Alan's Finance Blog

Exclusive Interview with Ron Paul Reveals Major Concern about U.S. Gold Supply

By Bob Bauman

Dear Sovereign Investor,

Yesterday I got a rare chance to talk to an old friend of mine who has by now become a household word to many concerned Americans — U.S. Rep. Ron Paul (R-Texas).

I first came to know Ron when we both served in the U.S. House of Representatives in the 1970s – and we almost always voted alike on the issues.

I am certain that most of you recall Ron’s 2008 presidential campaign and the surprising enthusiasm and support this avowed Libertarian was able to generate. While he did not come close to winning he received over $32 million in contributions, almost 99% from individuals — and he produced an army of true believers that is still around.

None of this surprised those of us who have known Ron for a long time, but his candidacy was a shock to the leftist elites and the liberal news media.

In my recent conversation with Ron, he made some startling revelations to me.

What Ron Paul Revealed
Exclusively in Our Conversation

He told me he is considering another campaign for president of the United States. “It’s something I think about every single day,” Ron told me.

Earlier this year, he won a somewhat surprising victory in the Conservative Political Action Conference’s (CPAC) presidential straw poll.

Political observers say that this two-time presidential contender could wreak havoc for Republicans if he decides to make a third-party or independent bid for president in 2012.

Ron cited an increased national awareness and new enthusiasm for his Libertarian views that he said resulted from his 2008 campaign. It will be a “tough decision” he said, but indicated that he thinks Americans are ready for a new direction in national politics.

Ron Paul’s Latest Demand May Send Gold Prices Soaring

What I found really interesting was that Ron called on the Obama administration to allow an audit of all government gold reserves. His goal is to determine their total amount and to see if there is official manipulation of gold prices.

Imagine what would happen to the price of gold, if true reserves turn out to be less than the stated amount.

Gold prices move the way most prices do – based on simple laws of supply and demand. If supply sharply declines, prices will soar. This could create a windfall for investors.

Earlier this year, Congress backed his call for an audit of the Federal Reserve. Chances are Congress will back his demand for the gold supply audit, too.

What an Audit Could Mean for the Dollar

If an audit showed the U.S. to have significantly less gold in reserve than stated, creditors world-wide may push hard for a new world reserve currency. They may demand that the U.S. increase its gold supply – a tough thing to do right now amid sky-high government debt.

Either way, the dollar will suffer.

Ron told me, “eventually the dollar is doomed” as the world’s reserve currency unless the U.S. government abandons its international “imperial” policies and leaves both Afghanistan and Iraq.

These are just a few highlights of our conversation. I recommend you listen to the full Ron Paul interview at

http://www.globalconferencecall.com/playback.html?m=sovsoc/conf84318_32013.mp3

Bob Bauman JD

Legal Counsel, The Sovereign Society

What Little Investment Means Christmas in July?

Enjoy the Gifts that Keep on Giving When
You Invest ‘Down Under’

New Zealand is an awkward place for an American at Christmastime, as I learned during a trip there this past December.

That’s mid-summer in the Southern Hemisphere, and families spend their holiday at the beach. Yet, all the winter trappings of Santa season are on display wherever you look. Really disconcerting.

I’m reminiscing now because it’s Christmas in July in New Zealand (where it’s now winter and, thus, oddly appropriate). And it has a summer fruit that’s ripe for the picking right now. I’ll explain…

Central bank governor Alan Bollard is playing Kris Kringle. His agency, the New Zealand Reserve Bank, raised interest rates for the first time in three years.

They pushed up the Official Cash Rate last month by 0.25% (or 25 basis points, to the hardcore finance crowd).

Small nudge, true. But the move means the land of Middle Earth is now on board with central bankers in Canada, Australia and Norway, who have also recently raised rates. They all sense what’s really going on with all this phony money sloshing around the world.

They all want to head off inflation before inflation takes the head off their economies.

For an investor like me (someone who globe-trots to find profitable opportunities outside America), this is fine news! Suddenly, New Zealand is back on the investment radar.

Anytime a stable, financially viable country raises its rates vis-à-vis my hometown U.S. dollar, I perk up.

New Zealand’s assets are suddenly more attractive. The interest-rate spread between the N.Z. dollar, or “kiwi,” and the greenback has widened.

