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Shake the Fear, Don't Let the Fear Shake You. FATCA Won't Ruin Your Wealth Protection Plan... Unless You Let It.

By Steve Emerick


When I first started with ASI, I sat alongside co-founder Glen O. Kirsch and listened as he spoke with clients. It wasn't long before I noticed how many of the conversations centered on the fear of gold confiscation.

Glen calmed their fears by confidently asserting that he did not think confiscation would ever happen, because it would cause more problems than it solved. Instead, he predicted the real concern should be the devaluation of the dollar and exchange controls.

Glen would always explain it this way... Imagine the U.S. dollar is a dog, and America is its yard. To keep the dog in the yard, you need to build a fence. That is what exchange controls are, a fence that keeps the U.S. dollar here in America. He asked clients not to give into irrational fears, but to buy gold for wealth protection and to diversify outside the dollar while they still could.

Glen put his reputation on the line daily, and his clients benefited. In his honor, I intend to do the very same right now, with respect to the fears caused by FATCA (Foreign Account Tax Compliance Act) and other financial reporting requirements.

FATCA has not changed our 3-legged stool philosophy that you must diversify your assets across currencies, across countries and across investments for wealth protection.3LeggedStoolarticle

Lately, we have all been inundated by pundits claiming that FATCA will be the end of the U.S. economy as we know it; that millions of dollars of our funds will virtually disappear; that this is a government created crisis from which we will never recover.

Whether they are right or wrong, what we believe is, FATCA notwithstanding, some of your money is safer abroad and will give you more options in the future.

Understanding FATCA.

On July 1, 2014, withholding of taxes on your offshore funds will start under the Foreign Account Tax Compliance Act (FATCA) of 2010. FATCA requires foreign financial institutions report to the IRS on foreign accounts held by U.S. taxpayers. It extends to reporting any foreign entity, including a trust or company, in which a U.S. taxpayer has a substantial interest.

If you are considering retirement in Mexico, Panama, Canada or anywhere outside the U.S., please note FATCA applies to the assets of expats as well.

FATCA's stated purpose is to combat tax evasion and improve tax compliance. From the time of its enactment, dozens of special agreements have been signed by foreign entities, institutions and countries to support FATCA. Some of those jurisdictions include long time tax and privacy havens like Switzerland, the Cayman Islands and Costa Rica.

FATCA has teeth.

The U.S. government can impose 30% withholding on all transactions concerning U.S. securities owned by non-compliant foreign institutions and governments. And, that's not the only reason foreign institutions will comply. U.S. banks must also report to the IRS on non-U.S. citizen deposits to prevent evasion by foreign nationals of their home country's tax laws. This is all part of a worldwide attempt to track tax dollars and curtail evasion.

The unintended consequence of FATCA can create de facto exchange controls, if we let it.

FATCA requires you as a citizen (also green card holders) to file a new form, 8938, with your 1040, if you have foreign holdings over a threshold of $50,000. Reporting is retroactive to 2010.

The minimum threshold for an unmarried taxpayer who resides within the United States (or a married taxpayer who resides within the United States and files a separate income tax return) is over $50,000 in value on the last day of the tax year or over $75,000 in value at any time during the tax year. These figures are doubled to over $100,000 and over $150,000 respectively, for married individuals who file a joint income tax return. Other reporting thresholds apply to United States taxpayers who reside outside of the United States.

The Internal Revenue Code has set up a web page so you can learn your obligations. If you would like us to send you a link to this site, please call 877-340-2250 and ask to speak to a Preferred Client Relations representative.

These new requirements are turning people off to foreign holdings and causing foreign financial institutions to reject the business of U.S. citizens to avoid bureaucratic hassles. Some financial institutions are closing doors to U.S. citizens out of compliance fears. They don't want to incur penalties if they comply incorrectly.

