An interesting loophole for Chilean residency

unnamed 150x150 An interesting loophole for Chilean residency

I’ve been in Chile now again for the past few weeks, and I’m really glad to be back. There’s lots of exciting stuff going on here, but today I want to tell you about a new way of obtaining residency in Chile that I’ve recently discovered.

This is hot off the presses as I’ve just come back from a meeting with one of my attorneys, and I’m really intrigued by this, simply because of its simplicity.

We’ve talked on numerous occasions about different ways of obtaining residency in Chile. There are two main visa programs—the “person of means” visa and the work contract visa.

For individuals with an established independent source of income or assets, the best and easiest way to obtain residency in Chile is the so-called visa temporaria, what we often refer to as the rentista, or person of means visa.

As the name suggests, this visa category implies that you derive passive income from any type of investments, such as:

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Truth: a great holiday gift idea

shutterstock 53855575 1 150x150 Truth: a great holiday gift idea

December 13, 2013
Sovereign Valley Farm, Chile

One of the things we talk about routinely in this column is the fraudulent nature of the global monetary system.

When you step back and look at the big picture, it seems ludicrous. We have essentially awarded totalitarian control of our money supply to a tiny banking elite.

And in controlling the money supply, they have the power to set or manipulate the price of just about everything on the planet.

I’m certain that at some point in the future, financial historians will look back with astonishment at how we could allow ourselves to be bamboozled like this. We have literally entrusted the entirety of our wealth, savings, and livelihoods to just a handful of people. It’s insane.

What’s even crazier is how few people really understand how this system works.

If anything, we’re told that there’s a crack squad of brilliant economists making decisions about things that are simply too complicated for us little people to understand. And we just have to trust them to be good guys.

As a regular reader of Notes from the Field, I’m guessing that you already understand that this monetary system is one of the most blatant, destructive scams in history. But chances are, you have a lot of friends and family who don’t get it.

This is always a tough nut to crack. People can be very intransigent in their ignorance. They’ve grown up for their entire lives hearing about how they live in a free country with the strongest currency and richest government in the world.

They’ve become so brainwashed that suggesting anything to the contrary is tantamount to blasphemy. And it can be very difficult to talk to them about the truth.

Fortunately the holidays are coming up. So if you’re thinking that you might want to educate some of the important people in your life, here are a few inexpensive gift ideas that might just transform someone’s entire worldview:

1) Book: The Creature from Jekyll Island.

G Edward Griffin’s investigation into the creation of the Fed really does read like a detective novel. At 600+ pages, it’s long. But it’s a real page-turner.  And after finishing it, your loved ones won’t ever look at money, politics, or banking the same way ever again.

2) Book: End the Fed.

Written by none other than Dr. Ron Paul, End the Fed synthesizes historical analysis, common sense economics, and his own personal experiences from decades in Congress, all to argue one simple point– that the Fed is destructive and has utterly failed in its mission.

3) Movie: Money for Nothing.

This is my personal favorite, one I definitely recommend checking out. Even if you are up to speed on these concepts, I can almost guarantee that you’ll learn something.

Money for Nothing is a 90-minute documentary that was professionally and impeccably assembled by Jim Bruce and his all-star team.

The film is not only incredibly entertaining, their access to top former and current Fed officials was simply incredible– names like Volker, Yellen, Plosser, Fisher, Lacker, Poole, etc.

Money for Nothing is available for purchase (DVD or digital download) at


Gold and Banking in Hong Kong

Hong Kong 150x150 Gold and Banking in Hong Kong

We’ve reported several times before that Hong Kong is one of the cheapest places in the world to buy gold. But the bottom line is that it’s getting a bit more difficult to do so.

At Redacted Gold and Banking in Hong Kong Bank, for example,they will now only sell a maximum of HK$120,000 (about US$15,400) worth ofgold coins to non-account holders. This is less than 12 ounces of gold.

Now, if you open an account at Redacted Gold and Banking in Hong Kong Bank, no limit applies. And, the good news is that anyone can still open a bank account with them. Redacted Gold and Banking in Hong Kong does not require Hong Kong residency or a Hong KongIdentity card to open a bank account.

But, you will need to show up in person to the bank with the following:

1.  Passport

2.  Proof of current residential address

I would also bring a driver’s license or other identity document that has your address on it, if possible.

The proof of current residential address can take the form of a utility bill – an electricity, gas, or water bill is best. But, a bank statement may also be accepted.

The utility bill or bank statement cannot be more than 3 months old. And the name on it must exactly match the name in your passport.

In terms of inventory, Redacted Gold and Banking in Hong Kong only has current-year Australian Kangaroo Nuggets from the Perth Mint. All sizes are available: 1 Oz, ½ Oz, ¼ Oz and 1/10th Oz.