This makes the kiwi more appealing – it is worth more and more of my dollars. And that means good things for my preferred global investments: dividend paying companies.

The way I see it, if the kiwi’s appealing, then kiwi dividends are even more appealing.

When an economy is growing (which a rate hike clearly hints at), then corporate profits are expanding.

When corporate profits expand, companies generally share the wealth in the form of bigger dividend payouts.

And larger dividend payments when the kiwi is gaining ground on the dollar equals more greenbacks when you bring your money back home.

Sounds pretty good to me!

Got Milk?

I’m not saying N.Z. stocks are suddenly up, up and away. The world remains a dicey joint.

Economic, market-based and politician (yes, you read that last one right) risks lurk around every corner. Sometimes they’re waiting in broad daylight with a big club to beat you over the head – particularly the politician risk (and particularly the U.S. politician risk).

That said, N.Z.’s baby step toward interest-rate normality means one thing to me as an investor … that it’s time to start mining this tiny nation for investment values before professional investors jump in with two hands groping for an alternative to the S&P 500 and the Dow.

Commodities – agriculture in particular – rule New Zealand’s economy.

Here’s a fun fact: Despite a Hobbit-sized land mass, New Zealand accounts for about 35% of the global dairy trade.

Kiwi cows are keeping Asia, especially China, fat and happy. In case you haven’t heard, dairy consumption is growing in Asia faster than you can say “cheese.”

And early investors in this sector are going to smile – all the way to the bank.

Kiwi interest rates will keep climbing and New Zealand’s commodities will gain a higher profile. And the best gains will come not to those who wait. Don’t be late to the party.

Now, this rate decision could definitely be a case of central bankers testing the waters.

Sure — maybe they just want to gauge how markets react and how the economy responds. The new rate-hike cycle may not go full force until fall. Who knows?

But whatever the case, the point remains the same: Institutional money will hit New Zealand sooner than later.

And I think you should be there first.

Look, N.Z. is not a huge market – just $50 billion or so. For comparison, Dow Jones Industrial Average component 3M Co. alone is $53.3 billion, give or take. An inflow of money into such a smallish exchange bears meaningfully on returns.

So, where would I be looking?

Yield, Baby, Yield …

I’ve been involved in New Zealand’s markets since 1995, and I can tell you the industries I’m nosing around include telecom, manufacturing, building materials, property, retail, healthcare and food.

N.Z. has some fine companies paying very attractive dividends – attractive like 4% to 9%!

So, I mean Attractive.

And these aren’t those loopy dividends that a troubled company is likely to axe in a couple of months. These are stable dividends paid by stable companies, whose stock prices just happen to be down these days because of that little global dustup we had.

I know some will grumble about “the consumer,” given the supposed near-extinction of that animal amid The Great Purging of the last few years. But N.Z.’s economy is looking up. Joblessness has fallen. Consumer sentiment is up, though consumers do remain cautious. Nevertheless, those are wonderfully divergent trendlines, given what the U.S. still struggles with.

And others will kvetch that higher interest rates are, in textbook terms, bad news for companies since rising borrowing costs pinch earnings. True. But coming off such low levels—the new rate is just 2.75%, after all—interest rates need to rise a good deal before hindering corporate growth and spooking investors.

Think about it this way: In the 1990s and the middle years of the last decade, rates in the US were in the 5% range … and down in N.Z. they were jumping around between the 6% and 8% range … and stock markets were whistling a carefree tune.

So I don’t have big fears that a new interest-rate cycle will suddenly clamp off profit growth and send N.Z. stocks back into hibernation.

For those who like the taste of kiwi—and those who’ve never tried it—now’s a good time to start digging in the dirt down under.

Until Next Time, Keep a Global View.

Jeff D. Opdyke
Senior Editor, The Sovereign Society

Regardez la Distraction, S’il Vous Plait!

Dear A-Letter Reader,

In French, it’s called ‘legerdemain.’

Scientifically, it’s called prestidigitation.

But we all know it from some point or another as ‘sleight of hand.’ It’s that old trick—namely the trick of speed and deception—by which a magician secretly and swiftly manipulates objects to complete his illusions.

But what happens when a magician’s hands are full?

