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ACCESS to International Asset Protection and Investment Opportunities

The Baby Boomer Emergency Retirement Repair Plan


How a Defined Benefit Plan Can Turn an Under-Funded Retirement Account into a Superfund
By Larry Grossman The first of the Baby Boomers turned 60 this year. I happen to fall right into the middle of this group (those born between 1946 and 1964), so Im pretty familiar with the financial challenges facing many of my peers. For many, right at the top of the list IS the fact theyre grossly unprepared for retirement. Survey after survey shows that many graying boomers still have no idea how much money theyll need to retire comfortably. Worse, in a country with a negative personal savings rate, millions are far behind on their wealth accumulation goals. If you or someone you know is headed for a severely under-funded retirement, fear not. Ill show you how you can create the retirement you wanteven if youve fallen far behind on building your nest egg. For the sake of argument, well use a number somewhere in between, say 75%. And well run though some examples. Lets assume you are 50 years old earning US$150,000. You want to retire at age 65 with 75% of your current income. Now without too many mental calculations, we are also going to assume youre making a 10% rate of return and youre putting away 10% of your income into a retirement plan. And, finally, we are going to actually assume Uncle Sam will still be around to take care of you so you can draw Social Security. Oh and one last thing, lets assume you have already accumulated US$100,000 in a retirement plan along the way. With this plan, you will run out of money when you hit age 72. Thats right. You lasted a whopping 7 years before you exhausted your savings! To meet your goal you have a couple of options. You can increase your rate of return from 10% to 18.5%. We know thats not going to happen! You can reduce your required income at retirement to 40% of your final years income. Hmmm, reducing your income by 40% probably doesnt sound like an appealing retirement after you worked your whole life. Or you can always delay retirement until age 76. Ouch! I dont think any of us want to work that long. And

In This Issue
July 2006 | Vol. 9 No. 7
Whats Wrong with the Fourth of July . . . . . . . . . . p. 3 Defensive Investing with Global Titans . . . . . . . . . . . p. 5 Worse than Worthless: 3 Asset Protection Scams Exposed . . . . . . . . . . . . . . . p. 7 The New Offshore BankNo Longer Just for Millionaires. . . . . . . . . . p. 9 Your New Country In a Matter of Months: Economic Citizenship for Sale. . . . . p. 10 The Scourge of Exit Taxes . . . . . . . . . . . . . p. 11 Four of the Best Ways to Profit in the Global Marketplace . . . . . p. 12 The World of The Sovereign Society . . . . . . p. 13 Global Correction to Create Eventual Bargains . . . . . . p. 14 TSI Portfolio . . . . . . . . . . . p. 15 Come Explore Four Ancient Regions of Wealth . . . . . . p. 16

Website Password
The password for the members- only section of The Sovereign Societys website at www.sovereignsociety.com is: zurich (no quotes).

What Do You Mean Im Broke?


The standard rule is you need 60% to 90% of your pre-retirement income to maintain a similar standard of living postretirement. Now that is a pretty wide spread, and it depends on whether you include things like radically increasing health care costs, energy prices and other necessary items.

A Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever. John Adams

A P U B L I C AT I O N O F T H E S OV E R E I G N S O C I E T Y

PUBLISHERS NOTE/WEALTH PRESERVATION

Massive Market Correction: A Midsummers Nightmare for the Unprepared


Its summertime again. And this year, in addition to the usual summer annoyances from mosquitoes to sunburns, global investors are also suffering through the worst market correction since 2002. But luckily none of us here at The Sovereign Society are panicking. In fact, The Sovereign Societys Investment Director, Eric Roseman, has been prophesying this correction for some time. And now that the correction has arrived, were doing a little defensive investing with the Global Titans Index. The Index includes all the large companies weve come to know and love from Johnson & Johnson to Coca-Cola, which look to soar as emerging markets and small cap companies sink. But even with the present markets weighing on our minds, were still thinking of the future. This month, Larry Grossman reveals how you can restructure your retirement plans to contribute as much as US$177,000 a year to your retirement fund. Plus, this month, Chairman John Pugsley comments on whats fundamentally wrong with the 4th of July celebration. Our Legal Counsel, Robert Bauman, reveals two of the last remaining havens on Earth where you can essentially purchase citizenship. And finally, Wealth Preservation and Tax Consultant, Mark Nestmann gives you the top 3 asset protection scams that could cost you your fortune (and your freedom if you go to jail)! In Wealth and Prosperity,

Continued from page 1: The Baby Boomer Emergency Retirement Repair Plan

lastly, you can increase contributions to 31% of your income. So clearly, most of us do not contribute enough for retirement. Please, max out on your IRA, SEP and or 401k contributions if at all possible. But now lets talk about the greatest savings plan available called a Defined Benefit Plan. I mentioned Defined Benefit Plans recently and was surprised to learn how few people know about them. I was even more shocked how little these life saving plans are actually discussed. A DB plan is a plan designed to pay a target level of benefits at retirement age. These benefits can be based upon a fixed percentage of your average salary, a flat monthly dollar amount or a formula based on years of service in a business. Most DB plans I have seen simply state the maximum allowable contribution limit based upon the participants age. Going back to the example we were using, a 50-yearold who wants to retire at age 60 can contribute approximately US$168,000 per year. Compare this US$168,000 to the garden variety retirement plans contributions. With a 401k, you can only contribute up to US$15,000 (and if youre over 50, you can add an extra US$5,000 a year to catch-up). SEP retirement plans are far more generous. You can contribute US$44,000 or 25% of your income up to US$220,000 to your SEP. But that still only leaves you with a maximum of only US$55,000 a year. Lets take a look at some real life examples.

P.S. If youre concerned about your retirement, Larry Grossman will be attending our next Permanent Wealth Protection Summit in October. Hed be happy to sit down with you and look over your personal retirement plan. See the conference corner page for more information.
Erika Nolan has been Executive Director of The Sovereign Society since its inception. She travels extensively and focuses on the development of new business partnerships and marketing opportunities in order to strengthen and expand the Societys network.

Contribute Even More Than US$168,000 a Year with a DB Plan


Recently, I met S.W. at a Sovereign Society conference. S.W. is a retirement planners dream client. Hes a 51-yearold, self-employed physician with no other employees.
(Continued on page 4)

The Sovereign Individual is published monthly (12 times a year) for $145 per year by The Sovereign Society, 5 Catherine Street, Waterford, Ireland. POSTMASTER: Send address changes to: The Sovereign Society, PO Box 925, Frederick, MD 21705. For information about your membership in The Sovereign Society, contact Member Services at 888-358-8125 or fax 410-2301253. Our e-mail address is: info@sovereignsociety.com. Managing Director: Erika Nolan. Associate Publisher & Marketing Director: Shannon Crouch. Editor: Mark Nestmann. Legal Counsel & Editor: Robert Bauman. Investment Director: Eric Roseman. Ecommerce Manager: Matthew Barrett. Membership Director: David Newman. Graphic Designer: Jennifer Costigan. Contact the editor through the Society or by e-mail at info@sovereignsociety.com. All contents of this issue are copyright 2006 by The Sovereign Society. All rights reserved: reproducing any part of this document is prohibited without the express written consent of The Sovereign Society. Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to 5 years in prison and $250,000 in fines. LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what weve learned as financial journalists. It may contain errors and you shouldnt make any investment decision based solely on what you read here. Its your money and your responsibility. The Sovereign Society expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All The Sovereign Societys (and affiliated entities) employees and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. Chairman John A Pugsley, U.S. Medical Expert Jonathan Wright, M.D., U.S. Council of Experts Mary Anne Aden, Costa Rica Pamela Aden, Costa Rica Colin Bowen, Isle of Man Michael Chatzky, U.S. Michael Checkan, U.S. Thomas Fischer, Denmark Neil J. George, Jr., U.S. Stuart Goldsmith, UK Ed Gunther, France, U.S. Larry Grossman, U.S. Adrian Hartmann, Canada Doug Hendler, Canada Ron Holland, U.S. Hubert Jongen, Belgium Rita Jongen, Belgium Christian H. Kalin, Switzerland Rainelda Mata-Kelly, Panama Michael Ketcher, U.S. Pierre Lemieux, Canada David S. Lesperance, Canada Kathy Lien, U.S. Leon Louw, So. Africa David Melnik QC, Canada Vince Miller, U.S. Brian OKane, Ireland Humberto Pacheco, Costa Rica Dr. Jose V. Pascar, Uruguay Norman Rentrop, Germany Eric Roseman, Canada Gideon Rothschild, U.S. Rick Rule, U.S. Derek Sambrook, Panama Boris Schlossberg, U.S. Timothy Scrantom, U.S. Marc Sola, Switzerland Dr. Erich Stoeger, Austria Robert Vrijhof, Switzerland Hans C. Weber, Switzerland William Woods, Bermuda Peter Zipper, Austria

THE CHAIRMANS CORNER

Whats Wrong with the Fourth of July?


