Why a Second Passport Could Be the Wisest Investment You Ever Make

Today's comment is by Christian H. Kalin, a member of our Council of Experts and a partner at Henley & Partners, which are recognized as the world's leading experts in providing advice on the acquisition of alternative citizenship. The foreword is by one of his clients, T.S.

Dear A-Letter Reader,

"Five years ago. I am in the lobby of the Savoy hotel in downtown Zurich, Switzerland. After visiting my bankers, I have just made what would later turn out to be one of the most important decisions of my life.

I am instructing a specialized firm to proceed with obtaining an alternative citizenship for me through investment. For me, it is the first step to prepare for relinquishing my citizenship I was born with, and initiating a residence permit application in Switzerland.

Almost exactly one year later, I am once again in Zurich. I am now already a dual citizen, and I'm preparing for the ceremony that will, in a few hours, lead to handing over my passport that I've used my entire life to an Embassy employee. It was easy to decide to acquire another citizenship. Apart from the fact that my former citizenship cost me extra money in taxes, there are only advantages.

Why Would You Want to Move Abroad?

Citizens from All Walks of Life Look for Freedom

An Insurance Policy

Dual-Nationality Is a Foregone Conclusion in Today's Global Economy

Whatever your personal situation is, it will be worth considering these options.

CHRISTIAN H. KALIN, Partner
Henley & Partners AG
Kirchgasse 22
8001 Zurich
Switzerland
Tel: +41 44 266 22 22
Fax: +41 44 266 22 23
Email: christian.kalin@henleyglobal.com

EDITOR'S NOTE: Interested in acquiring your own second citizenship and the home of your dreams abroad? Find out how in our special two-page spread in the coming October issue of The Sovereign Individual. Don't receive our members-only newsletter? Click here to order the next 12 issues for our lowest cost ever..

Bernanke Blinks!

Staring down the gun barrel of the worst credit crunch since the implosion of Long-Term Capital Management in 1998 - and perhaps since the U.S. Savings & Loan crisis of the late 1980's - the Federal Reserve once again called on the old reliable reflation play yesterday.

Fed Chairman Ben Bernanke essentially said: "I love the smell of freshly minted money in the morning." Fire up those printing presses, and crank up the credit-choppers - helicopter-Ben is on the job!

In case you missed the fun yesterday afternoon, here's a recap:

Following up on the first appearance of the Plunge Protection Team about one month ago with a surprise half-point cut in the discount rate, the FOMC yesterday matched that easing with a 50 basis point cut of its own in the more closely watched Fed funds rate.

Saying that "the tightening of credit conditions has the potential to intensify the housing correction, and to restrain economic growth," the FOMC voted unanimously to rush to Wall Street's aid... er, that is... the economy's aid, by slashing a full 50-basis points off its benchmark lending rate now. In other words: Overreact now, and lose all credibility as an inflation-fighting institution in the process.

No surprise that along with across-the board stock market gains, investors also witnessed gold soaring above US$730 an ounce, oil crack US$82 per barrel (both on the way much higher in my view) and the U.S. dollar sink to yet another record low!

Indeed, all the Fed has succeeded in doing is to postpone the inevitable day of financial reckoning on Wall Street. It has bought some time, by issuing a new round of Bernanke Puts - but at what cost?

At its present rate of decline, the U.S. dollar, not so long ago the world's preferred currency, will more closely resemble the bank notes of a 1970's-era banana republic soon. The only difference is those countries south of the border at least had natural resource riches to prop their failing currencies back up.

Another tangible cost will almost certainly be paid in the form of much higher structural inflation down the road. For investors with portfolios top-heavy in U.S.-based assets, this represents a double threat to purchasing power and asset values from BOTH a sinking currency and the corrosive impact of inflation. It's a threat not to be taken lightly.

The Fed's move also has direct implications for your immediate portfolio strategy, and for the shape of the rally that's likely to follow. The shift back to reflating the bubble - any bubble - means the game is afoot once again. The yen carry-trade will no doubt swing back into action.

The U.S. economy is now likely to avoid recession, although housing will remain in its own private bear market, perhaps for several more years to come - just like tech shares (the previous burst-bubble class) have been laggards during the current bull market rise. The real action however is likely to be back in commodities and emerging markets, which should remain the asset class de jour!

In recent weeks, I've been noticing potential breakout moves developing in several natural resource sectors, and in select emerging market leaders. So I've been busy recommending a number of commodity-based ETF plays as well as re-recommending a way to play the world's fastest growing major economy, in my research services, Global Market Investor and Market Shock Trader.

Now that the Fed has given the green light to even more risk taking, it's time for us all to sharpen our pencils and add to our buy lists! Of course it will all end badly...eventually. It always does. But it should be one heck of a blow-off rally in the meantime. You may as well play it for all it's worth...

Hey, if you can't beat them, you may as well join them...or at least profit off them!

MIKE BURNICK, Senior Editor & Global Markets Analyst

P.S. To get all the details on my latest emerging market and commodity-based recommendations before the next big market move, sign up today for a risk-free trial of Global Market Investor, focused on ETFs with explosive profit potential. Or for even faster market action, take Market Shock Trader for a test-drive today.

Bonus Wealth

Tech-Stock Rally is at Odds
with Bearish Market Sentiment

Since the reemergence of the credit crisis in late July, the technology sector has been one of the few sectors remaining largely resilient to the market panic.

More precisely, semiconductor companies continue to report strong demand for their products. Intel Corporation is the latest entity to recently boost its Q3 guidance. That's bullish news for the world economy because technology, highly cyclical to economic trends, is in the midst of a mini-boom in the industrialized and emerging markets in 2007.

A Mini-Tech Boom Inside a Mega-Correction

In prior economic booms and busts, technology stocks responded with a high degree of correlation to broad-based economic trends. The last boom-bust cycle in the late 1990s notwithstanding, tech booms in the 1980s and 1970s all led to major price declines for sector stalwarts. At the times, recession fears mounted, and eventually resulted in periods of economic contraction.

But this time, recession fears, though rising since August, have not derailed the primary uptrend for sector leaders. Tech giants like Intel, Hewlett-Packard and IBM are still posting strong earnings. That tells me the demand for their products has remained unfettered by the bearish news still spewing out of Wall Street and across European money-markets.

The above chart on Intel, from late June to September 14, shows strong support for the world's largest semiconductor company by revenue, despite the 10% correction from peak-to-trough for global stocks from July 19 to August 16.

Intel's stock price has actually risen since June 30 - not declined - compared to a major hit inflicted across most sectors of the market since mid-July.

Technology stocks are still cyclical and any threat to global growth would have severely impacted their stock prices by now. The fact that this hasn't occurred is a very bullish sign for global economic growth and corporate earnings over the next 12 months.

To be sure, the ongoing sub-prime crisis and money-market tumult for mortgage-backed commercial paper will slow economic growth next year.

But despite all the damage done to the real estate sector, hedge funds, private equity and massive central bank cash injections since August, the Dow is just a few percentage points below its all-time high. And semiconductor stocks have actually risen over the same period.

Now that's a resilient bull - at least so far.

ERIC ROSEMAN, Investment Director