According to the bank, it’s possible for customers to buy up to 100 coins without any problem. But stocks are limited, so several hundred coins at one time would be problematic.

Their prices are still good – about 4% above spot gold.


The IMF wants you to pay 71% income tax

shutterstock 110888168 150x150 The IMF wants you to pay 71% income tax

December 12, 2013 
Sovereign Valley Farm, Chile

The IMF just dropped another bombshell.

After it recently suggested a “one-off capital levy” – a one-time tax on private wealth as an exceptional measure to restore debt sustainability across insolvent countries – it has now called for “revenue-maximizing top income tax rates”.

The IMF’s team of monkeys has been working around the clock on this one, figuring that developed nations can increase their overall tax revenue by increasing tax rates.

They’ve singled out the US, suggesting that the US government could maximize its tax revenue by increasing tax brackets to as high as 71%.

Coming from one of the grand wizards of the global financial system, this might be the clearest sign yet that the whole house of cards is dangerously close to being swept away.

Think about it– solvent governments with healthy economies don’t go looking to steal 71% of people’s wealth. They’re raising this point because these governments are desperate. And flat broke.

The ratio of public debt to GDP across advanced economies will reach a historic peak of 110% next year, compared to 75% in 2007.

That’s a staggering increase. Most of the ‘wealithest’ nations in the West now have to borrow money just to pay interest on the money they’ve already borrowed.

This is why we can only expect more financial repression from desperate governments and established institutions.

This means more onerous taxation. More regulation. More controls over credit and capital flows.

And that’s only the financial aspect; the deterioration of our freedom and liberty will continue at an accelerated pace.

Can a person still be considered “free” when 71% of what s/he earns is taken away at the point of a gun by a bankrupt, bullying government? Or are you merely a serf then, existing only to feed the system?

This is why we often stress having a global outlook and considering all options that are on the table.

Because the other side of the coin is that while some countries are tightening the screws and making life more difficult, others are taking a different approach.

Whether out of necessity or because they recognize the trend, many nations around the world are launching new programs to attract international talent and capital.

I’ve mentioned a few of these already– economic citizenship programs in places like Cyprus, Malta, and Antigua (I met a lot of these programs’ principals at a recent global citizenship conference that I spoke at in Miami).

[Note to Premium Members: you’ll receive the details and contact information for the Antigua program today.]

Then there are places like Chile and Colombia which have great programs for entrepreneurs and investors. Other places like Georgia and Panama have opened their doors to nearly all foreigners for residency.

Bottom line– there are options. Some countries are really great places to hold money. Others are great to do business. Others are great places to reside.

The era we’re living in– that of global communications and modern transport– means that you can live in one place, your money can live somewhere else, and you can generate your income in a third location.

Your savings and livelihood need not be enslaved by corrupt politicians bent on stealing your wealth… all to keep their destructive party going just a little bit longer.

The world can truly be your playground. You just need to know the rules of the game.


Why I don’t invest in stocks (and where I do park my investment capital)

shutterstock 145160464 150x150 Why I dont invest in stocks (and where I do park my investment capital)

December 11, 2013
Santiago, Chile

Earlier this week, Start-Up Chile announced the next round of new businesses who have been accepted to the program.

If you’re not familiar with it, Start-Up Chile is a government program that provides $40,000 in equity-free seed capital (plus a residency visa) to entrepreneurs and their startup companies who make the cut.

Now… in my worldview, this program shouldn’t even exist. This is a government program funded by Chilean taxpayers, and I don’t agree with the idea of government stealing people’s income for any reason.

Unfortunately we don’t get to live in a world where politicians cannot plunder the wealth of citizens.

But the compromise is that we get to vote with our feet and live where we want; we can choose to thrive in a place where taxation is relatively low… and where the politicians fund startups with taxpayer money rather than drones that drop bombs on children by remote control.

Chile is one of those places. It’s far from perfect, but the fundamentals are solid. The government balance sheet is strong– Chile has ZERO net debt. Yet the level of taxation here is among the lowest in the developed world.

So far Start-Up Chile has been a great success for the country.

I know many of the alumni who have come through the program, both foreign and local; several still operate their businesses here and have become successful, creating additional wealth and jobs in the local economy.

This latest round will bring in startups from 28 countries in industries as diverse as agriculture, travel, medical care, advertising, and cryptocurrencies. (Some of my students from our summer entrepreneurship camps have been accepted as well…)

I follow this closely, mostly because I’m an avid investor in startup companies.

With global markets trading at nose-bleed valuations, and almost every possible objective metric suggesting that a crash is coming, a conventional approach to investing seems crazy.

Besides, it’s clear that fundamentals no longer matter. Central bankers are spraying so much money into the system that the only thing driving stocks and bonds is the expectation of further printing. Central bankers have completely hijacked the markets.

