- Why Would I Need A Service Like This?
The key aspect is the jurisdiction that I’m operating under, and my experience in helping high-net-worth individuals navigating it.
The Case For Switzerland
As a Swiss citizen, allow me to begin with Switzerland, a nation defined by its own people’s will, having taken an oath not to pay taxes to foreign reeves. Even before the enforced confederation of 1848, Switzerland was the most industrialized country on main land Europe. The economy was everywhere and politics nowhere. Even under intense external pressures, Switzerland retained its sovereignty and remained an armed neutral country, resisting two world wars, with a track record that it can be proud of. Up to this day, it still has one of the most decentralized political structures in the world. Its constitution outlines the basis of its political system and its government’s limits, according to the principles of subsidiarity and direct democracy.
The core idea of the people being vested with meaningful decision-making power and of solving every important problem on the lowest possible level, i.e. by asking the individual voter, is part and parcel of Switzerland’s historical DNA. Under this system, whenever politicians want to change the rules, the people will always have the final say. Instruments such as referendums “against the state” and initiatives “from the people” help to keep the State in check and the country as decentralized as possible. And although the last 20 years have seen political pressure put on Switzerland to follow the way paved by the EU rather than its own, the system itself remains solid. Unlike its neighbors, the Swiss government still does not have the power to enforce questionable policies, unchecked by the people until the next election.
Therefore it's clear that the Swiss simply understood that the government cannot give away what it has stolen from someone else; as it turned out, and quite predictably, this was a wise decision, as most highly-redistributive political experiments have failed miserably.
In terms of stability and security, especially from a physical gold investor’s point of view, it is clear that Switzerland has withstood the test of time. Its long-standing neutrality position, its solid non-interventionist foreign policy record and the fact that more than 50% of households in the country are armed, create a safe environment and provide peace of mind both for its citizens and for investors. Furthermore, the strict limits placed on its government’s powers and the long track record of the government staying well within those limits, make confiscation scenarios of precious metals stored under Swiss law very improbable. As such a move would require a historic constitutional shift, the Swiss people would have the final say on it, and their voting record speaks for itself. Thus, Switzerland can certainly be relied upon as a safe haven.
However, because you can never be sure to know the future, it always makes sense to look for other jurisdictions, which offer a solid basis as well. Unfortunately not many are left over on this planet, but the Principality of Liechtenstein has the following values to offer.
Liechtenstein’s Unique Advantages
The Principality of Liechtenstein is not in the EU; it is however a member of the European Economic Area and the Schengen visa zone. Although it became independent in 1806 it can be argued that the values exhibited by today’s Liechtenstein were mostly formed after WWII. It was then that today’s monarch, Hans-Adam, had to take over a bankrupt country and effectively managed to turn it into a highly competitive, innovative and agile financial hub of international renown. Liechtenstein is led by one of the oldest noble families in European history and its roots go back into the eleventh century. They have a long-established history as advisers, especially during the Habsburg Monarchy.
The country’s standing as a reliable business and banking center and the princely house’s reputation as being ahead of the curve are still undeniable today. For example, Liechtenstein and members of the princely family have established the Center for Austrian Economics under the guidance of H.S.H. Prince Michael of Liechtenstein and H.S.H. Prince Philipp of Liechtenstein. Therefore, it is a fair to say that the ruling figures of Liechtenstein fully embrace the values of individual and financial freedom and recognize the importance of private property rights.
The system of government is classified as constitutional monarchy, with the decision-making power being shared by the monarch and the democratically elected parliament. The Prince retains significant political power, as head of state, and also has veto power. However, there are key exceptions and limitations to the Prince’s authority, as the people have the right to abolish the monarchy if they choose to, or to launch an initiative of no-confidence against the prince, with only 1,500 signatures required kickstart both processes.
Hans-Adam himself wrote the political treatise “The State in the Third Millennium” in 2009, in which he promotes sound money in the form of gold and silver. In it, he also defends the right of secession right down to the level of the municipality and he is a fierce proponent of limited government, free trade and free speech.
Overall, Liechtenstein remains a very solid candidate jurisdiction. It is built on a system of governance that shows great restraint and respect towards the individual freedoms, private property, the right to privacy and the financial sovereignty of its people. From a military aspect, Liechtenstein is protected by the Swiss military and has strong ties with Switzerland in general, even though it remains independent when it comes to local laws and international policy.
Weighing The Options
All in all, when it comes to prudent and long-term investments in physical precious metals, one size most definitely does not fit all. Each decision and step that forms a comprehensive and solid strategy needs to take into serious consideration the individual needs and aims of each investor. While security and strong property rights play a key role for all investors, specific circumstances and relevant technicalities might make one jurisdiction more attractive the other.
Both jurisdictions make a convincing case for gold storage, with regard to stability and private property rights, which is infinitely strengthened when compared to the risks and uncertainties that what most other jurisdictions entail. Even from a more practical perspective, it also makes sense to store gold in jurisdictions with ready access to active commercial gold markets, that are not bank-based, as for example is the case for London. Switzerland is a global leader and hub of gold refining and has extensive and vibrant bullion commercial activity.