By John Pugsley This year marks the 230th anniversary of the signing of the U.S. Declaration of Independence from Great Britain, and as is the custom, the anniversary will be feted with fireworks, flags and parades. Celebrating independence from foreign rule is not unique to America. A few years back, I celebrated the 4th of July, in Fort Lauderdale. Crossing to the Abacos the following day, I joined the Bahamians in celebrating their independence from the Brits on July 10th. I happened to be in Grenada on February 7th last year, as Grenadian soldiers and sailors, performed their annual ritual of deliverance from British rule. Its the same around the world. Mexicans celebrate independence from Spanish rule on September 16th. Zaire celebrates its independence from Belgium on June 24th. Algerians from France on July 5th. From the Ukraine to the Philippines, and from Vanuatu to Turkmenistan, country after country celebrates liberation with military bands, flags and enthusiastic crowds singing national anthems. ments formed to replace those toppled by rebellion consume their citizens lives much more than their predecessors did. Government is like the android in The Terminator: if the tiniest speck of it is left after its destroyed, it reforms itself. It doesnt matter what form of government is thrown off. One population celebrates when a benevolent king replaces a tyrannical king. Another, when a secular leader replaces a religious leader. Or, as in America, people celebrate when the monarch is deposed and the people elect their own ruler under the concept of a republic or democracy. No matter, it seems. Monarchy, dictatorshipcommunism, none have lasted. Even democracy hasnt solved the problem. Observing parliamentary elections in England, Rousseau observed: The English people believes itself to be free; it is gravely mistaken; it is free only during election of members of parliament; as soon as the members are elected, the people is enslaved; it is nothing. In the brief moment of its freedom, the English people make such a use of that freedom that it deserves to lose it.

Just a decade after the Declaration liberated individuals from one powerful central government, the Constitution created another.

Yet, to paraphrase Rousseau: Man frees himself, but everywhere he is in chains. If independence is cherished and celebrated worldwide, why isnt man free? Why do people rebel, free themselves from tyranny, then fall victim again, in an endless cycle? I submit the seed of the problem may lie within that great template for independence, the Declaration of Independence itself. No doubt you can quote its stirring words: We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. And then the muted but ominous conclusion: That to secure these rights, Governments are instituted among Men[W]henever any Form of Government becomes destructive of these ends, it is the Right of the People to institute new Government. New government? Aye, as Shakespeare would say, theres the rub. Consider the American Revolution. Just a decade after the Declaration liberated individuals from one powerful central government, the Constitution created another. And so it has been around the world throughout history. Today, govern-

Whats wrong with the Fourth of July? It celebrates a pyrrhic victory. People think they will be free if they exchange one set of rulers for another. Yet, it hasnt worked. The failure is people celebrate a nations independence from foreign rule, rather than their own individual independence from the rule of any other person. No man (or woman, Hillary) has a mandate from God or from the universe to rule over others, whether he or she be king, queen, czar, fuehrer, or president. No one is endowed with rights superior to anyone else. This is the true heart of the American credo. When the ultimate declaration of independence is drafted, tested and in place, it will not refer to the independence of one nation within a world of sovereign nations, but to the independence of each individual within a world of sovereign individuals. While nations will continue to pass in and out of the revolving door of independence and subjugation, a personal declaration of independence is for all time. When you make your declaration that you are a sovereign individual, that truly will be the day for remembrance and celebration.
John Pugsley is Chairman of The Sovereign Society and the author of many books on economics, investing and politics. John is also the editor of The Sovereign Society's elite investment trading service, Stealth Investor. 3

WEALTH PRESERVATION
Continued from page 2: The Baby Boomer Emergency Retirement Repair Plan

S.W. makes a nice living with just over US$350,000 per year. And S.W. was shocked when I told him he could be contributing approximately US$177,000 into a DB plan. Most of us wont be quite as lucky as S.W. Well either have other employees to deal with or we wont make his high income. But, amazingly, a DB plan can work nearly as well for most business owners. Here is another example:
Example: Owner Grabs 90% of the Businesss Retirement Funds Employee Owner Emp 1 Emp 2 Emp 3 Emp 4 Total Age 60 40 35 30 25 Comp. $205,000 $40,000 $35,000 $30,000 $25,000 Contributions $144,034 $7,074 $4,371 $2,707 $1,656 $159,842 % of Total 90.1% 4.4% 2.7% 1.7% 1.1% 100.0%

talking about the traditional mutual funds you see in a 401k were talking about a world of investments available at your finger tips. You can invest in real estate, both domestic and foreign, precious metals, foreign bank accounts, nonU.S. currencies and many, many other investments you have read about here in The Sovereign Individual. If properly structured, its actually quite easy to allocate and invest your retirement plan assets anywhere in the world. Plus, these assets grow on a tax-deferred basis until you start to withdraw them at retirement. That means the law of compounding work is working in your favor as you continue to save assets you would normally have to pay taxes on. A Defined Benefit plan allows you to maximize your retirement savings in a way no other retirement plan does. This plan reduces your income tax and gives you the freedom to invest your retirement plan anywhere in the world. If you are one of the fortunate ones who are in a position to implement a DB plan, I would urge you to consider it today. For more information on DB plans, including a custom designed plan for you, please contact my office for additional information.

Yes, the owner still has to pay out-of-pocket to cover his employees, but the owner still ends up with over 90% of the total contributions. And these are very simple examples. Far more complex plans allow you to target highly compensated employees while excluding others. These plans, called Tiered Defined Benefit Plans, let you assume different benefit levels for each participant. That means you can make greater contributions for some employees while minimizing contributions for others. This factor alone was once one of the biggest deterrents to DB plans. What does this mean to you? This means if you own your own business or can influence your retirement plan in any way, then it may not be too late to save for retirement with a defined benefit plan. Now that I have scared the heck out of you, lets talk about a DB plans other benefits.

A DB plan is the number one legal way to reduce your taxes (because) the contributions you make to your DB plan are all pre-tax.
Authors Note: The development and implementation of a custom designed retirement plan can be a complex task, as it is with all areas of financial planning, requiring a high degree of technical expertise. For the sake of simplicity in trying to explain a highly complex subject, I have made certain assumptions and have rounded numbers. A full explanation of this topic or any assumptions made are available upon request.
Larry C. Grossman, CFP, CIMA is one of approximately 1,500 CIMAs nationwide. He is also the Managing Director of Sovereign International Asset Management. In 2006, he established Sovereign International Pension Services to further help his clients liberate their retirement plans for greater asset protection and investment opportunities. He can be contacted at 727-784-4841. Email: lgrossman@worldwideplanning.com. Website: www.worldwideplanning.com.

Tax Savings & Global Investments


A DB plan is the number one legal way to reduce your taxes. Thats right I said the number one way to reduce your taxes. Just like any other retirement plan, the contributions you make to a DB plan are all pre-tax. So if the 50-year-old doctor S.W. contributes the full US$177,000 to his defined benefit plan, he only pays taxes on his remaining income. That means out of a US$350,000 income, he only pays tax on US$173,000. These defined benefit assets can also be invested virtually anywhere in almost any kind of investment. Were not just
4

GLOBAL INVESTMENTS

Defensive Investing with Global Titans


Tapping into the Worlds Best Brands for High Yield, High Value and Euro Diversification
By Eric Roseman Big might seem boring to most investors. But, increasingly, large-capitalization stocks are looking mighty attractive in the rough market environment weve been enduring since May. In fact, for U.S. dollar-based investors and euro investors alike, this is the best time since 1973 to buy global multinationals on the cheap. Large caps currently sell at a major discount to small and mid-sized companies. And as world markets continue to correct further, the biggest global brands should draw safehaven flows from nervous investors seeking stable and reliable earnings growth. There are two excellent ways to play this sector right now. Each enables you to snatch up global category leaders at good prices and collect healthy dividends. The European version of this investment also offers protection against a falling dollar to boot. compared to just 4% per year for the S&P 500 Index, or the broader market. And since the bear market low in October 2002, smaller companies have zoomed ahead with a cumulative 96% gain versus only 35% for the S&P 500 Index. But that trend is now history in mid-2006 as hedge funds and investors are dumping the worlds riskiest investments amid the worst reversal for global equities since April 2004.