Well, we all know there’s no such thing as magic—so something’s got to go…

Replace the magician with central bankers of 40 devastated countries desperate for credit, and you’ll get a glimpse of reality.

Central bankers have been engaging in such deep financial chicanery for so long that trying to make any sense of it all could either drive you insane or make you impossible to talk to.

And remember; I’m talking about almost all of the world’s central bankers, not just the ones you know by name…

Last summer, Latvia narrowly avoided a default in the legal sense of the word. Dubai passed off its obligations to a non-government subsidiary, a backdoor way of avoiding a sovereign default. Major countries have already turned to the printing press, relying on money printing as they always have in times of crisis.

In the U.S., Treasury auctions are increasingly comprised of assets either bought directly by the Fed, or acquired by the Fed through intermediaries a few days later. We’re hardly alone in this kind of activity.

We’re not seeing the whole illusion here—and that’s exactly what these magicians want.

But from what we have seen, accidentally or deliberately, it’s obvious it can’t go on much longer… at least under the current names… TARP, quantitative easing (which just ended at the end of March), tax breaks, and so on.

You can rest assured as one form of government intervention is relaxed, another one will either be implemented or will sit ready to be implemented if chaos ensues.

Same Playbook, Different Page…

The debt crisis is one that can continue a bit longer, but nobody knows for certain when and where we’ll finally reach the tipping point of debt that will trigger a major crisis of confidence.

It wasn’t Latvia. It wasn’t Greece. It wasn’t Dubai. But there are still 40 more countries past the historical tipping point for a major default—and all the chaos that comes with it.

Now’s the time to sneak out—before there’s a mad rush for the exits. Central bankers are playing with fire—and they’d rather you burn than them.

Stay Sovereign (and away from Sovereign Debt)!

Andrew Packer,
Managing Editor of The Sovereign Individual

Value investors take refuge in tech

Ten years ago you wouldn’t find a value fund holding a single technology stock.

Today, many of the world’s top-performing U.S. and global equity funds hold significant positions in these companies as they’ve transitioned from bubble-stocks to cash-rich darlings…

Value funds typically seek to isolate those companies trading at or below book-value, accompanied by rising free cash-flow per share.

They also seek low price-to-earnings ratios (P/Es) and, if possible, dividends. Benjamin Graham’s The Intelligent Investor remains the standard source of investment theology for this market discipline dating back to the 1930s.

Though the majority of actively managed mutual funds have consistently failed to beat their respective benchmarks historically, there’s still a case to be made for owning these
products. Indexing is no panacea.

Investors have wholly embraced this investment style over the last several years, brainwashed by low fees but forgetting that most benchmarks in the major markets have gone nowhere since 2000; adjusted for inflation, most indices are down since 1998.

Value funds typically made money in the first bear market of the last decade (2000-2002) and generally suffered a bit less than indexes in the 2008 market romp. It was almost impossible not to lose money in 2008. Every investment category save Treasury bonds, gold bullion or the Japanese yen shed big dollars. The 2000-2002 bear market saw value funds return en vogue after lagging benchmarks in the tech-mania in the late 1990s; many value funds made healthy profits avoiding tech stocks in 2000 and by over-weighting consumer non-durables.

Longer term, the leaders in this category like U.S. domiciled Fairholme Fund (FAIRX) and First Eagle Global Fund (SGNEX) have smashed the averages.

Offshore, Optima Platinum Fund and Orbis Global Equity Fund (both unavailable to U.S. investors) have trounced the MSCI World Index over the last five, ten and fifteen years.

Perusing some of the leading offshore equity global funds’ Top Ten, including Optima Platinum and Orbis Global, reveals that stocks like Microsoft, Cisco Systems, and Apple are among their biggest holdings.

In 1999, none of these actively managed funds held a position in technology. But they do now.

Microsoft, one of their favorites, has increased its dividend for the last several years and, although still low compared to big dividend-paying stocks, now yields just a bit less than the S&P 500 Index. Microsoft holds $30.1 billion dollars in net cash or 12% of its market-cap.

And Apple, making all sorts of inroads over the last ten years with its iPhone, the iMac and iTunes hoards $25 billion dollars in net cash or 13% of its market-cap.