In fact, the way the law is written, domestic financial institutions are encouraged to over collect withholding taxes. When in doubt... collect 30%

Just as Glen predicted, the effect is the same as exchange controls. More money will stay in the U.S. out of 'regulatory revulsion,' without the government lifting a finger to impose direct exchange controls.

Don't let your fear collapse the three-legged stool of asset protection.

Much like the confiscation scares I lived through with Glen, the rhetoric can get scary. When the words being used are 'apocalyptic,' 'total economic collapse,' and worse, it can get to you.

Don't let it. Don't get me wrong, FATCA is a pain in the-you-know-what for institutions; it covers banks, pension plans, financial brokerages, you name it. It's also a pain for you, as your name, your highest balance and more will be reported to the IRS.

At ASI we see the unintended consequences of FATCA as simply further threats to your wealth that can stand in line behind our national debt, inflation, the devaluation of the dollar, irresponsible media reporting, trade deficits, and irrational exuberance of the stock market bubble.

Counter-intuitively, the more FATCA creates problems for our economy, the more we need to diversify offshore despite the compliance burden.

FATCA creates a disincentive for the investment of foreign capital in the U.S. This may be a $21 trillion mistake (the amount of foreign capital invested here). There have already been complaints about the withholding penalties from:

• The Japanese Bankers Association
• The European Banking Federation
• The Institute of International Bankers
• The Luxembourg Bankers' Association

A KPMG survey conducted in 2011 of very large mutual fund promoters in 12 countries found 6% might divest themselves of U.S. income and growth securities in their funds; 29% in the fixed income market and 26% in the equity market. They are watching the degree of compliance difficulty before deciding on divestment.

Many small and medium size foreign financial firms simply do not have the wherewithal to comply with tax withholding rules. They may need to pull out of U.S. securities as well. This may mean our economy grows weaker and becomes even more difficult to internationalize your portfolio.

One door closes, another one opens.

We know some of your foreign banks and money managers will reject your business. We are opening doors and keeping them open for you worldwide.

We are starting a series on privacy written by international asset protection attorney, Michael Chatzky and another series by scam and identity theft expert John Hemingway (pseudonym). The U.S. Government Accounting Office estimated more than 600,000 incidents of taxpayer identity theft in 2012 alone, a fivefold increase in two years. Anytime any legislation requires reporting of detailed information, there is increased identity theft danger. We want to prepare you to thwart the predators.

Solutions, not scaremongering, are our business. Together we will adapt to the changes with new tools for both on and offshore protection and privacy. If your assets are in the U.S., don't think they are not being reported.

About the only thing the government doesn't know about your finances is what you have buried in your back yard, and that's really not a good plan.

So where will you put your assets moving forward?

We have several opportunities for you:

Consider our Rare Tangible Assets program for uncorrelated assets with proven performance:

• Rare Coin Program (RCP) with Douglas Winter, the world's leading expert in pre-1933 U.S. rare gold coins, and
• Rare Stamp Program with Stanley Gibbons Ltd., the world's largest rare stamp merchant.

With rare stamps, not only do you diversify into the British Pound, but you also have two international storage options, (the Channel Islands and Hong Kong). In addition, we even have a special feature that will allow you to receive Hong Kong Dollars when you liquidate in the future. Call 877-340-2250 to find out how.

For your gold, silver, platinum and palladium holdings, there is nothing more convenient than ASI Precious Metals Direct (ASIPMD), our online metals trading platform. You get immediate access to a network of dealers who all bid for your business. ASI Precious Metals Direct provides 100% secure storage facilities in:

• New York
• Salt Lake City
• London
• Zurich
• Singapore
• Melbourne

Private international money management is available through our friends and we can guide you to the right ones by calling 877-340-2250.

If there ever was a time to call us and discuss precious metals, offshore storage, money management and Rare Tangible Assets, now is the time.

Your ASI Preferred Client Relations representative is on top of the current issues and ready to help. Call 877-340-2250 or send me an email to find out more.

Shake the fear. Don't let it shake you. Take the steps to Keep What's Yours!

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