Deposit box in Austria/Switzerland

[D]

I listened to HB radio shows, and he suggests for bullion deposit box in Austria or Switzerland if I remember well. How do you go about renting a deposit box in such a country and buying/selling gold, in particular to rebalance? Can this be done remotely without actually visiting?

[Wonk]

www.dassafe.com in Vienna

I've read that one can purchase gold in Zurich with no VAT and have it stored there as well.

Side note: if you are an American, be advised that any relationship with a banking institution anywhere in the world must be declared--which seemingly defeats the purpose of storing assets overseas with banks.  However, if you purchase coins and store them in a vault that has no relationship with a banking institution, it appears that problem is solved. 

The only problem with the latter option is the lack of insurance.

[pplooker]

I think people have this fantasy that they can stow fortunes in gold in foreign places so they can flee the Gestapo in the middle of the night and go live lives of ease in exotic ports of call.

Fact check:

- Gold can be made into a black market good as it suits the authorities.
- A box in a foreign country isn't safe from a foreign government or other interlopers.
- Gold stored half a world away is useless when your passport is revoked, etc.
- Other governments are every bit as stupid and corrupt as your government.
- People who aren't legal citizens or otherwise lack paper work are not molly coddled in most nations. 

What are you going to do, go flee your country in the night and go live there instead?  How are you going to get there?  Why will they let you in?  Why should you trust them to not take advantage of you?  Etc.

You would have to solve all these problems years ahead of time.  Some people have but it's not just that easy.

The way I look at it, if there were a nation so benign, so safe, and so secure that it was the best place to store my worldly wealth... why wouldn't I just live there?  Also, if my country is about to endure such a horrible crisis, I won't know it until it is upon me in all likelihood at which point escape is impractical or impossible.

[craigr]

The point of geographic diversification is not just for govt. interference. There can me manmade or natural disasters that interrupt financial centers in the US for instance. Having all your wealth as electronic blips in a computer in one location has its own risks.

[Indices]

I think people have this fantasy that they can stow fortunes in gold in foreign places so they can flee the Gestapo in the middle of the night and go live lives of ease in exotic ports of call.

Fact check:

- Gold can be made into a black market good as it suits the authorities.
- A box in a foreign country isn't safe from a foreign government or other interlopers.
- Gold stored half a world away is useless when your passport is revoked, etc.
- Other governments are every bit as stupid and corrupt as your government.
- People who aren't legal citizens or otherwise lack paper work are not molly coddled in most nations. 

What are you going to do, go flee your country in the night and go live there instead?  How are you going to get there?  Why will they let you in?  Why should you trust them to not take advantage of you?  Etc.

You would have to solve all these problems years ahead of time.  Some people have but it's not just that easy.

The way I look at it, if there were a nation so benign, so safe, and so secure that it was the best place to store my worldly wealth... why wouldn't I just live there?  Also, if my country is about to endure such a horrible crisis, I won't know it until it is upon me in all likelihood at which point escape is impractical or impossible.

These are excellent points. If you find yourself having to flee the country and think getting to your gold in Europe will somehow save you, think again. You will most likely be arrested and/or killed for the reason you are fleeing. I see gold as a diversifier, which is why I believe in the permanent portfolio. I don't see it as a refuge against Armageddon, because if society collapsed to the point where gold is all that holds any value, I will probably be killed in the ensuing chaos anyway. I suppose if I lived in a bunker in North Dakota I would hold gold abroad "just in case", but I think that mentality will drive you nuts.

[pplooker]

The point of geographic diversification is not just for govt. interference. There can me manmade or natural disasters that interrupt financial centers in the US for instance. Having all your wealth as electronic blips in a computer in one location has its own risks.

Electronic blips are a heck of a lot safer than pieces of paper, which sufficed for many centuries.

[Pkg Man]

It may be far-fetched, but I think a valid case can be made for storing some gold abroad.  If at some point in the future government became oppressive and you wanted to leave, and restrictions were placed on capital leaving the US, then having some assets abroad may be a good idea.  Not likely, but the permanent portfolio was designed to provide protection against even improbable events.  HB also advised using a Treasury MM account rather than CDs, splitting your investments among different financial companies, etc.  At least it gives more options than not having anything abroad. 

Then again, maybe I'm just paranoid, as I have a 60-day supply of freeze dried food in my basement...

[MediumTex]

There is an enormous amount of wealth from all over the world stored in vaults in Austria and Switzerland.  The world does not need to end for these places to be good places to store wealth.

I'm not a big fan myself of holding any asset offshore anywhere, but a whole lot of people from all over the world store valuables in Austria and Switzerland.  It's not a crazy thing to do.  When HB was writing about it, the U.S. had a very different policy on offshore assets.  It is obviously less appealing today than in earlier times when there was more privacy available in international banking for U.S. citizens.

