2013 after evidence surfaced of his complicity in a domestic spying operation.

So what does a disgraced politician who resigns in shame do?

Why, receive a promotion, of course.

Less than a year later, Junker was appointed to the most powerful political office in Europe– President of the European Commission.

(I say “appointed” because Junker was selected by the reigning political establishment, not by voters.)

Aside from being one of Europe’s most prominent unelected policymakers, Junker has become legendary for his bizarre quips and daft behavior.

(Here’s some incredible footage of an intoxicated Junker marching in place and slapping around other world leaders at a press event.)

Among Junker’s most famous quotes are perhaps the truest eight words in politics: “When it gets serious, you have to lie.”

That was from 2011 when Junker was caught lying about a secret meeting about Greece’s debt crisis.

On the surface, the politicians insisted that Greece was just fine.

Yet all the while they were lying to the public, they were preparing for an emergency behind closed doors.

I was reminded of this quote recently when the European Central Bank published results of its bank “stress tests”.

The ECB conducted these tests to prove that Europe’s biggest banks were just fine and would be able to withstand another major crisis.

Surprise, surprise, nearly every bank in Europe passed with flying colors, as if the ECB were saying, “Nothing to see here people…”

One of the ECB’s primary missions, after all, is to maintain stability in the financial system.

And when your financial system is this toxic, the ECB can’t maintain stability by telling the truth about their insolvent banks.

“When it gets serious you have to lie.”

Here’s the reality: Europe’s banking system is toast.

Wholesale interest rates on the continent are already negative.

Negative interest rates essentially penalize any bank that tries to be responsible and hold extra reserves

What an unbelievably stupid policy.

Rather than encourage banks to be conservative with their customers’ deposits, the ECB is practically forcing them to make as many loans as possible.

So it’s not exactly much of a shocker to find out that, in their haste to loan out almost 100% of their customers’ money, many of the loans went belly-up.

EU data showed that by the end of September 2015, 17% of Italian loans were non-performing. The non-performing loan rate is a shocking 43.5% in Greece, and 50% in Cyprus.

(That data is nearly a year old, so the numbers are worse now.)

This is a huge problem. Banks have lost a big chunk of their depositors’ savings.

There’s a lot of talk now about government bail-outs. And some of that has already taken place.

In Italy, the government already had to step in with a 150 billion euro guarantee just to forestall a potential bank run.

But the Italian government is one of the most bankrupt in the world, with a debt level that exceeds 130% of GDP; they’re in no position to bail anyone out.

That’s why, as of January 2016, European “bail in” legislation has taken effect.

The rules are already in place whereby depositors can be held liable for the idiotic financial decisions of their banks.

If the bank goes under, they can take your money down with it.

It’s already happened.

In 2013, the government of Cyprus froze EVERY bank account in the country, locking every single depositor out of his/her savings.

These risks are very real.

Banks are illiquid and overleveraged. They’ve made far too many bad loans with their customer’s savings.

The governments are in no financial position to bail them out. And the bail-in legislation already exists to steal from depositors.

What’s the point of holding money in this kind of system, especially when the biggest benefit you could hope for is about a 0.1% yield on your savings account?

When you step back think about the big picture, the conclusion is pretty obvious: don’t hold money in such a precarious banking system.

And yet, it’s very seldom that anyone really thinks about his/her bank.

Chances are most people put more thought into what they’re going to have for dinner tonight than where their money should live.

A bank is your silent financial partner. This is an incredibly important decision.

Especially given that once you turn over your hard-earned savings, it’s not even your money anymore. You become an unsecured creditor of the bank.

A decision of this magnitude deserves more analysis. And anachronistic features like a bank’s location shouldn’t factor into the calculus.

Geography is totally irrelevant in the 21st century. You shouldn’t hold your money somewhere just because the bank is near your house.

Rather, your money should live where it’s safest and treated best.

Just in the same way that you would choose your neighborhood based on its safety or quality of schools for the kids, you can choose your bank (or at least banking jurisdiction) based on safety and quality.

For example, avoid banking in countries that have already adopted bail-in rules that allow them to steal depositors’ savings.

This includes Canada and the EU.

(The US Dodd-Frank legislation is conveniently opaque on this issue– more on that another time.)