According to the Bloomberg World Technology Index, 69% of the 169 companies forming that benchmark have no net debt. Collectively, the sector has a net $260 billion dollars in cash or 12% of its market-cap.

The Bottom Line:

Technology stocks are rapidly becoming the new safe-havens in the market.

High free cash flow and low net debt is exactly what investors should strive to isolate in hard economic times. But investors also like to see their cash put to work. Increasingly, it looks like tech stocks will start a new wave of acquisitions before interest rates rise much higher over the next few years. The cost of doing deals is still inexpensive, especially if you’re cash-rich.

Sincerely,

Eric Roseman

Investment Director for The Sovereign Society

Source: Sovereign Society

Why you should worry when banks hoard cash

Dear A-Letter Reader,

Banks are holding a lot of cash these days… over $1 trillion according to the latest estimate. It’s a trend that’s been accelerating for the most part, despite the stock market’s intense rally over the course of the last year.

Here’s why it’s troubling…

Excess Reserves Skyrocket in the wake of Lehman’s Failure

There are two reasons why banks are stuffing their vaults with money…

The first is that the pendulum on risk management has swung to ultra-conservative levels. You see, a few years ago, at the height of the economic boom, banks were lending to anyone who asked for money. You could buy a million-dollar home via a so-called “NINJA” loans— meaning No Income, No Job.

And we all saw how that trend ended.

So it makes sense that the banks are now asking for everything short of a DNA sample to make sure that any new loans they write will be completely repayable. And with their books still packed with “toxic” loans from the freewheeling bubble era, banks would rather keep the cash in the vault than reinvest the profits by offering more loans.

But the second reason is the real kicker—it’s the growing problem in commercial real estate (CRE), which we’ve been reporting on for the past year as markets have rallied and shrugged off the information…

The days of commercial refinancing are at hand.

Specifically, the type of commercial real estate loans that were being made while everyone was becoming a realtor and learning to ‘flip’ houses. Despite the extra $1 trillion in cash held at banks, there’s actually $1.4 trillion in CRE loans that are going to reset in the next four years.

And dollars to donuts says some of them won’t qualify for refinancing. Many will be refinanced on existing terms, irrespective of the decline in cash flow and value of the property—extending and pretending on both sides that some of the destroyed value still exists, or will again someday.

But don’t take my word for it. Elizabeth Warren, head of the Congressional Oversight Panel overseeing TARP funds, had this to say about the banks, “We’re seeing banks that don’t want to lend because they see every dollar that comes in the door and say I’ve got to hold on to it to try to fill my commercial real estate hole or else I will be gone.”

Obviously, some banks will be more affected than others—particularly those with a high CRE exposure. These banks are the next downleg in the ongoing credit-crunch.

The best and most profitable course for banks is usually to expand their loan portfolio. Right now, they’re not doing that. And there’s a stark possibility of further contraction when CRE loans come due. Add all that up and it’s “Watch out below!” for America’s weary banking system.

Stay Sovereign and Stay Short!

Andrew Packer

Editor of The Credit Crunch Short Report

Source: Sovereign Society

JP Morgan CEO…headed for the slammer?

I’m always keeping my eye on the banks… and there are a few developments that will eventually give me a reason to go on a shorting spree.

The first is how banks are treating the properties they foreclose on…

I won’t mince words: banks are deadbeats on assets they acquire through foreclosure. And that’s not even counting the properties banks should be foreclosing on for non-payments, but aren’t.

It’s an ugly picture for real estate, with or without federal stimulus.

Now banks are in the business of lending, and only want to seize these properties when the borrower defaults. They’re not in the business of owning, managing, or maintaining real estate. But some banks have been pretty aggressive about foreclosing—I’ve written about Bank of America’s shenanigans in this area.

But what you might not realize is that once banks do foreclose, they often don’t do anything with the property. This is a huge problem for condominiums or other communities that are dependent on an HOA (Home Owners Association) for common area maintenance, utilities, and the like.

Nevertheless, some banks have been so derelict in paying HOA fees on properties they’ve foreclosed on, that the HOA themselves have then had to foreclose on the property for failure to pay their HOA fees (so if you’re thinking of skipping on your mortgage but still want to live in your house, be sure to pay the HOA).