The key is to remember that the world normally doesn't ever end, but certain arrangements within the world end all of the time, sometimes in a very sudden manner that people say would have been impossible to predict in advance. Two of the best examples in modern times are the changes that occurred in Germany between the late 1930s and mid-1940s and the changes that occurred in the USSR in the late 1980s.

I wouldn't think in terms of Armageddon/no-Armageddon--rather, I would think in terms of stages of progression and stages of deterioration in institutions and belief systems.  

I think it's important to note as well that the ultimate forms of portable wealth are skills and relationships. Those are normally the things that really count in a crisis.  The PP should just be one part of an overall life strategy aimed at arranging one's affairs so that personal goals can be achieved and life can be enjoyed with a minimal level of outside interference.

[pplooker]

There is an enormous amount of wealth from all over the world stored in vaults in Austria and Switzerland.  The world does need to end for these places to be good places to store wealth.

I'm not a big fan myself of holding any asset offshore anywhere, but a whole lot of people from all over the world store valuables in Austria and Switzerland.  It's not a crazy thing to do.

It's not so much crazy as it is of severely limited utility relative to what people think they could accomplish with such a thing, imho.

[craigr]

There is an enormous amount of wealth from all over the world stored in vaults in Austria and Switzerland.  The world does need to end for these places to be good places to store wealth.

I'm not a big fan myself of holding any asset offshore anywhere, but a whole lot of people from all over the world store valuables in Austria and Switzerland.  It's not a crazy thing to do.

It's not so much crazy as it is of severely limited utility relative to what people think they could accomplish with such a thing, imho.

The US is very stable compared to many places in the world. It is a huge mistake to think that geographic diversification has limited utility for many people on the planet.

In Argentina in 2001 they debased the currency by 66% after implementing capital controls to keep money from going out. Citizens that had money overseas were spared having their wealth stolen for instance.

On 9/11 the attacks closed down Wall St. for around a week if I recall. I wonder how long it would have been if the banking district itself was hit? Sure, there are hot sites for the big bank's data centers. But it's not unreasonable to imagine situations where even these backups are affected.

So I don't think that geographic diversification is just an academic exercise or even limited utility. If anything, the rules of the US are making it much harder to hold overseas accounts which is a stealth way of implementing capital controls. There is no telling how these rules could be tightened in the future under other administrations or various "emergencies" that could come up for whatever reason. These things can all happen without a country falling into utter tyranny but still have devastating effects on individuals.

[MediumTex]

There is an enormous amount of wealth from all over the world stored in vaults in Austria and Switzerland.  The world does need to end for these places to be good places to store wealth.

I'm not a big fan myself of holding any asset offshore anywhere, but a whole lot of people from all over the world store valuables in Austria and Switzerland.  It's not a crazy thing to do.

It's not so much crazy as it is of severely limited utility relative to what people think they could accomplish with such a thing, imho.

IMHO, aspiring PP'ers would do better to just hold some gold a little closer to home for a while, just to get used to the whole concept.  After you have gotten accustomed to the PP strategy and determined that it is right for you as a long term strategy, then maybe think about a foreign storage arrangement (assuming you are still interested in storing gold overseas).

When thinking about HB's writing and thinking on this subject, I think it is also important to note that he lived in Switzerland for a while in the 1970s, so to him he was writing about something that he was personally acquainted with.  He actually wrote a book entitled "Harry Browne's Complete Guide to Swiss Banks" in 1976.

[pplooker]

The US is very stable compared to many places in the world. It is a huge mistake to think that geographic diversification has limited utility for many people on the planet.

Again, if a place is so stable that you'd prefer to keep your wealth there, why don't you live there?  I realize it's hard to just up and go like that, but I interact every day with people from all corners of the globe who left those places behind.

In Argentina in 2001 they debased the currency by 66% after implementing capital controls to keep money from going out. Citizens that had money overseas were spared having their wealth stolen for instance.

We can name any possible course of action, and then find one time and place in history somewhere it would have been a great ideal to do it.  That's the chance you take.

On 9/11 the attacks closed down Wall St. for around a week if I recall. I wonder how long it would have been if the banking district itself was hit? Sure, there are hot sites for the big bank's data centers. But it's not unreasonable to imagine situations where even these backups are affected.

Shorter than any of us think I bet.  When money and greed are involved, human beings move at lightning speeds.  I would even bet the shutdown had little to do with any damage to the local areas and was instead done to keep people from panicking instantly.  Can you imagine the upheaval?

As for the data, that is all guarded most jealously.  A good friend of mine does this for a living, and all these people do all day is imagine things that could happen and how to affordably safeguard against them.  Is it foolproof?  Absolutely not.  Is it as safe as you can get in this life?  Most likely.

So I don't think that geographic diversification is just an academic exercise or even limited utility. If anything, the rules of the US are making it much harder to hold overseas accounts which is a stealth way of implementing capital controls. There is no telling how these rules could be tightened in the future under other administrations or various "emergencies" that could come up for whatever reason. These things can all happen without a country falling into utter tyranny but still have devastating effects on individuals.

