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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Wednesday, September 15, 2004 - Vol. 6 No. 176
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In This Issue:
* COMMENT: Ugly Duckling Becomes a Swan.
* OFFSHORE: Caymans Devastated. Bermuda Blast. British Virgin Islands & China. US Haven: Puerto Rico. Bahamas Taxes. Europe Biz Nixes EU Tax.
* WEALTH: Russian Suspicions. Canada Revenue Strike.
* PRIVACY & RIGHTS: Chicago Spies. U.K. Fingerprints Visitors. ID Theft.
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Our guest Comment is by Thomas FISCHER, director of Client Relations for Jyske Bank Private Banking, Copenhagen, Denmark, and a member of The Sovereign Society's Council of Experts.
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COMMENT: Ugly Duckling Becomes a Swan.
Dear A-Letter Reader:
In the financial barnyard, there's never been doubt about the pecking order. Depending on the world economy's temperature, equities and bonds take turns as the leaders. Currencies, however, almost always have played the lesser role of the investment 'ugly duckling'.
Considering the depressed economies of recent years and fluctuating returns on both equities and bonds, investors now are turning to new and alternative investment opportunities. They've learned the tough lesson that risk diversification is crucial to both a good night's sleep and the size of your bank account. In the hunt for alternatives, they're looking at currencies, which I think is developing into another desirable asset class. But will the ugly duckling of currencies finally come into favor in the financial markets? Are they a swan in the making, as many predict?
Currencies are never boring. Equities are traded in anticipation of rising prices, and their price never can go below zero. In the currency market theoretically there is no limit to how much one currency can depreciate against another and no inherent expectation of ups or downs. The more developed a nation's economy and institutions, the less likely its currency will 'go through the floor'. Central banks and global institutions (the IMF) usually are ready with a rescue. But the very nature of currency markets invite major swings. Liquidity is very high and trading goes on 24 hours a day. Uniquely, the currency market largely is unregulated, operating outside the national bourses.
The primary factors triggering currency fluctuations include the gaps between interest paid on various currencies, basic economic variations, political events, natural disasters, and not the least, supply and demand. Currency dealing is driven by securities trading and specula- tion and by commercial hedging of currency risks, so forces of market psychology are crucial to exchange rate movements. And technical analysis is also a factor, closely monitored by market participants.
Aa in Hans Christian Andersen's tale of the ugly duckling, currencies have suffered tremendously in their transformation into a financial swan. A few years ago the advent of the EU's euro was wrongly seen as the end of currency trading. And governments try to curb currency fluctuations, but usually fail in a free market.
Currencies stand out because they're not closely related to the swings of equities or bonds. This allows a clever investor to gain on the upswings what he loses on the downside. Put some of your assets in a bank deposit account in one or more currencies, and you spread your risk over several asset classes and still get a reasonable rate of interest.
Jyske Bank Private Banking in Copenhagen offers you the opportunity to gain advantage in the currency market with our special currency accounts and round-the-clock, 24/7 trading room. We welcome inquiries.
Thomas Fischer
Copenhagen, Denmark
E-mail: fischer@jyskebank.dk
Jyske Bank Private Banking, Copenhagen. LINK: http://www.jbpb.com.
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* OFFSHORE *
CAYMAN ISLANDS DESTROYED
GEORGE TOWN, Grand Cayman: Scene of mass destruction. LINKS:
http://quote.bloomberg.com/apps/news?pid=10000087&sid=apXIpr6BvqOA&refer=top_world_news
http://www.nola.com/newsflash/weather/index.ssf?/base/international-3/1095165544323920.xml&storylist=hurricane
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BERMUDA FINANCE MINISTER BLASTS REPORT
HAMILTON: Denies NY Times claim island is a tax haven. LINK:
http://www.theroyalgazette.com/apps/pbcs.dll/article?AID=/20040914/BUSINESS/109140070
* Study Finds US companies shifting profits offshore. LINK:
http://www.nytimes.com/2004/09/13/business/worldbusiness/13tax.html
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CHINESE INVESTORS USE OFFSHORE CORPORATIONS
KAIPING, China: British Virgin Islands (pop 22,000) is now the 2nd
largest source of direct foreign investment in China, after Hong Kong.
In 2003 BVI pumped US$5.78 billion into China, some stolen cash.
LINK: http://www.kentucky.com/mld/kentucky/news/9642882.htm
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AMERICA'S OWN TAX HAVEN
SAN JUAN: US companies boost their investments in Puerto Rico.
LINK: http://web2.innovationworld.net/biotechconnect/000508.html
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THE BAHAMAS FACE NEW TAXES
NASSAU: Interesting history of a tax haven's tax history. LINK:
http://www.thenassauguardian.com/sports/281433060904688.php
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EUROPEAN BUSINESS REJECTS EU 'TAX HARMONIZATION'
BRUSSELS: Tax competition, not same high taxes for all.
LINK: http://www. tax-news.com/asp/story/story.asp?storyname=17246
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* WEALTH *
RUSSIAN BANKS TO REPORT SUSPICIOUS ACTIVITY
Banks ordered to report information on clients. LINK:
http://www.russiajournal.com/news/cnews-article.shtml?nd=45470
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CANADIAN REVENUE ON STRIKE
OTTAWA: 22,000 tax collectors on rotating strike over wages.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17245
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* PRIVACY & RIGHTS *
CHICAGO UPGRADES SURVEILLANCE SYSTEM
250 cameras for use by emergency dispatch and police. LINK:
http://news.ft.com/cms/s/fb166284-0540-11d9-8f8e-00000e2511c8.html
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U.K. SECRET PLAN TO FINGERPRINT VISITORS
Prints to be stored, checked against international databases.
LINK: http://news.scotsman.com/politics.cfm?id=1071452004
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WHO IS TO BLAME FOR IDENTITY THEFT?
More British citizens targeted by ID criminals.
LINK: http://www.sundayherald.com/44650
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
* Bob Bauman, Editor * Daniel Aponte, Jr. Editorial Asst.
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