Time to Get Defensive as Bull Fades


The worlds largest companies, based on their stock-market capitalization, havent looked this attractive since the late 1990s. Over the last 3.5 years, investors have neglected stable and reliable earnings (aka boring stocks) for the highflying emerging markets, small and mid-cap equities, real estate investment trusts (REITs), and commodities. But as the Federal Reserve, the European Central Bank and even The Bank of Japan either accelerate or begin a new round of monetary tightening to curb rising inflation, corporate earnings will be revised lower for 2007. Thats especially true for smaller companies, highly tied to the global economic cycle. Historically, small-caps are the first sector to feel the squeeze, a result of slowing global growth and rising interest rates. In this environment of risk reduction, portfolio managers dump high-risk equities and exchange market risk for predictable earnings growth from brand-name franchises. The StreetTracks Dow Jones Global Titans ETF is dually listed in New York and Frankfurt, and traded in dollars and euros, respectively. The Global Titans are the worlds 50-largest publicly-traded companies and include many of the worlds greatest companies. As of June 1, 2006, the Global Titans traded at 14 times historical earnings and yield an effective 2.7% dividendthats 35% cheaper than the MSCI World Index based on price-to-earnings and 32% more in dividends. When you buy this cheaply valued blue-chip portfolio, youre getting world-class diversification because all of these great companies derive a significant portion of their gross sales revenues from international markets. Companies like Coca-Cola, Nestl of Switzerland, Toyota Motor Corporation, Roche Holdings, and Samsung Electronics are just a few of the many brand-names deriving a hefty chunk of their sales from fast-growing foreign economies. And talk about mega-market caps! The smallest Global Titan is Dell Computer at just US$58.4 billion. The indexs largest company is Exxon-Mobil, a beneficiary of the big boom in energy prices this decade commanding a fat US$376 billion market capitalization. Exxon-Mobils market capitalization,
5

Bigger is Better in 06
Over the last three years, small and mid-sized stocks around the world have literally gone ballistic while large-cap stocks have lagged (see enclosed chart). This divergence has recently reached its highest level since 1973, when large-caps began their long-term decline relative to small stocks. Since 1926, large-cap stocks have outpaced small-caps during only one performance periodfrom 1926 to 1957. Small Caps Have Soared While Cheap Large Caps Lagged
80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40%

Small stocks have skyrocketed since 2002, but now look expensive compared to large-caps.

Source: MSN Money


Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 May 06

May 01

S&P 600 Small-Cap Index versus S&P 500 Index (Large-Caps): May 2001 to June 2006 ---- Large Caps Small Caps

Small stocks have historically posted fatter returns than their large-cap cousins for several reasons. Namely, short stocks provide faster growing corporate earnings and greater agility to meet the changes facing the global marketplace. Since 2001, small stocks have gained 12.6% per annum

GLOBAL INVESTMENTS
in fact, exceeds the total gross domestic product value of many emerging market countries! The Dow Jones Global Titans Index currently holds 19.8% in financial services; 17.4% in health care; 16.4% in energy; 14.5% in information technology, and 11.8% in consumer staples. The remaining 20% are diversified across cyclical, telecommunication and consumer discretionary large-caps. Assets are heavily weighted towards U.S. companies with substantial foreign earnings exposure at 62% of the index, followed by 16.5% in the United Kingdom, 7.2% in Switzerland, 3.2% in the Netherlands, and 2.7% in Japan. late May. Valued at approximately US$96 million, the cashbased purchases are certainly a positive omen for future earnings growth. The average insider purchase in the United States is US$60,000. When two powerful executives spend almost US$100 million of their own cash as the stock hits a 52-week low, its worth noticing. But insider buying doesnt stop at Dell, either. AIG, the worlds largest insurance company by market capitalization, saw two insiders purchase US$200,000 worth of shares in late May following the market sell-off. Another high-value Global Titan, Johnson & Johnson, recently increased their dividend for the 43rd consecutive year, raising the latest annual payout by 15%. Many of the Global Titans have also raised their payout ratios since the bear market low of 2002, including stock buybacks, special cash distributions and even bold compensation plans for executives. At Coca-Cola, the worlds largest soft-drinks company, the Board of Directors recently voted to tie corporate compensation and options to performance targetsone of the first schemes now in place at a Fortune 500 company. Like all ETFs, the Global Titans in the United States and Germany are inexpensivecertainly much cheaper than actively-managed funds. At 0.5% per annum, a global investor accesses many of the worlds most profitable conglomerates, all in one convenient ETF.

A Falling Dollar is Bullish for the Titans


Over the last three years, the Dow Jones Global Titans ETF has gained 41.2% or 12.2% annualized. That performance figure is certainly not bad, but it badly trails the huge returns already generated for many international markets since the bear market low in October 2002. But as the market grows more defensive this year and the dollar continues to fall over the next 6-12 months, many of these Global Titans will log strong earnings growth as dollar-based exporters in the United States and Asia grow their market share. Lets not forget that in 1995the year the dollar finished its last secular bear marketthe S&P 500 Index derived more than 35% of its earnings growth from a falling American dollar. A weaker dollar does wonders for dollarbased multinationals, and I expect more of the same ahead of the next major U.S. dollar bear market. Global Titans Are a Buy
70 68 66 64 62 60
Jul Sep

The German Hub for ETFs


Exchange-traded-funds provide low cost indexing across sectors, countries and even commodities, while also levying much smaller annual management fees than actively-managed mutual funds. Over the long-term, ETF fees can save an investor a small fortune. The average actively-managed fund in the United States charges 1.47% per annum compared to just 0.35% for ETFs. The United States remains the epicenter of exchangetrade-funds with the S&P 500 Index, or SPIDERS, the home to US$50 billion in assets, making it the largest ETF in the world. ETFs in the United States managed US$296 billion as of December 31, 2005. The problem with U.S.-listed ETFs, however, is that all of these products are valued and denominated in a heavily indebted currency. The dollar remains in a secular bear market since 1971 when the Nixon administration effectively closed the gold standard. And since 1987, the dollar has plummeted more than 50% against the worlds hardest currencies. ETFs in Europe have boomed over the last six years. The Deutsche Borse Group in Frankfurt has emerged as the largest
(Continued on page 8)

Source: Globeinvestor.com

A declining dollar combined with a major shift in earnings momentum for large-cap stocks is very bullish for Global Titans.
Nov Jan05 Mar May Jul Sep Nov Jan06 Mar May

streetTRACKS Glb Titans E.T.F. (DGT-A) as of May 31, 2006

Although certainly not a guarantee to future profits, insider buying is usually a very bullish signal for investors looking to ride the coattails of several directors or executives. With many of the Global Titans now trading at multi-year or 52-week lows, its no surprise several companies insiders are stepping up to the plate and buying stock with cash. For example, Dell Incorporateds founder and chairman, Michael Dell, along with the companys chief executive officer, acquired a total of about four million company shares in
6

ASSET PROTECTION STRATEGIES

Worse than Worthless: 3 Asset Protection Scams Exposed


By Mark Nestmann At least once a week, someone contacts me to announce a new asset protection scheme, and with near-religious intensity, implores me to promote it. The schemes usually promise significant tax benefits and investment returns of 100% or more annually! In 20 years of studying asset protection methods, I have never found one of these schemes effective. Indeed, the vast majority of these plans are worse than worthless. In fact, some of these asset protection plans not only help you lose your protected assets, but can also land you in prison. Or help the IRS, rather than your creditors, seize your assets. Year after year, the schemes never really change. Only their names change. As one promoter is shut down, ten more take its place. Some of the scams originated more than 80 years ago and are still going strong! Thats not to say theres not a crying need to protect assets. The U.S. is by far the worlds most litigious society, with more than 50,000 lawsuits filed each week. But if an asset protection promoter tells you one on more of the following things, RUN (dont walk) away: (1) My plan will result in big tax savings. With the exception of asset protection plans involving insurance, annuities and certain retirement plans, asset protection planning is tax-neutral. (2) If you follow my investment advice, youll achieve great returns plus asset protection. Those who offer investment advice are seldom asset protection experts, and vice versa. (3) When you form this trust (foundation, corporation, etc.), youll achieve complete secrecy and total anonymity. Since most asset protection plans must be tax-neutral, this is a dubious claim, because U.S. persons are taxable on their worldwide income. Plus, most asset protection structures involve extensive IRS reporting requirements. (4) Youll maintain total control over your assets at all times. Virtually all asset protection techniques result in transferring legal ownership or control of assets to a third party. Thats one of the main reasons these are effective. If a promoter claims this isnt necessary, its near-100% certain youre witnessing a fraud.