I’m simply not willing to take Ben Bernanke on as my silent partner. This is why I invest in real assets– primarily, high quality agricultural properties and private operating businesses.

(Note- I didn’t say precious metals because gold and silver are a form of money to me, not an investment or speculation).

Given the long-term supply, demand, and policy fundamentals of agriculture, I think this sector is exactly the right place to be for the next decade. And owning physical, productive land is as close to the source as it gets.

Private businesses also make a lot of sense, allowing you to invest on the cutting edge of emerging trends and technologies, as opposed to big behemoth corporate bureaucracies. And while the risk potential is greater, so are the potential rewards.

I think any of us would have rather invested in Apple when it was just a startup in the Jobs family garage rather than the slow-moving bureaucracy it is today.

But just like great agriculture properties, such deals and talent are hard to find; this is one of the reasons I hold my entrepreneurship camps each summer, why my team and I travel the world looking at global opportunities, and why we follow programs like Startup Chile so closely.

We’re launching a new service after the holidays for investors who agree with this premise, but need help sourcing and navigating quality deals. More to follow on that in a future letter.


If you have a foreign bank account, you need to know this

unnamed 150x150 If you have a foreign bank account, you need to know this

Here’s something that almost nobody knows about. And it’s an important topic.

If you’re a US taxpayer, you know that the Foreign Bank Account Report or FBAR is one of the numerous forms from a stack of compliance documents that the US government demands.

We’ve talked at length about it previously, not least in the June issue of SMC where we went through the form step by step. But now, filing of an FBAR is changing. Starting next year the form will have to be filed electronically.

Just recently, the Financial Crimes Enforcement Network (FinCEN) held a webinar intended to provide instructions how the new electronic filing of an FBAR will look like.

Hardly anyone else even heard about this. I know this for a fact because when I was talking to some of my professional colleagues about it, they had no clue. In fact, almost everyone in the ‘business’ is still referring to the FBAR as the paper form TDF 90-22.1. This is incorrect… and bad information now.

Fortunately, I personally sat for two hours on the FinCEN’s webinar, listening to the technical details and procedures required to be able to file the new FBAR. I must imagine I was about the only person actually tuning in.

But I do these things that few others are willing to do, or even know about, so that you don’t have to.

So, let’s review first who has to file an FBAR:

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How Isaac Newton went flat broke chasing a stock bubble

Newton2 150x150 How Isaac Newton went flat broke chasing a stock bubble

December 10, 2013
London, England

[Editor’s Note: Tim Price, Director of Investment at PFP Wealth Management and frequent Sovereign Man contributor is filling in for Simon today.]

For practitioners of Schadenfreude, seeing high-profile investors losing their shirts is always amusing.

But for the true connoisseur, the finest expression of the art comes when a high-profile investor identifies a bubble, perhaps even makes money out of it, exits in time – and then gets sucked back in only to lose everything in the resultant bust.

An early example is the case of Sir Isaac Newton and the South Sea Company, which was established in the early 18th Century and granted a monopoly on trade in the South Seas in exchange for assuming England’s war debt.

Investors warmed to the appeal of this monopoly and the company’s shares began their rise.

Britain’s most celebrated scientist was not immune to the monetary charms of the South Sea Company, and in early 1720 he profited handsomely from his stake. Having cashed in his chips, he then watched with some perturbation as stock in the company continued to rise.

In the words of Lord Overstone, no warning on earth can save people determined to grow suddenly rich.

Newton went on to repurchase a good deal more South Sea Company shares at more than three times the price of his original stake, and then proceeded to lose £20,000 (which, in 1720, amounted to almost all his life savings).

This prompted him to add, allegedly, that “I can calculate the movement of stars, but not the madness of men.”

20131210 image How Isaac Newton went flat broke chasing a stock bubble

The chart of the South Sea Company’s stock price, and effectively of Newton’s emotional journey from greed to satisfaction and then from envy and more greed, ending in despair, is shown above.

A more recent example would be that of the highly successful fund manager Stanley Druckenmiller who, whilst working for George Soros in 1999, maintained a significant short position in Internet stocks that he (rightly) considered massively overvalued.

But as Nasdaq continued to soar into the wide blue yonder (not altogether dissimilar to South Sea Company shares), he proceeded to cover those shorts and subsequently went long the technology market.

Although this trade ended quickly, it did not end well. Three quarters of the Internet stocks that Druckenmiller bought eventually went to zero. The remainder fell between 90% and 99%.

And now we have another convert to the bull cause.