And it’s not just homeowners facing problems.

Consider the city of Atlanta, who had problems with illegal tire dumping on a property.

After looking at the books, they determined that J.P. Morgan Chase owned the property through one of their subsidiaries, and tried to take them to court for failure to pay fines. The bank never showed up. So here’s where it gets crazy…

The city issued an arrest warrant for CEO Jamie Dimon for illegal dumping. Of course, running the bank through New York means Dimon was nowhere near Atlanta… but that got the bank’s attention, and a judge cancelled the arrest warrant.

Nevertheless, as banks foreclose on properties, they’ll have to learn to take responsibility for them, lest the properties further decline in value due to the bank’s negligence.

Markets, however, are rewarding banks for refusing to lend, as well as refusing to maintain foreclosed properties. That will change… but until it does, expect the bank stocks to continue rallying (which will make put options cheaper). We’re still up on our Wells Fargo option that triggered, and we’ve got a pending recommendation on J.P. Morgan that isn’t cheap enough yet. If some of the regional banks show any weakness, I’ll have a recommendation in that area as well.

So… is there anything banks can do competently?

After all, they’re not doing much in the way of lending… yield spreads make it a better option for banks to borrow nearly for free from the Fed, then buy riskless assets like Treasuries. They know how to drag defaulting borrowers to court, but then prove worthless at managing properties themselves.

Banks are looking overvalued to me based on their inability to act like a bank… and markets will reach that conclusion eventually too.

Stay Sovereign and Stay Short!

Andrew Packer

Editor of The Credit Crunch Short Report

Source: Sovereign Society

Wag the Dog…AIG style…

Equity Markets Are About As Rational
As the High School Rumor Mill

There are some things I miss about being a kid.

Like playing with Legos, blowing off chores, and letting someone else do the cooking (thanks for all the years of meals, mom).

But some things I’m glad to put behind me. For instance, in high school, I was often hearing about the latest “juicy gossip” about someone that invariably was not only false, but often amusingly so…

I’m guessing the kids that did that never grew out of it… and got jobs on Wall Street. You see, rumors about a company can affect markets, and often in a completely irrational way.

For instance, take a look at AIG in the past week:

What happened?

A juicy rumor! Apparently, word went around to Wall Street traders that the SEC was considering a short sale ban on certain stocks. Namely, companies it had a major ownership stake in courtesy of the bailouts: Citigroup, AIG, and so on.

Naturally, if you can’t short a stock, the bias shifts upward. So traders jumped into shares, sending the price and volume up. Anyone short the stock either had to sell to cover, or throw in more capital to cover his or her margins. So what we had here was a classic example of a short squeeze (good thing I’m not shorting Citigroup or AIG—yet).

But don’t fret, following the market close, the SEC released a statement, “There is no truth to the rumor that we are considering restricting the short-selling of stocks in which the government has a stake,” John Nester, Securities and Exchange Commission.

In other words, the rumors were unsubstantiated.

But for those seeking to profit from the failure of these companies by shorting them, the damage has been done, and the message was made clear. Sure; these bank stocks are floating on thin air, but short selling that illusion is best left to the pros…

Stay Sovereign and Stay Short!

Andrew Packer

Editor of The Credit Crunch Short Report

Source: The Sovereign Society

Merry Christmas…from the IRS!

A Quarter Million Tax-Cheating Bureaucrats, Shady Tax Breaks,
and the IRS’ 70% Error Rate……Merry Christmas Indeed…

Daniel J. Mitchell of the Cato Institute is our guest columnist today. Dan is a frequent speaker at Sovereign Society conferences and has just released a new video documenting the “red ink train wreck” of deficit spending that is well worth viewing. Dan writes:

Here are a few stories guaranteed to bring holiday cheer for taxpayers…

First, we have an Associated Press report that several hundred thousand federal bureaucrats have serious tax delinquencies. The Department of Housing and Urban Development always ranks high on the list of government entities that should be abolished, so it’s interesting to see that HUD bureaucrats are most likely to be dodging their taxes:

More than 276,000 federal employees and retirees owed back income taxes as of Sept. 30, 2008, according to data from the Internal Revenue Service. The $3.04 billion owed was up from $2.7 billion owed by federal employees and retirees in 2007. Among cabinet agencies, the Department of Housing and Urban Development had the highest delinquency rate, at just over 4 percent.

