GEOGRAPHICAL DIVERSIFICATION AND OFFSHORE STORAGE
If history is any guide, gold has been the object of confiscation because it represents an obvious concentration of wealth. Such confiscation can take the form of theft if done by private individuals, or public policy if done by governments. Governments can unfortunately reach out to the safest private storage facilities and insurance does not cover government confiscation.
When choosing a jurisdiction in which to store a large amount of wealth, it is crucial that:
- It is governed under the rule of law and has an efficient legal system.
- It has a low motivation to expropriate assets (which is usually an inverse function of its solvency).
- It has balanced finances.
Unfortunately, these criteria rule out most of the Western world as viable options. Investors are very concerned about the Western banking system and the risks of bail-ins, deposit confiscations and capital controls.
As a result, the world’s growing middle classes and the wealthy are moving their gold away from increasing financial repression in the Western world to the Asian capitals of Hong Kong and Asia’s emerging precious metals trade hub, Singapore. Switzerland remains a favorite destination for many western and international investors, both retail and institutional. Let us review the jurisdictions that are considered the safest.