Fund manager Hugh Hendry has hardly nurtured the image of a shy retiring violet during the course of his career to date, so his recent volte-face on markets garnered a fair degree of attention. In his December letter to investors he wrote the following:

“This is what I fear most today: being bearish and so continuing to not make any money even as the monetary authorities shower us with the ill thought-out generosity of their stance and markets melt up. Our resistance of Fed generosity has been pretty costly for all of us so far. To keep resisting could end up being unforgivably costly.”

Hendry sums up his new acceptance of risk in six words: “Just be long. Pretty much anything.”

Will Hendry’s surrender to monetary forces equate to Newton’s re-entry into South Sea shares or Druckenmiller’s dotcom capitulation in the face of crowd hysteria ? Time will tell.

Call us old-fashioned, but rather than submit to buying “pretty much anything”, we’re able to invest rationally in a QE-manic world by sailing close to the Ben Graham shoreline.

Firstly, we’re investors and not speculators. (As Shakespeare’s Polonius counselled: “To thine own self be true”.)

Secondly, our portfolio returns aren’t exclusively linked to the last available price on some stock exchange; we invest across credit instruments; equity instruments; uncorrelated funds, and real assets, so we have no great dependence on equity markets alone.

Where we do choose to invest in stocks (as opposed to feel compelled to chase them higher), we only see advantage in favouring the ownership of businesses that offer compelling valuations to prospective investors.

In Buffett’s words, we spend a lot of time second-guessing what we hope is a sound intellectual framework. Examples:

  • In a world drowning in debt, if you must own bonds, own bonds issued by entities that can afford to pay you back;
  • In a deleveraging world, favour the currencies of creditor countries over debtors;
  • In a world beset by QE, if you must own equities, own equities supported by vast secular tailwinds and compelling valuations;
  • Given the enormous macro uncertainties and entirely justifiable concerns about potential bubbles, diversify more broadly at an asset class level than simply across equity and bond investments;
  • Given the danger of central bank money-printing seemingly without limit, currency / inflation insurance should be a component of any balanced portfolio
  • Forget conventional benchmarks. Bond indices encourage investors to over-own the most heavily indebted (and therefore objectively least creditworthy) borrowers. Equity benchmarks tend to push investors into owning yesterday’s winners.

In the words of Sir John Templeton,

“To buy when others are despondently selling and sell when others are greedily buying requires the greatest fortitude and pays the greatest reward.”

So be long “pretty much everything”, or be long a considered array of carefully assessed and diverse instruments of value. It’s a fairly straightforward choice.


Riots break out in Singapore. Think your country is immune?

shutterstock 137895923 150x150 Riots break out in Singapore. Think your country is immune?

December 9, 2013
Santiago, Chile

Mohamed Bouazizi. It’s not a name that means much to most people. But you’ll recall his story.

Frustrated with the absurd amount of regulation and corruption that prevented him from being able to put food on the table for his family, Bouazizi was the 26-year old Tunisian fruit merchant that set himself on fire in 2011.

In doing so, all the pent up frustration across the Middle East and North Africa erupted all at once; the entire region immediately plunged into multi-year revolution which became known as the Arab Spring that has since toppled a number of governments.

Like individual people, societies have their own breaking points. They build up anger and frustration for years… sometimes decades. Then all it takes is one spark. One catalyst. And it all becomes unglued.

Just yesterday, a 33-year old Indian man got hit by the proverbial bus in Singapore’s Little India neighborhood. That was the catalyst. What transpired for the next several hours was a full blown riot… the first of its kind since 1969.

Several hundred rioters stormed the streets. They started off smashing the up the bus that was still on the corner of Hampshire Road and Race Course Road. Then they started throwing objects at the ambulance staff who were unsuccessful in extracting the man in time to save his life.

By the end of the evening, an angry mob had lit five police vehicles on fire, plus the ambulance, leaving the streets in a towering inferno.


The government immediately went into damage control mode trying to explain what happened. But the explanation is really quite simple.

Singapore has had years of tensions building. The wealth gap is growing like crazy. Wealthy people are becoming ultra-wealthy, while the majority of folks see the cost of living rise at an alarming rate.

Strong ideological and ethnic differences are boiling over. And backlash against immigrants, especially from certain countries, is becoming an acute and obvious problem.

These issues are commonplace. Ideological differences. The wealth gap and economic uncertainty. Immigration challenges.

They’re the same issues, for example, that have plunged much of Europe into turmoil, including the rise of a blatantly fascist political party in Greece.

And these same issues exist, in abundance, in the Land of the Free… where a number of serious ideological divides are becoming obvious social chasms.

Printing money with wanton abandon. Racking up the greatest debt burden in the history of the world. Doling out wasteful and offensively incompetent social welfare programs at the expense of the middle class. Brazenly spying on your own citizens. These are not actions without consequences.

And if it can happen in Singapore– one of the safest, most stable countries on the planet, it can happen anywhere. Even in a sterile American suburb.