This rampant nonpayment is especially outrageous since federal bureaucrats “earn” twice as much compensation, on average, as those of us laboring in the productive sector of the economy. One might think they would go out of their way to comply since their bloated salaries come from tax collections.

Speaking of outrage, the internal watchdogs at the Treasury have just published a report showing that it is almost impossible to verify eligibility for the special interest tax breaks in the so-called stimulus. As Investor’s Business Daily opines, this is an invitation to fraud:

A new report from the Treasury Department’s Inspector General for Tax Administration counts 56 tax provisions in the bill having a potential cost of $325 billion. Of those, 20 are tax breaks for individuals and 36 are for businesses. The problem, the Inspector General says, is the IRS can’t verify taxpayer eligibility “for the majority of Recovery Act tax benefits and credits.” For individual taxpayers, 13 of the 20 benefits and credits can’t be verified; for businesses, it’s 26 of 36. …To suggest, as Treasury does, that the biggest chunk of the $325 billion in stimulus package tax breaks can’t be adequately followed violates the pledges of openness and fairness made when the stimulus was passed last February. As the government-stimulus-oversight Web site, recovery.gov, notes, last year’s package “requires that taxpayer dollars spent under the Act be subject to unprecedented accountability.” W e wouldn’t call being unable to verify upwards of two-thirds of the $325 billion handed out as “unprecedented accountability.” Sounds more like an invitation to fraud, all at the expense of the taxpayers.

To be fair, even a competent government agency might have trouble making a bad law work, and the $787 boondoggle was rushed through the legislative process with very little – if any – attention paid to anything other than funneling other people’s money to special interest groups.

That being said, the IRS has trouble even with routine tasks. According to another IG report, the agency has a staggering 70 percent error rate in its processing of taxpayer identification numbers for individual taxpayers:

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its review of the IRS’s processing of applications for Individual Taxpayer Identification Numbers (ITINs). TIGTA reviewed a sample of ITIN applications and found that almost 70% contained significant errors and/or raised concerns that should have prevented the issuance of an ITIN. The IRS estimates that it has issued more than 14 million ITINs as of December 2008. ITINs are intended to provide tax identification numbers to resident and nonresident alien individuals who may have U.S. tax reporting or filing obligations but do not qualify for Social Security Numbers, which generally are only issued to U.S. citizens and individuals legally admitted to the U.S. …”The number of individual income tax returns filed using ITINs and reporting wage income has increased by 247 percent from 2001 to 2008,” commented J. Russell George, the Treasury Inspector General for Tax Administration. “If the IRS continues to issue ITINs without proper verification, the risk of fraudulently filed returns – along with fraudulently claimed refunds – will continue to rise,” added Inspector General George.

Just think how much fun it will be when the IRS is in charge of determining those of us who should get fined or jailed for noncompliance with government-run healthcare! No wonder so many taxpayers put a flat tax or national sales tax on their Christmas lists.

Sincerely,

Daniel J. Mitchell

Source: Sovereign Society

Where in the World is the Next Generation of Rampant Consumers?

And How Can we Profit?

By Ashish Advani

As you look out across the U.S. – across your hometown and your local big city, each and every one of us can pick out at least a few vacant retail spaces… it seems each medium-sized town has its own “ghost mall,” and at least a few abandoned strip malls.

How did that happen? Are we not the largest consumers in the world? Do we not need all the Malls we can make to continue our insatiable consumerism habits?

This problem’s been building for a while.

The simplest way to put this is; America is getting older. The median age of the American population is 37. The baby boomers (kids born between 1944-1964) are slowly beginning to retire. They are reaching the age of 65. The first round of baby boomers retired in 2007.

And this trend will only continue to escalate…

America is not the only country afflicted by the aging of its population.

Many of the world’s largest economies are headed down this same demographic hill. Japan’s median age is 44…the second highest on the planet. Italy’s median age isn’t far behind at 43, UK is 40; Australia is tied with the US at 37… As you can see, folks aren’t getting any younger here.