The Most Commonly Encountered Asset Protection Scams


Nevada Corporations: Corporations are usually lousy asset protection vehicles for individuals. (In certain cases, corporations may offer businesses asset protection, although limited liability companies are often more effective.) Nevada corporations are the worst offendersnot because theres anything intrinsically wrong with them, but because of their promoters 25 years of false promises. Heres the form the pitch generally takes: Nevada is the only U.S. state that lets you use bearer shares, meaning you can anonymously transfer the assets those shares represent and no one really knows who owns your corporation. So, you can give the shares to Aunt Milly before you appear in court and testify under oath, I dont own the shares. And everyone, including your creditors, your creditors lawyers and the judge will believe you. First, its far from clear Nevada law even permits bearer shares. Since 1942, Nevada has required a transfer of stock between individuals, in order to receive recognition by the corporation, must be registered upon its books. That certainly sounds like registered shares to me! And creditors can subpoena your corporations books. Thus, simply handing Aunt Milly your shares hardly constitutes a change of ownership. And because stock shares are personal property, all rules, regulations and taxes which apply to personal property transfers also apply to bearer share transfers. So, assuming Aunt Milly DOES own the shares you gave her, delivering those shares will trigger a U.S. federal gift tax up to 46% of their fair market value. When Aunt Milly gives them back, another gift tax is triggered.

Pure Trusts: An 80-Year-Old Scam


These arrangements supposedly allow a person to transfer all their property into the trust, never pay taxes again, and secure asset protection. These scams are also called common law trusts, equity trusts, unincorporated business organizations (UBOs), liberty trusts, contractual companies, colatos, and unincorporated business companies (UBCs). These schemes seldom result in asset protection because the person funding the trust generally retains complete control over the trust and its assets, and there are serious tax problems with virtually all variations. You are the grantor so
7

ASSET PROTECTION STRATEGIES/GLOBAL INVESTMENTS


you directly benefit from the trusts property, and therefore you must pay all taxes from the trusts income or gain. But as you might expect, promoters claim no taxes are due, which leads to a near-inevitable confrontation with the IRS.
Continued from page 6: Defensive Investing with Global Titans

The Disconnected Offshore Trust Scam


By the 1970s, pure trusts had evolved into offshore trust schemes. Promoters claimed you could convey assets into an offshore trust, which disconnects assets from the U.S. tax system. Until 1976, there was some truth to this claim, because you could set up an offshore trust and defer the trusts income tax until the funds returned to the U.S. But the 1976 tax law made this almost impossible. But that hasnt stopped promoters from claiming you can save taxes with an offshore trust or foundation. In virtually every case, you cant. Offshore trusts can sometimes reduce future estate tax liability, but you wont save taxes during your lifetime. A recent scheme placed a foreign corporation between the grantor and the trust. The grantor funded the corporation, which in turn funded the trust. Promoters said this made the trust disconnect from the U.S. tax system. In all cases, the disconnect theory doesnt work. The IRS looks through the person or entity funding an offshore trust and determines where the funds originate. Thats you, if you sent the money to the promoter. You wont save taxes and when the IRS finds out, they can prosecute you for tax evasion, tax fraud and perhaps even money laundering. As with domestic pure trust scams, many offshore trust scams let you retain control over its assets, often by serving as trustee. Youre advised to resign as trustee at the first sign of trouble, and transfer control to an offshore trustee. Judges have thrown many individuals in jail who followed this strategy. These tax strategists are only released after their assets are repatriated for their creditors. As you can see, asset protection scams have a long history. Its the mission of The Sovereign Society to show you the right way to protect your assetsand teach you how to avoid the charlatans.
Mark Nestmann is president of The Nestmann Group, Ltd., a consultancy assisting high net-worth individuals with wealth preservation solutions. He is the author of many books and reports on privacy and asset protection. In 2005, he was awarded a Master of Laws (LL.M.) degree in international tax law at the Vienna University School of Economics and Business Administration. The former editorial director for The Sovereign Society, Mark now serves as a consultant to the Society. You can contact him at assetpro@nestmann.com or visit his Web site at www.nestmann.com. 8

hub for exchange-traded-funds denominated in euros. Assets of German-listed ETFs have leapt 64% year-over-year through December 31, 2005, to 26.9 billion or US$31.9 billion. As of March 31, 2006 (latest data available), German ETF assets have grown a further 20% to 32.3 billion or US$39 billion. If an investor wants to play sectors, countries or even commodities, Frankfurt is by far the best and most liquid destination for exchange-traded products. A total of 117 ETFs now trade in Frankfurtall denominated in euros. As the U.S. dollar heads into the foreign currency basement once again this year versus most international units, indexing in non-dollar currencies continues to gain universal appeal among global investors.

And Now Introducing the Dow Jones Global Titans 50 in Euros!


Listed in Frankfurt, the Dow Jones Global Titans 50 SM EX is denominated in the worlds second most liquid currencythe euro. For dollar-based investors seeking not only global diversification across undervalued multinationals, the Global Titans offers a truly ideal hedge in a fundamentally stronger currency. In the last U.S. dollar bear market from 2002 to 2004, the euro rallied a cumulative 45.5%. The next dollar decline should be similar, if not greater. With one global investment in Frankfurt, you get low fees, world-class blue-chip diversification, dividends, low p/e multiples, and a great long-term investment denominated in the euro. Its time to buy large-caps in euros! Buy the Dow Jones Global Titans 50 at market in Frankfurt, Germany. The symbol is EX12. ISIN code: DE006289382. Please use the ISIN code for all trade executions. Visit the German Stock Exchange at http://deutscheboerse.com and click English at the top right corner of the homepage. Once there, click Private Investors and then Indices. When you get to Indices, click Funds located at the top right corner of the page and scroll down for Dow Jones Global Titans 50 SM EX.
Eric Roseman is the Investment Director for The Sovereign Society as well as founder and editor of Global Mutual Fund Investor (GMFI), a monthly newsletter that highlights the worlds best managed offshore funds. Visit www.globalmutualfundinvestor.com. Eric Roseman also founded The Sovereign Societys investment trading service, Commodity Trend Alert in 2001. Erics weekly newsletter, Commodity Trend Alert focuses on the best global commodity plays worldwide. For more information, visit www.commoditytrendalert.com.

OFFSHORE SOLUTIONS

The New Offshore BankNo Longer Just for Millionaires


By Kathlyn Von Rohr Years ago, you had to be very wealthy to meet the minimum balances and afford the banking fees for an offshore bank account. Not anymore. After dramatic changes in international banking and Internet communications, you can secure a relatively modest offshore account, as your quick, inexpensive entry into the world of foreign investments. And while some nations, like Switzerland, may ask for high minimum deposits, others are relatively low. An offshore bank account in the right jurisdiction provides layers of asset protection, as well as better investment opportunities. An offshore account shields your assets from greedy settlement-seeking lawyers or determined creditors who want to seize your wealth (in most offshore jurisdictions, they wont get past the local courts). access to the worlds best investments without being hindered by U.S. laws or SEC rules. You can buy attractive life insurance and annuity products unavailable in the U.S. and Canada. Tax savings may result from deferred investment earnings, capital gains or appreciation, rather than being immediately hit with taxable ordinary income. Choosing the right jurisdiction for your offshore bank account makes all these investment opportunities possible. Heres a quick look at three top jurisdictions where you can secure an affordable offshore account.