Also, avoid banking in countries that are heavily-indebted; those are the places most likely to run into serious problems, and you don’t want your money anywhere near them.

Again, this rules out most of Europe.

Last, consider other options. You don’t need to hold 100% of your wealth in a bank, especially one that is in questionable health.

Physical cash and precious metals can be an excellent substitute for bank deposits, especially as interest rates continue to slide below zero.

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[Editor’s note: This letter was penned by Tim Price, London-based wealth manager and author of Price Value International.]

For those that already have, Mark Carney is the gift that keeps on giving. Borrowed imprudently and struggling to make those interest payments ? Worry not; the Bank of England has your back. For those that don’t have, the Bank of England is taking away your chance of ever realistically saving anything, now that interest rates have been driven down to new historic lows of 0.25%, and may go lower yet. For the asset-rich, for the 1%, for property speculators, and for zombie companies and banks, Carney is your man. For the asset poor, or for savers, or pensioners, or insurance companies, or pension funds, the Bank of England has morphed from being anti-inflationary fireman to monetary arsonist.

The economist Ludwig von Mises foresaw all this, nearly a century ago. He called it “the crisis of interventionism”. Actions have consequences everywhere (except in Keynesian and Marxist economic theory). Interfere with the free market process and inefficiency and complexity are certain to rise. More actions and interventions are required. Pretty soon the entire system becomes a Heath Robinson contraption requiring constant amendments and ad hoc fixes and bolt-on workarounds. Welcome to the modern monetary system – the last, doomed refuge of the central planner with messianic delusions of adequacy.

“The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution. Every measure is ultimately justified by declaring that it is fair to curb the rich for the benefit of the poor.”

But so warped has our monetary system become after almost a decade of furious interventionism that Mark Carney’s redistributive efforts don’t even attempt to deliver to that objective. With interest rates fast approaching the theoretical lower bound of zero, Mark Carney is curbing the prospects of the poor for the benefit of the rich. He is redistributing capital from the prudent saver and gifting it to the borrower and the speculator. A crisis of too much debt is being met with ever more urgent attempts to prime the credit pump.

Mises had something to say about credit expansion, too.

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”

The Bank of England, along with the US Federal Reserve, the European Central Bank and the Bank of Japan, has made it perfectly clear that the credit expansion will continue. They had better hope that Mises was wrong.

In a 2013 essay, Dylan Grice also addressed the crisis of interventionism.

“Prior to the 2008 crash, central banks set interest rates according to what their crystal ball told them the future would be like. They were supposed to raise them when they thought the economy was growing too fast and cut them when they thought it was growing too slow. They were supposed to be clever enough to banish the boom-bust cycle, and this was a nice idea. The problem was that it didn’t work. One reason was because central bankers weren’t as clever as they thought. Another was because they had a bias to lower rates during the bad times but not raise them adequately during the good times. On average, therefore, credit tended to be too cheap and so the demand for debt was artificially high. Since that new debt was used to buy assets, the prices of assets rose in a series of asset bubbles around the world..”

Wealth was redistributed towards the financial sector. It was also redistributed to those who were already asset-rich.

“Who paid ? Those with no access to credit, those with no assets, or those who bought assets late in the asset inflations and which now nurse the problem balance sheets. They all paid. Worse still, future generations were victims too, since one way or another they’re on the hook for it.

“So with their crackpot monetary ideas, central banks have been robbing Peter to pay Paul without knowing which one was which.. But what does it mean for the owner of capital ? If our thinking is correct, the solution would be less monetary experimentation. Yet we are likely to see more.. In an ideal world we would have neither Peters nor Pauls. In the imperfect one in which we live, we have to settle for trying hard to avoid the Pauls, who we fear mistake entrepreneurial competence for proximity to the money well. But when we find the real thing, the timeless ingenuity of the honest entrepreneurs.. we find inspiration too, for as investors we try to model our own practice on theirs..”

With $13 trillion of sovereign debt trading at negative yields, bonds as an asset class are barely investible. They are only a plaything for speculators.