Even then, that just means it becomes a non issue.  If you can't even do it, why worry about it?  It's just a lot of hand wringing.

[craigr]

The US is very stable compared to many places in the world. It is a huge mistake to think that geographic diversification has limited utility for many people on the planet.

Again, if a place is so stable that you'd prefer to keep your wealth there, why don't you live there?  I realize it's hard to just up and go like that, but I interact every day with people from all corners of the globe who left those places behind.

I'm going with history on this one that geographic diversification is a good idea. Many countries are stable, right up until the point when you can't get your money out for whatever reason. I remember reading a review on Amazon.com about Fail-Safe investing years ago. Here was my favorite part:

I first read Browne's advice a couple of decades ago when I was living overseas and had just had the fun of going through a coup against the government that involved three days of firefights between govt troops and rebels *inside* the bank where every dime I owned was kept. Mr. Browne is right. Nobody knows what will happen next. If you have money you can't afford to lose, you have to be ready for anything, and Harry Browne gives you the tools to do so.

So things happen all the time we can't predict. I worked in Internet security for many years. This work included doing security audits and writing network attack tools. I can tell you that no bank or investment house is totally secure. Trust me. You're better off spreading the money around. If for no other reason than if there is a problem with your account it can take some time to get it cleared up and you don't want to be totally locked out of your life savings in that event. Or, if there was a major disaster in the financial center and the hot sites do not work as they planned, you can still have some money outside the affected region to get some breathing room.

A safe deposit box in Switzerland may not be possible as it once was (a warning in and of itself??). But this still doesn't mean people should not look for some of the other market solutions today that can provide geographic diversification for you. The point of the geographic diversification is not so much for banking privacy as it is to give you a way to flexibly respond to extraordinary events happening where you live.

[pplooker]

Lifestyle can solve the "temporarily locked out" phenomenon however.  I carry no debt, amass extra supplies, etc.  As long as prickly pear cacti keep growing around here, I won't starve.

Here's some other problems:

- First, I think we agree on the point that you won't know when it's time to get out of your own country until it's too late.
- Second, it takes a certain concentration of wealth to make it worthwhile to move money out of the country.  I don't even have enough money to meet my goals within the country and quite frankly probably never will as my goals simply advance with whatever level of accomplishment I reach.
- Third, the economic and political fates of each nation on earth, while something I suck at predicting myself, are inextricably intertwined nonetheless.  There's no guarantee if one nation goes down that it won't send the others into a crisis just as there's no guarantee that it will.  Imagine what could happen if one day the U.S. woke up and suddenly China was gone, just as mental exercise.

I'm not saying this isn't a worthwhile thing to do.  It's just you have to be a very wealthy person before it will become viable or easy, and it would take some years to learn many competing sets of foreign rules.  I can barely run GAAP and IFRS in my head alongside each other, never mind trying to figure out how financial products work in India, Russia, The Ivory Coast, France, California and other foreign nations.  I myself have looked into banks in both Austria and Ireland.  But upon much consideration, I opted not to bother for many reasons I've already outlined.

[Wonk]

I think much of this debate centers on personal assessments of risk and portfolio size.  I agree with craig and MT in that most historical precedents where gold was needed did not coincide with armageddon.  Rather, a slow, grinding constriction of capital controls were progressively enforced which made life more difficult in one's home country and necessitated a hiatus somewhere more palatable.

For those with $100K or less, storing gold overseas may not make sense.  For others who want more peace of mind, perhaps a token amount of $10K held outside one's home country will provide a better sense of security.  Where each individual draws the line on diversification is obviously up for debate and largely a personal decision.

From what history tells us, nation states are constantly in political flux and can't be thought of as starkly "safe" or "unsafe."  It's more a label of "safer" or "less safe."  I tend to think spreading geographical risk may be close in importance to asset class diversification once one accumulates considerable means.  Consider that in times of turmoil, those with considerable means are often the first target of wealth extraction to satisfy political agendas.

[Pres]

Lifestyle can solve the "temporarily locked out" phenomenon however.  I carry no debt, amass extra supplies, etc.  As long as prickly pear cacti keep growing around here, I won't starve.

If I remember well, Harry Browne also advised to keep some wealth in a foreign country for other than economic reasons.
You could for example be persecuted (like the jews in Nazi Germany) and have to flee from your country, leaving your belongings behind. Such a sitation doesn't seem likely, but I think we all agree that improbable doesn't equal impossible.

I hesitate. Switzerland is a 6 or 7 hour drive from my country. But I don't know anything about Swiss banks and this time around even Switzerland has problems. (they loaned a lot of money to countries who may be unable to pay it back)
Also, if you keep gold in a bank safe, if it gets stolen you won't be able to prove it was there in the first place, nor who did it. I wouldn't want to concentrate too much metal in one place.

[MediumTex]

I hesitate. Switzerland is a 6 or 7 hour drive from my country.

I wonder how long of a drive it is from Texas.