Austria: Constitutionally Guaranteed Privacy


After a tradition of banking privacy that lasted two centuries, Austrians finally wrote bank privacy laws right into their constitution in 1979. According to the constitution, bankers are forbidden to divulge your financial information to anyone. Austrian banking involves two way communication bank/client, client/bankthats it! declared Peter Zipper, Senior Vice President of Anglo Irish Bank in Vienna. Austrians even managed to hold onto their bank privacy when they joined the European Union in 1995. With Austrian bank secrecy protected by constitutional rank, the EU can try to persuade Austrians to change their policies, but the Austrians still have the final say. Plus, as far as safety goes, no Austrian bank has failed since 1939 when Hitlers anschluss took place. In the unlikely event that your Austrian bank did ever fail, an Austrian trustee would make sure your securities holdings and other assets were returned to you.

Better Investments, Less Taxes


Yes, your cash will be safer offshore, but one of the big pluses of an offshore account is your power to trade freely and invest widely in foreign-issued stocks, bonds, mutual funds and national currencies. You can diversify with instant

The Sovereign Society Offshore Convenient Account Partners include:


1. Austria: Anglo-Irish Bank. Contact Patrick Doherty Tel: +43(1)406-6161, Ext 186 Fax: +43(1)406-6161-150 Email: patrick.doherty@angloirishbank.at Web: www.angloirishbank.com Minimum Balance: US$100,000 (or equivalent) 2. Denmark: Jyske Bank. Contact Thomas Fischer Tel: +45-3378-7812 Fax: +45-3378-7833 Email: fischer@jyskebank.dk Web: www.jbpb.com Minimum Balance: US$25,000 (or equivalent) 3. Liechtenstein: SwissFirst Bank. Contact Julia Fernandez Weber, Hartmann, Vrijhof & Partners Tel: +41-1-709-1115 Fax: +41-1-709-1113 Email: whvp@active.ch Web: www.whvp.ch Minimum Balance: US$70,000 (or equivalent)

Denmark: Double-Digit Investment Opportunities


Denmark is not only one of the best nations to shop for international investments, but its continually ranked the safest place to bank by Moodys. Plus, Danish banking fees are also significantly lower than Austria and Switzerland. Denmarks second largest bank, Jyske Bank, is internationally known for their unequaled investments and the management of those investments. Just this spring, Global Investor magazine named Jyske Bank the best performing European Equity Fund Manager in Europe. And its no wonder. Just in 2005, Jyske Bank had five equity funds yield
(Continued on page 13) 9

THATS THE WAY IT LOOKS FROM HERE

Your New Country in a Matter of Months: Economic Citizenship for Sale


By Robert E. Bauman, JD I often get questions concerning how to acquire dual citizenship and the second passport that comes with it. Folks want to know how it can be done, and why they should consider it. I start by assuring them that dual citizenship is legal under American law, as it is in many nations, and that the U.S. Supreme Court upheld this right in several cases decades ago. And of course, if the person is interested in expatriation, the formal act of surrendering U.S. citizenship (also a legal right), I explain that they certainly need a second citizenship to avoid becoming a man (or woman) without a country, a modern day version of Edward Everett Hales disturbing novel from 1917. A second nationality is a hedge against unforeseen events. It provides the option to legally reside and work in another country that may offer tax advantages, although this is of limited benefit to U.S. citizens. (If you are a U.S. citizen or green card holder, you are still accountable to Uncle Sam when it comes to reporting your taxes, no matter where you live.) Most countries require a foreigner to become a resident and live there for an average of five years or more before they are granted citizenship. But there is a quick route to a second passport in just a matter of monthsbut it will cost you dearly. Its known as economic citizenship and only two sovereign nations sell it, both tropical island tax havens in the Caribbeanthe Commonwealth of Dominica and St. Kitts/Nevis. and permanent residence, if desired. And both countries are offshore tax havens.

Become a Saint Kittian or Nevisian


St. Kitts & Nevis is an independent English-speaking island state situated in the northern part of the Leeward Islands in the eastern Caribbean. The federation is made up of two islands, St. Kitts and the smaller Nevis, separated by a channel two miles wide. It is a former British colony, a member of the British Commonwealth of Nations and the United Nations. It has a pleasant climate, particularly during the cool months from December to March. Humidity is relatively low, and constant northeast trade winds keep the islands cool. St. Kitts & Nevis offers good opportunities for investors and manufacturers. The workforce is well-educated, Englishspeaking and friendly. Other advantages include tax breaks of up to 15 years, repatriation of profits and the possibility of tax-free entry of produced goods into the U.S. market. Substantial European import benefits also apply. There are no income taxes and no net wealth taxes in St. Kitts & Nevis. St. Kitts & Nevis labels their instant citizenship plan, Citizenship-by-Investment Program. To qualify for citizenship, the government requires a real estate investment of at least US$250,000. The islands are an attractive place to own real estate, and there are some excellent real estate developments approved under the program. The new citizen is not required to spend any set period of time on the islands each year. Alternatively, there is an option available to purchase government bonds. Instead of real estate, one can purchase US$250,000 equivalent in EC$ (Eastern Caribbean currency) Literacy Month 10-year Treasury bonds. Details of this program are not yet final and no date has been set for the next bond issue. Additional costs include official government fees of US$35,000 for a single applicant, plus US$15,000 for each dependant. There are also application/professional fees of US$15,000 (same as with Dominica) per application and a US$2,500 due diligence fee per adult applicant. They require a reasonable amount of documentation for the application, and the application procedure itself is fairly simple. The St. Kitts & Nevis passport is relatively well regarded since only a relatively limited number of passports have been issued under this citizenship-by-investment program during

Escape from America


Using the excuse of drug wars and anti-terrorism, plus imposing excessive taxation, government controls on private capital and travel restrictions are becoming more prevalent around the world. Smart people of wealth naturally are seeking alternatives that allow them to protect their assets and income and to travel freely throughout the world. And, in the case of the United States, the only way to escape from taxes is to end your citizenship. Two Caribbean jurisdictions offer economic citizenship under government-sponsored investment laws. These nations want to create jobs, accelerate resort development and grow their tourist industries by bringing in more money. The laws provide a foreigner with instant citizenship, a new passport,
10

THATS THE WAY IT LOOKS FROM HERE


its nearly 20 years of existence. As a result, St. Kitts & Nevis citizens enjoy a passport with a good reputation and good visa-free travel. For example, passport holders still have visafree access to Canada. Visa-free travel throughout continental Europe is also available by combining St. Kitts & Nevis citizenship with a residence permit in European Union countries. Option, the applicant pays US$100,000, which qualifies the applicant, his or her spouse and two children under 18 years old for citizenship. An additional US$25,000 per child is required for each child under 25 years old. Under the Single Option, a single applicant pays US$75,000. In addition to the above additional application, agent and registration fees amount to approximately US$2,200. There is also a US$5,000 due diligence fee per person. Further information on each program: St. Kitts & Nevis: www.henleyglobal.com/stkittsnevis.htm Dominica: www.henleyglobal.com/dominica.htm You may contact a member of The Sovereign Society Council of Experts, Mr. Christian Kalin, Executive Director, Henley & Partners AG, Kirchgasse 24, 8001 Zurich, Switzerland. Tel: +41 44-266-2222; Web: www.henleyglobal.com; Email: chris.kalin@henleyglobal.com. The Passport Book covers second passports in detail. More about the book at LINK: www.agora-inc.com/reports 190SGOPS/W190D342.
Robert Bauman is Legal Counsel for The Sovereign Society and editor of The Sovereign Society Offshore A-Letter. A former member of the U.S. House of Representatives from Maryland, he is a graduate of the Georgetown University Law Center (1964) and the School of Foreign Service (1959).