Cash is also increasingly problematic, as the commercial banks are now making it abundantly clear that negative interest rates may soon be upon us, irrespective of what Mark Carney claims to think or want.
By a process of logic and elimination, with cash and bonds (and perhaps property) effectively out of the picture, that leaves common stocks. Given that many stock markets have been artificially boosted by central bank stimulus, that leaves listed stocks that still offer a margin of safety, ideally with principled management and a history of decent shareholder returns. There are fewer of them than there used to be, but they can still be found. They can be found on the roads less travelled.

Perhaps at some point our central bankers will come to appreciate that wealth is not created by the printing of money, nor is it created by a reduction in the official rate of interest – at a time when it is mostly the desperate that want to borrow money. It is created by honest entrepreneurial endeavour, which is itself jeopardised by constant monetary intervention. As Tony Deden puts it,

“Dishonest money has created a culture of speculation out of ordinary producers and savers. As a result, we confuse financial markets for the source of our wealth. Our time preference has been altered so that we seek returns incompatible with the real risks we take. We focus on market activity rather than on the substance that it fails to imply.

“Substance is something that is real. It does not necessarily have to be tangible, but that would be preferable. Whether it is in gold – a form of money – or honest entrepreneurship, substance is rooted in economic reality. And so, understanding substance, whether it is in money or in entrepreneurial and wealth creating activity, is the most important practical skill we must acquire.”

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If you are a taxpayer in the Land of the Free, you may have recently received a love letter from the Social Security Administration that went something like this:

“Dear [Medieval serf paying into an insolvent pension fund]:”

(OK I added that part myself)

“Starting in August 2016, Social Security is adding a new step to protect your privacy. . .”

Whoa. Full stop. I love it already.

My dear Uncle Sam, who spends hundreds of billions of taxpayer dollars to spy on absolutely friggin’ everybody, is suddenly interested in protecting my privacy.

“This new requirement is the result of an executive order for federal agencies to provide more secure authentication for their online services.”

This part is hilarious. The US government has been hacked so many times over the last several years that it is the laughing stock of global cybersecurity.

Hackers have stolen 5.6 million government employee fingerprints, tens of millions of social security numbers, and financial and medical records from 19.7 million people who had been subjected to a government background check.

And those are just a few of the data breaches that we know about, and only over the last couple of years.

The US government is a veritable goldmine for identity thieves.

Social Security and Date of Birth data can sell for $30 on the black market. Stolen health records go for $10 to $50 each, and bank details can fetch up to $300.

So you can see why the Social Security Administration, which has SSN/DOB data for 300+ million Americans, not to mention emails addresses, physical mail addresses, health records and bank details for tens of millions more, may be the single most valuable repository of information in the world.

All that data is worth tens of billions of dollars at current black market rates. To put that in perspective, Google values its own data and intellectual property at $8.7 billion.

So now the Social Security Administration, under order from Barack Obama, is on a mission to fix its cybersecurity by implementing something called multi-factor authentication (MFA).

MFA is a security standard that requires a user to have at least two pieces of evidence to validate (or authenticate) that you are who you claim to be.

Different factors of authentication include things that you know (like a PIN code or password), things that you are (like a fingerprint or voice recognition), and things that you have (like a keycard that you swipe in a card reader).

The idea is that you have at least two of these factors to validate your identity.

Many banks, for example, issue security tokens that constantly refresh a special code.

So in order to log in, you have to enter your password (something you know) AND type in the special code from your security token (something you have).

This makes it much harder for your account to be breached.

Multi-factor authentication has been the industry standard for a long time. The FDIC has been pushing banks in this direction since at least 2005.

Even Facebook and Gmail have had MFA for several years.

So finally the US government is getting on board with the 21st century. Well done.

But as you can imagine, they managed to find a way to screw it up.

The Social Security Administration has started including mobile phones in their MFA platform.

So now when you log in, in addition to your password (something you know), they’ll send a special code via text message to your mobile phone (something you have).

That sounds great– though this does provide the Social Security Administration with even more of your personal data that will be compromised in a security breach.

Furthermore, if you don’t comply, or you don’t have a mobile phone, or if you’re living outside of the United States without a US phone number, “you will not be able to access your My Social Security Account.”

Tough luck.

This is a great reminder of how governments operate.

They can (and will) change the terms of the deal at ANY time of their choosing without any regard for how it might affect you.

And of course, they’ll always tell you that it’s for your own safety and security…

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