And an older population means lower consumption patterns. As folks get older, retire, and start to live on a fixed income, they have less need for consumer products. Now healthcare is an exception. But beside this sector, most other sector consumption patterns will gradually go into overall decline.

But, over on the other side, the developing economies are still quite young.

China’s median age is 27, along with Indonesia, while Pakistan’s median age is just 20. But it’s not until you look to India that you the most interesting facts…

1/3 of India’s population is below the age of 14 …and the median age in India is 24, which is even younger that that of China. And India has a total population is 1.1 Billion. India is expected to overtake China in total population by 2020, when the Indian population is estimated to be at 1.3 Billion and growing.

India also has an educated, English speaking and dynamic population. An average Indian in the city can speak English, is very entrepreneurial by temperament and is always looking to make money and grow his/her wealth base.

When You Add it All Up…

The Indian economy is expected to grow by 6% GDP next year, a rate that it’s consistently held up for the last few years.

Indians are continually increasing their disposable income. The younger, richer Indian population can now afford to buy a better living standard than ever before. The media is open without restrictions, giving their dreams access to the gadgets of comfort they have long desired.

They are eager to consume and the overall trajectory of consumerism is only going to head upwards for decades to come.

Granted, not all sectors of the Indian economy will grow evenly…but it’s a no brainer that the Consumer Goods, Electronics. Automotive, Food and Beverages, Travel, and Discretionary Spending sectors – to name a few – will continue to see double digit growth for many years to come.

What makes this growth story even more exciting is the fact that the overall economic growth is taking place against the backdrop of major political reform…

Bureaucracy is reducing, economic liberalization is deeply supported by the masses and foreign investments are being welcomed with open arms in most sectors. As history has proven time and time again, this translates into companies having blockbuster years in sales and profits.

Often times, when one sees a confluence as described above, we see significant long- term growth opportunities in an economy.

As long as we can select the correct companies in the right sectors, only one word comes to mind…

$$$ Cha-Ching $$$$.

Stay long India dear readers, stay long for a long time!!!

Ashish Advani
Editor, Dalal Street Insider

Source: Sovereign Society

New Haven on the Horizon; the Cook Islands

By Bob Bauman

A broad net of 15 coral islands in the central heart of the South Pacific, the Cook Islands are spread over 850,000 square miles, southwest of Tahiti and due south of Hawaii. The islands occupy an area the size of India, but have a population (a little over 21,000 people) no larger than a small town in America.

Local time is 10 hours behind GMT, with 9:00 a.m. in Hong Kong is 3:00 p.m. the previous day in the Cook Islands. When it is noon EST in the United States it is 5:00 p.m. in the Cook Islands.

This geographic location gives the Cook Islands, with its excellent modern communications, a strategic advantage in dealing with both the Asian and American markets.

Not as well known as some offshore financial centers, in 1981 the Cook Islands government first began adopting (and updating) a series of wealth and asset-friendly laws. Since then these islands have attained a definite role in offshore financial circles, especially when it comes to asset protection trusts.

Named after Captain James Cook, the famous British explorer who visited them in 1773, the islands became a British protectorate in 1888. By 1900, administrative control was transferred to New Zealand; in 1965, residents chose self-government and a free association with New Zealand. A member of the British Commonwealth, the islands have a constitution with a Westminster style parliament elected every four years by universal suffrage. The legal system is based on British common law and English is widely spoken.

There is much here to for serious persons of any nationality who want strong asset protection supported by sympathetic government and judicial policies.

Existing statutes provide for IBCs, offshore banks, insurance companies, and trusts. All offshore business conducted in the Cook Islands must be channeled through officially registered and regulated trust companies. A comprehensive range of professional trustee and corporate services is available.

In a major American legal case, the U.S. government tried to force the repatriation of funds held by a Cook Island trust and lost, even though the Americans who created the trust for a time were jailed for contempt of court. Not even a federal court could crack the Cook Island trust laws. For more about what is known as the “Anderson case” see FTC vs. Affordable Media LLC, 179 F. 3rd 1228, U.S. Ct. of Appeals, 9th Cir. (1999).

I have a good friend who has had a Cook Islands trust for many years as as protection against possible business liabilities. He is fully satisfied with its operation and protection, with his local American attorney acting as liaison with his Cook Islands trust company.

Source: Sovereign Society