A Passport of the Commonwealth of Dominica


Dominica is often called The Nature Island of the Caribbean. Its a small, beautiful island located in the eastern Caribbean between the French islands of Martinique and Guadeloupe. Independent since 1978, Dominica is Englishspeaking and a member of the British Commonwealth. It has a Westminster-style parliamentary government, free elections and peaceful transfer of power. There is a strong currency and almost no crime. Unlike some other states offering economic citizenship, Dominica has a good reputation. The economic citizenship program has operated successfully since 1991, and it is based on a solid legal foundation in the Constitution of Dominica. A limited quota of applications has been set by the government. There are now two options for obtaining citizenship: a Family Option and a Single Option. Under the Family

The Scourge of Exit Taxes


While emigration, the right to move freely among nations, is a basic right confirmed by the UN Charter and in international treaties, many countries try to impose emigration (exit) taxes in an effort to preserve tax claims over citizens who leave. The most brutal of all such taxes can be traced to Nazi Germany when all the assets of Jews lucky enough to escape were confiscated. Apartheid South Africa imposed a similar levy on whites who left to live abroad. But democracies do it too. The most sweeping tax is a general exit tax, the sort of proposal that, fortunately, recently was rejected by the U.S. Congress. That scheme provided that if a U.S. person surrendered their citizenship for tax-motivated reasons, they would be taxed on all unrealized gains on the fair market value of their entire estate. This tax grab allowed, generously, a US$600,000 exemption. How anyone could pay such a huge tax is anyones guess in practice, most expatriates would be forced to liquidate much of their wealth to pay it. The only way to avoid paying the tax would be to post a bond equal to the tax liabilityor to elect to continue being taxed as a U.S. citizen, (or to sell all your assets before you ended your citizenship). If this Draconian plan had become law it would have applied not just to wealthy Americans, but also to hundreds of thousands who are dual nationals: persons born abroad to a U.S. parent or born in the U.S., many of whom live outside the United States. The proposal would also catch hundreds of thousands of wealthy U.S. resident aliens (green card holders) who are not U.S. citizens. Only Canada imposes an exit tax similar to the proposal rejected by the U.S. Congress. It applies when a long-term Canadian resident becomes non-resident for tax purposes. Since Canada (along with virtually every other country, with the exception of the U.S.) imposes taxes based only on physical residence, and not citizenship, Canadians do not have to give up citizenship in order to escape taxes. They can just move and live offshore. A limited exit tax, which many EU nations levy, extends only to certain kinds of property; typically securities. Another form of emigration taxation is extended income tax liability. Your former country taxes you even though you no longer live there. Many EU countries, Canada and the United States try to impose tax on this basis. The U.S. makes a ten-year claim for taxes when a U.S. person ends citizenship. Exit taxes by their nature impede the right to move freely. On this basis, in 2004, the European Court of Justice struck down a relatively mild French exit tax. That decision probably nullifies the exit tax regimes of all EU members. The U.S. Congress, however, may be moving in the wrong direction. Its possible an American exit tax will become law in the next few years, perhaps sooner. U.S. citizens considering expatriation as a tax saving measure may only have a short time to act. Think about it!
(This is adapted from Mark Nestmanns masters degree thesis, Change of Residence by Natural Persons in Light of the EC Freedoms, published in Aigner/Loukota, Source versus Residence in International Tax Law [Linde 2005.])

11

BEHIND THE TRADING LINES

Four of the Best Ways to Profit in the Global Marketplace: Global Mutual Funds, Currencies, Commodities, and Small Caps
By David Newman You wont find a lot of The Sovereign Societys investment recommendations in Money magazine. You cant read about our best performing offshore funds in Wall Street Global. And youre not likely to read about our best way to play the Japanese yen against the British sterling even on the front page of the Financial Times. Thats because our investment experts tend to stray away from the mainstream media. Instead they dig deeper to discover the unpublicized investment opportunities. They often seek out undiscovered trends your broker cant even predict. And our investment editors are doing it again this month.

Small-Cap Stocks & Commodities Completely Off Your Brokers Radar


And there are other great ways you can play the Canadian dollar. You can play it indirectly by owning a good Canadian stock. And thats just what John Pugsley is recommending to readers of his trading service, Stealth Investor. John is extremely bullish on natural resources. He thinks certain junior resource Canada companies can give you a double bang for your buck, appreciation for your stock and appreciation of the currency. I cant name Jacks current gem of a small cap because he often recommends such micro-cap stocks that could double or more in a very short time (especially if every Sovereign Society member bought them), and thats why he limited the excellent service to 500 subscribers. Visit www.stealthinvestor.com if youre interested in becoming one of those 500 members. Fortunately, we happen to have Eric Roseman on staff. Like Boris and Kathy, hes bullish on the Canadian dollar. Not only that, Eric is Canadian and, of course, hes long-term bullish on select Canadian commodities. In fact, in 2001, he founded the immensely popular and remarkably accurate Commodity Trend Alert trading service just to follow those types of commodity trends. One of his favorite Commodity Trend Alert Canadian resource stocks is Strategic Energy Fund, which youll find in your Sovereign Society portfolio. This energy fund just corrected, giving you a great opportunity to buy more. If youd like to play commodities more actively, you might want to check out Commodity Trend Alert because Erics other 23 long positions are averaging 124% right now. Thats even after the recent massive correction! And thats just an average. Eric has shown readers profits of 77%, 99%, 129%, 146%, and up to 966%. Search www.commoditytrendalert.com for more details. Keep an eye out for this section in future issues. Well snatch one or two of the best investment ideas from the editors of The Sovereign Society weekly investment trading services and give you a brief glimpse. Until next month, keep your ear to the investment ground
David Newman is The Sovereign Society's Membership Director. He's dedicated to helping you make the most of your membership. Call him today at 561-272-5332 ext. 118 or email him at dnewman@sov-soc.com.

Double and Triple-Digit Investment Opportunities in Currencies and Funds


For example, at our editors recommendation, select subscribers sold the Laurentian Bank for a sweet 37% profit back in April after only 14 months. This is an example of what Eric Roseman recommends every month in Global Mutual Fund Investor. In his May issue, Eric also gave subscribers a detailed chart of how they should diversify their portfolios, with the majority in hedge funds (a full 30%). He also warned his subscribers of the inevitable correction coming (which we all felt in mid-May). Check out www.globalmutualfundinvestor.com for more information. Every month in this section, Im going to give you a glimpse at Erics best offshore mutual fund picks. And Ill also tell you about the best way to trade currencies right now. There are no better traders to ask than The Money Traders editors, Kathy Lien and Boris Schlossberg. As we went to print, Kathy and Boris had just picked eleven currency trades in a row for The Money Traders subscribers. And over the past year, FX Magazine rated Kathy and Boris the #1 currency traders for a three-month period twice. One of the currencies Kathy and Boris are bullish on longterm is the Canadian dollar or loonie as its called in the trade. Right now its at US$0.89. Boris and Kathy expect that the Canadian dollar will shoot up higher than the U.S. dollar in the next 12-24 months. You can trade that directly in the currency spot market. You can play that without leverage or play it aggressively with leverage where a 10% move could result in 100% profits for you. See www.money-trader.com for more information.
12

THE WORLD OF THE SOVEREIGN SOCIETY

The World of The Sovereign Society


Decoding The Sovereign Society Members Only Website
If you ever have a question about who we are or what we do here at The Sovereign Society, you can quickly find the answer to just about any question on our website. But with so much content on our constantly updated website, wed like to point you in the right direction of our members only content and help you decode what each section entails. To access the members only sections, go to our homepage at www.sovereignsociety.com and then look for the members tab at the top of the page. Click on your desired section (see below) and then log in. bank, where to set up your account, the type of account thats right for you, and even important information about banking fees. White Paper Reports: Updated regularly, this currently includes 10 free reports for you to read at your leisure including 70 Days to Empty; Fab 4: The 4 Best Offshore Havens in the World; Amazing Annuities; and many more.

A Brand New Section: Membership Handbook


As one of our valued Sovereign Society members, youre constantly receiving information from us. Ever wish we provided a manual so you could keep the basics straight? Now you have one. The How to Protect Your Assets and Grow Your Wealth: The Sovereign Society Handbook is now available on the website. This handbook allows you to become a more informed Sovereign Society member. You can use this handbook to Maximize your earning potential with The Sovereign Society's "Rules of Thumb" for investing Discover which conference fits your particular financial situation Take a closer at each of our investment trading services Find out how The Sovereign Society all began. Check out the new Membership Handbook today by visiting www.sovereignsociety.com/login.php?nid=1684.