Overall, although no one knows what the future will bring, when selecting a location to store parts of your wealth in physical precious metals, one has to look carefully at the political system, as well as the government’s track record through thick and thin. It is also important to consider the country’s “gold culture” and relevant tradition, as in nations with a long history of widespread private gold ownership, governments face formidable obstacles and serious opposition against aggressive legislation, like ownership restrictions, seizures or confiscation orders targeting precious metals. Thus, overall, Switzerland and Liechtenstein definitely seem to have an advantage, at this point in time.
What I can offer is to help you find a tailor-made solution and introduce you to reliable and honest business partners in the precious metals industry, with a network of like-minded individuals who share the same values we recognize in sound money and individual liberty. At the end of the day trust is paramount, and indeed it is essential before delegating storage of your precious metals to a third-party.
After the transaction, I can remain your independent and direct contact, and I can constantly update you on the situation, on geopolitical changes or something going in a direction which I would consider crucial to be aware of when storing physical precious metals as your insurance/hedge against the systematic risk of catastrophic monetary failure. I want to make sure that all the little details are covered, to make sure your precious metals are safe, in particular during a harsh crisis scenario.
- Are there any countries’ citizens that you refuse to take on as clients?
Because of my network, I accept clients from all over the world. That being said, please note that every client application will be carefully examined and the necessary due diligence will be done in order to fully comply with Swiss law and with our own ethical standards.
- Do I need to come to Switzerland to start the business relationship?
You are more than welcome to come over anytime and I will gladly arrange a personal meeting with your storage partners and a tour of the facilities. However, if you don’t have the time, it is also possible to become a client without travelling to Switzerland.
- Can I only sign up as a private individual or are legal entities also possible?
You can sign up as an individual or under a legal entity. Single or joint signatories or tailor-made signatory powers for institutional clients are also possible.
- Do I have full ownership of the metals?
You are the sole, direct and unencumbered owner of your physical precious metals and they will be stored in the format that you purchased (e.g. 1 kg bar, 1oz Maple Leaf coin etc.).
- Are my metals insured?
All partners are storing metals on behalf of the client and can offer full insurance, based on the customer’s needs.
- Are my metals audited?
All storage partners are audited on a regular basis by an independent and qualified auditor. In addition, any customer can send in his own auditors to inspect his metals.
- How do I trade the metals?
This depends on the storage solution of your choice. You can go for a set-up where metals are stored in a way that allows you to buy, sell or deliver at any time without you being physically present. You can send a written form with your instructions via email, fax or telephone.
If you decide to go for a safe deposit box or any other tailor-made storage solution whereby you are the only one that holds the key, transactions are less flexible.
On the other hand, safe deposit boxes offer flexibility in defining insurance costs yourself and are in general cheaper than managed storage solutions.
- What kind of metals and formats can I buy?
You can choose between different bars from 1gr to 1kg bars and if you wish, 400oz bars are available as well. Bars are sourced and certified from Swiss refineries. You will also have access to the most liquid coins such as the Australian Kangaroo, Canadian Maple Leaf, South African Krugerrand, Austrian Philharmonic or Swiss Goldvreneli etc.
- Which precious metals can I buy?
You can choose between Gold, Silver, Platinum and Palladium.
- What storage options do you offer?
You can store your metals in a managed account where metals are stored collectively, meaning that if 50 clients own 20 oz of Maple Leaf coins each, 1000 Maple Leaf coins would be stored all together.
You can also choose to store the metals in a segregated box or shelf, were your metals are kept “in-individuo”. This means that we will store your bars or coins completely separate from the metals of other clients.
Finally, you can have your own vault or key box, for which only you will have the key, ensuring you are the only one having direct access to your metals.
- Are precious metals subject to local taxes when purchased and stored in Switzerland?
Gold is still considered money and therefore there is no tax on investment gold in the format of bars and coins. White metals, i.e. silver, platinum and palladium, are subject to 7% VAT. However, there are legal processes in place that can provide exemptions from this tax. It is important that the metals be purchased outside of Switzerland and transferred afterwards into a tax-free-storage location in Switzerland. In this case, Swiss VAT would only be applicable if you picked them up in Switzerland. If you ask for physical delivery elsewhere, the tax regime of your chosen delivery destination would apply.
- Do you work with partners that are considered “financial institutions” and are therefore are subject to reporting regulations of foreign governments?
Due to the old-fashioned and purist physical storage solutions, in the most conservative and secure way, none of my partners is considered a financial institution. Thus, there are no international reporting requirements to be fulfilled from their side. However, all my partners are regulated by the Financial Market Authority and they do have processes in place to avoid fraud, terrorism financing and money laundering.
- How long in advance do I have to inform you if I want to inspect my metals or if I want to physically retrieve them?
A minimum of 48 hours notice would be enough to organize the necessary paperwork and security clearances.
- What happens if one of your partners goes bankrupt? Would I lose my metals?
All metals are stored off-balance sheet, under your direct and unencumbered ownership. Even if the company files for bankruptcy, your metals will still belong to you 100%.