Members Only Sections:


The Sovereign Individual: Read all past issues of The Sovereign Individual, with all their wealth preservation recommendations, investment advice, residency and visa information, and privacy protection ideas. Portfolio: Check out how your Sovereign Society investments are faring in this current turbulent market. Your Council of Experts: Contact any member of our council of experts for your personal financial questions with our updated council of experts rolodex. Your Offshore Convenient Account: Find out which offshore bank is right for you, how to choose an international

Continued from page 9: The New Offshore BankNo Longer Just for Millionaires

more than 40% (with returns of 42%, 41%, 51%, 44%, and 60%). But Denmark doesnt offer the same level of banking privacy as Austria or Switzerland because theres no bank secrecy law. And at the end of each year, under the EU tax directive, all Danish banks must turn over clients information to the Danish tax office, which is free to share that data with foreign tax authorities.

matter how large. However, this level of sophisticated asset protection doesnt come cheap. Liechtensteins banks have no official minimum, but they try to attract high net-worth individualswhich means fees are high. So as you can see, even with higher fees, banking offshore can definitely pay off in the end (sometimes in double-digit returns). You can bank in regions where your bankers are bound by law to keep your assets safe. You can maintain a level of complete financial privacy where no onefrom exspouses to creditors to settlement-seeking lawyers can discover your assets. Plus, you can keep your wealth in a host of currencies to protect yourself should your native currency ever plummet. Everyone should have some money outside their home countrys banking system. Even if its just as a safety net. You never know when you might need it.
Kathlyn Von Rohr is the new managing editor of The Sovereign Society. She manages the content of both The Sovereign Individual and the daily Offshore A-Letter. 13

Liechtenstein: Iron-clad Asset Protection with Safe-Haven Currency Options


Liechtenstein, a tiny independent enclave nestled between Switzerland and Austria, is a banking haven in its own right. This Swiss neighbor uses one of the safest currencies in the world: the Swiss franc. Plus, Liechtenstein has a reputation of having even more bank secrecy than Switzerland. Bank secrecy may only be lifted by a local court order and Liechtenstein rarely recognizes other countries mandates. The Liechtenstein government also insures all bank accountsno

PORTFOLIO UPDATE

Global Correction to Create Eventual Bargains Buy Precious Metals and Energy on Intermittent Weakness
By Eric Roseman In May, The Sovereign Individual (TSI) portfolio suffered its worst monthly loss in over a year as global commodities and stocks plunged. The good news is we correctly prepared for a major decline two months agojust emerging markets and the majority of industrialized bourses posted significant losses. From a universe of 38 open positions, the TSI portfolio has posted a 95.3% total return based on our equally-weighted strategy. Returns include dividends, if any, and foreign currency conversions. This month, were pruning the TSI portfolio and selling two positions at hefty gains. The Jyske-Invest Emerging Markets Bond Euro Fund has gained a cumulative 61.3% in U.S. dollars since May 2003. With emerging markets coming undone since mid-May, its time to book our gains and close-out our fixed-income positions in this asset class. Effective June 1, TSI no longer holds emerging market bond positions, except Russias Mobile Telesystem, which pays a 9.75% yield and matures in November 2008. In May, this bond only declined 1%. On May 22, members received a special TSI Profit Alert to sell Indias Tata Motors ADR at a 72% profit since April 2005. India, the emerging markets flavor of the year, has corrected heavily so were ejecting Tata Motors, our last emerging markets equity position. and commodities, especially beaten-up gold and silver at these very low levels. As the U.S. approaches the end of this monetary tightening cycle later this summer or fall, the dollar will head sharply lower. Remember to sell dollars on any intermittent strength and add to your precious metals holdings.

TSI Best Buys for July


Security Dow Jones Global Titans Euro Strategic Energy Fund Symbol Exchange/ Domicile Gain/ (Loss) New Buyup-to 23.00

DE0006289382 Frankfurt SEF.UN Toronto USA NYSE

+3.75% C$13.50 +4.96% +101.44% $18.25 $30.00 $25.00 $32.00 $31.25

ProFunds Ultra Bear Service URPIX Goldcorp Merrill Lynch World Energy GG

LU0122376428 Luxembourg +14.46% Everbank USA +2.26% NYSE Zurich +6.22%

TSI Asian Currency Sandwich None Pall Corporation Zurich Financial PLL ZURN

+15.65% CHF 300

For Best Buys in July, TSI is heading to Frankfurt, Germany, for euro-denominated, low-cost global indexing. The Dow Jones Global Titans 50 SM EX exchange-tradedfund is the best value in the world right now among major market indices. Over the last five years, the average global blue-chip stock has gone nowhere. Yet this index fund, denominated in euros, offers a host of compelling high-value attributes, including a low multiple (13 times price-toearnings, 2.8% yield), while trading at a significant 35% discount to the MSCI World Index based on relative p/e ratios. The Dow Jones Global Titans 50 should hold its own as global money managers shift capital to defensive companies with reliable earnings. Over the next several years, blue-chip stocks should return en vogue as investors search for reliable revenues amid a slowing world economy. Theres no doubt Canadas Goldcorp is the best-managed gold-mining company this decade. Goldcorps average production cost is just US$180 per ounce. With every incremental rise in gold bullions price, her profits are multiplying. The current gold correction offers an excellent entry point for new and existing investors seeking exposure to this tremendous mining company. Add to your positions below US$30.

Global Correction Has Arrived


With global interest rates rising, inflationary pressures increasing and soaring input costs likely to affect earnings this year, its time to bury the hatchet and get defensive. From its five-year high in early May, the S&P 500 Index is off 7%. Historically, corrections imply an average 10-15% decline from index highs. This summer, further weakness for common stocks will eventually create some great buying opportunities, in emerging markets and natural resource stocks. Seasonal stock market weakness has now arrived and will most probably last until late summer or early fall. So were focusing on defensive global blue-chips, energy stocks, precious metals, and betting against further market declines with an inverse U.S. index fund. Also, with the Fed still raising interest rates this summer, the oversold U.S. dollar might enjoy a short-term bear market rally. Use any short-term dollar weakness to purchase foreign currencies
14

PORTFOLIO UPDATE TSI Portfolio


Investment COMMODITIES Anglo American ADR ASA Barrick Gold Bema Gold Bonavista Energy Trust Canadian General Investment Limited Canexus Income Fund Chicago Mercantile Exchange ENI Spa ADR Gold bullion Goldcorp Merrill Lynch World Energy Fund Class A US$ Merrill Lynch World Mining Fund Class A US$ Oppenheimer Real Assets Fund Class A Palladium Primewest Energy Trust Strategic Energy Fund U.S. Global Investors World Precious Minerals Fund INTERNATIONAL VALUE Aegon Diageo Keppel PALL Corporation SIPEF Tata Motors ADR (India) Zurich Financial AEG DEO K02 PLL SIP TTM ZURN NYSE NYSE Singapore NYSE Brussels OTC Zurich TSI TSI TSI TSI TSI TSI TSI 1/05 4/03 12/05 2/06 3/05 4/05 12/01 13.17 16.49 37.25 66.13 S$11.5 13.40 28.45 30.00 129.30 170.00 9.47 16.03 CHF 311.85 CHF 275.5 31.51% 93.77% 23.08% 6.22% 36.82% 71.70% 15.65% Hold Hold Hold Buy Buy up to $31.25 Hold Sold 5/22 Buy Buy up to CHF 300 AAUK ASA ABX BGO BNP.UN CGI CUS.UN CME E none GG LU0122376428 LU0075056555 QRAAX none PWI.UN SEF.UN UNWPX TSI TSI TSI TSI TSI TSI TSI TSI TSI TSI NYSE TSI Luxembourg TSI Luxembourg TSI USA TSI TSI Toronto TSI Toronto TSI USA OTC NYSE NYSE AMEX Toronto Toronto Toronto NYSE NYSE 4/04 2/00 2/00 8/02 3/04 11/05 2/06 4/03 11/03 4/04 1/05 9/05 2/04 8/03 1/05 3/04 5/01 5.79 14.89 15.28 1.02 C$13.65 C$19.52 C$8.90 47.10 28.53 428.63 14.87 20.40 23.80 5.11 175.00 C$15.36 C$12.52 20.32 19.34 60.32 29.77 5.32 C$35.50 C$25.50 C$7.51 433.32 59.37 630.50 29.70 23.35 50.51 8.12 358.00 C$32.87 C$12.81 28.93 250.69% 334.65% 104.19% 421.57% 271.57% 37.23% -10.18% 828.49% 126.54% 47.10% 101.44% 14.46% 112.23% 59.42% 104.57% 224.14% 3.75% 42.37% Hold Hold Hold Hold Hold Hold Hold Hold Hold Buy Buy Buy Hold Hold Hold Hold Buy Hold 2 for 1 stock-split Symbol/ ISIN Exchange/ Domicile Added Buy Price Price 5/31/06 Total Returns Advice Notes

Buy up to $675 Buy up to $30.00 Buy up to $25.00

Buy up to C$13.50

TSI 1/06

CURRENCIES, BONDS, & ALTERNATIVE INVESTMENTS TSI Asian Currency Sandwich (5 currencies) Man-AHL Diversified PLC Jyske Euro Emerging Market Bond Fund Mobile Telesystem 9.75%, 11/30/08 [USD] 100% Capital Protected Notes Based on the American Stock Exchange China Index Pioneer-Momentum Emerald PIMCO Foreign Bond Unhedged ProFunds UltraBear Investor Class Principal Protected Notes (Basket of Asian Currencies) GLOBAL EQUITY FUNDS iShares FTSE/Xinhua China 25 Index Fund Orbis Global Equity Fund Pictet PF-Biotech P Fund Polaris Global Value Fund AVERAGE RETURN BUY THE FOLLOWING NEW POSITIONS Dow Jones Global Titans 50 SM EX (euro) SELL THE FOLLOWING POSITIONS Jyske Bank Emerging Markets Bond Fund Euro Class; Tata Motors ADR. Notes: The TSI Portfolio is an equally-weighted strategy and does not include dealing charges to purchase or sell securities, if any. Taxes are not included in total return calculations. Total return includes gains from price appreciation, dividend payments, interest payments, and stock splits for securities listed on non-U.S. exchanges, total return also includes any change in the value of the underlying currency versus the U.S. dollar. Anglo-American ADR stock-split 2 for 1 on March 6, 2006; entry price reflects stock-split; Oppenheimer Real Assets Class A paid distribution of $0.04 per share on March 16, 2006; Class C paid $0.04 on March 16, 2006. Stop-losses: The TSI Portfolio maintains a 15% stop-loss on every stock and bond recommendation; stop-losses are not exercised for mutual funds. Sources for price data: Yahoo! Finance (finance.yahoo.com), Financial Times Portfolio Service (www.ft.com), TradeNet (www.trade-net.ch/EN), Jyske Bank Private Banking Denmark (www.jbpb.com), and Web sites maintained by securities issuers. DE006289382 Frankfurt TSI 6/01 21.47 21.47 New Buy Buy up to 23.00 FXI NYSE BMG6766G1087 Bermuda LU0090689299 Luxembourg PGVFX USA TSI TSI TSI TSI 8/05 1/06 11/04 1/06 60.54 94.46 211.40 16.20 72.88 99.40 240.91 17.60 20.38% 5.23% 13.95% 8.64% 95.26% Hold Hold Hold Hold Closed to investors Everbank IE0000360275 Ireland A0B726 Denmark XS0162126287 CAX BMG6198G3123 PFBDX URPIX CAQ AMEX Bermuda USA USA AMEX TSI TSI TSI TSI TSI TSI TSI TSI 3/06 2/04 5/03 3/04 12/05 11/98 6/05 4/06 34.36 50.21 108.00 109.69 9.11 102.80 10.47 16.52 9.43 33.60 64.94 158.70 104.00 9.52 206.28 10.36 17.34 9.70 2.26% 29.34% 61.34% 11.79% 4.50% 100.66% 0.92% 4.96% 2.86% Buy Buy SELL Hold Hold Buy Hold Buy Hold Inverse Index Long-term Buy

Long-term Buy Buy up to $18.25

TSI 11/05

15

CONFERENCE CORNER

Come Explore Four Ancient Regions of Wealth


Join Us for the European Banking Tour September 20-29

nce again, The Sovereign Society will tour four of the best banking and asset protection havens in the world: Switzerland, Austria, Liechtenstein, and Denmark. As you tour these majestic old-world nations, youll be joined by our top international financial experts, who will reveal their best banking and asset protection secrets during this nine-day event. This group of leading European experts will include our Convenient Account Program banking professionals and other preferred financial services providers including Thomas Fischer of Denmarks second largest bank, Jyske Bank; Peter Zipper of Anglo Irish Bank in Austria; Robert Vrijhof of Weber, Hartmann, Vrijhof & Partners; and Marc Sola of NMG International Financial Services. Among the European money secrets they will reveal to you Confidential Banking: the Swiss, Austrian and Liechtensteinian Way, where your assets are concealed from prying eyes under penalty of law. First Class Estate Planning: Learn how you can access the Liechtenstein-conceived and created financial vehicle that is completely creditor-proof and can only be accessed by your beneficiaries.

Secret Currency Investments: How you could make double-digit profits trading the nine highest yielding currencies in the world through a Danish bank. Tools to Retire Abroad: Little-known residency and retirement programs that can dramatically reduce your estate tax billand help you transform your dream of living or retiring abroad into reality. Taking Your Retirement Plan Offshore for asset protection, investment diversification and greater profits. Plus, youll meet and hear from European visa and residency experts, international tax attorneys, investment specialists, privacy experts, and more. While touring these ancient wealth havens, youll stay at the best European hotels and enjoy 5-star amenities in every city. Youll enjoy VIP treatment with dinner on an old steamboat cruising on the Lake Zurich, a tour of the art museum in Vaduz, a Gala Dinner event in Copenhagen, and much more. Unfortunately, The Sovereign Society can only accommodate 40 attendees for the European Banking Tour and seats are filling up fast. Call today to reserve your spot: 561-272- 0413 ext. 122. Or you can email conferences@sovsoc.com.

Hurry Early Bird Discount Ends August 1st

Shield Your Wealth from a Lifetime of Doubt in One Long Weekend


Join us for the Permanent Wealth Protection Summit, October 11-15, 2006 There will be no conference rooms, microphones or podiums at this event. Instead, you will gather at a 5-star resort, nestled in the Irish countryside, where you will meet one-on-one with our top asset protection experts. Our experts will meet with you privately to help structure your asset protection plan. This is only the second Permanent Wealth Protection Summit that The Sovereign Society has ever had and we expect Octobers summit to be just as successful as the first. We hope youll join us for a relaxing weekend, with plenty of time between your meetings to swim, horseback ride, golf, play tennis, and enjoy the splendor of Irelands countryside, all while ensuring your assets are preserved for generations to come. If youre interested in joining us, please contact Membership Director David Newman by phone at 561-272-5332 ext. 118 or email him at dnewman@sovsoc.com for more information.

Offshore Novices: Discover the World of Offshore Opportunities All At Once


The Offshore Advantage: An Introduction to the Offshore World, November 8-11, 2006 Interested in offshore banking but have no idea where to start? Does trading currencies or global securities sound exciting but you need some advice before trading? For the first time ever, The Sovereign Society is hosting a conference specifically designed to introduce you to the offshore world. Youll learn what an offshore trust really entails and the best place to set up one. Youll discover which banking havens are worth your time and the easiest and safest way to set up an offshore account. A panel of our top experts will be on hand to explain the basics for safely protecting and growing your wealth in the next year. Join us at the Sheraton Buganvillas Resort & Convention Center in Puerto Vallarta, Mexico, to begin your financial adventure. Email conferences@sov-soc.com for more information.

Please note: While investing or doing business offshore is perfectly legal for U.S. citizens and residents, there are a few legal formalities you should keep in mind. The most important of these is that you are responsible for paying taxes on your worldwide income. In addition, many types of offshore investments are subject to separate reporting requirements. Also, transfers of US$10,000 or more in cash or cash equivalents across U.S. borders must be reported, as well as the formation and funding of a foreign corporation, trust or partnership. While its easy to comply with some of these requirementssuch as the annual filing of the foreign bank account reporting (FBAR) Form TD F 90-22.1, other forms (such as those necessary to report a foreign trust relationship) are more complex. To assist you in complying with these more complex reporting requirements, we recommend the services of a qualified tax attorney.