A Swiss Banker's View Disclaimer Notice
A periodic discussion on Swiss and Euro affairs

THE COMING ENERGY CRISIS
The link below takes you to a most interesting article about "Staking a Future on Fossil Fuels", appeard in the Vancouver sun, September 23, 2006.

The energy crisis is real, even though momentarily there is a lull, and prices of commodities and all sorts of energy producers and transporters have dropped.
You must read it nevertheless. click the link below.

http://www.canada.com/vancouversun/story.html?id=e62a42d0-b479-4d6d-83e2-620d071e9e0e

ASSET HAVENS
A Visit to Switzerland: The World's Most Trusted Asset Haven
By Robert E. Bauman, JD

It was an all too brief visit recently to one of my favorite offshore nations - Switzerland - but even short is pleasing when you're a visitor to Canton Zürich, founded in 1351.

During the recent Sovereign Society European banking tour, I spent several days in Zürich, with a day trip to nearby Liechtenstein. I also had a traditional Swiss dinner in a lofty alpine village in the Gotthard-Oberalp region. During my stay, I enjoyed the expert guidance of my host, Rob Vrijhof, a Swiss independent investment advisor and member of The Sovereign Society Council of Experts.

For 250 years, as European empires rose and fell, Switzerland's mountainous topography, its official neutrality and its determination to defend its sovereignty have made it an island of stability. After 50 years of saying "no," the Swiss recently joined the United Nations, but they repeatedly have rejected European Union membership, rightly fearing EU interference with Swiss privacy and banking laws. A few years ago, a national ballot soundly rejected a proposal to ease Swiss bank secrecy laws. Current public opinion polls are much the same. Bankers to the World

Say "Switzerland" and most people worldwide think "money." There are good reasons.

A global survey of private banks found that the major attraction for a bank's potential customers is its reputation. Certainly, Switzerland's solid financial reputation explains why this nation serves as "banker to the world." In times of crisis, even greater flows of foreign cash enter Swiss banks, confirming the belief that Switzerland is one of the best places to safeguard cash and assets. Currently Swiss banks are estimated to manage at least one-third of the world's private offshore wealth.

One factor-although by no means the only one-leading to the success of the Swiss financial industry is its legendary bank secrecy. While for centuries Swiss bankers have recognized a duty of discretion in dealing with their customers, it was not until 1934 that this duty became a legal obligation.

Not coincidentally, this date coincided with the rise to power of the Nazis in neighboring Germany. The famous 1934 bank secrecy law was an effort to stop Nazi agents from bribing bank employees to obtain information about the Swiss accounts of German citizens. Today this same law protects foreign depositors from unwarranted intrusions into their banking privacy, although tempered by anti-money laundering statutes and tax information exchange agreements, including one with the U.S. Swiss banks are prohibited from responding to inquiries about an account, whether from attorneys, credit rating services or foreign governments. The law punishes violations of bank secrecy with fines up to Sfr50, 000 (US$40,000) and six months imprisonment. Even the Swiss government cannot obtain information about an account without a court order. To obtain that order it must be proven that a Swiss law has been violated and that there is reason to believe the particular account at issue is involved in that violation.

Liechtenstein: Even Tighter Secrecy If Swiss banking secrecy is strict, it's even stricter in neighboring Liechtenstein. With its ruling prince living in a mountaintop castle, Liechtenstein may appear like something out of a fairy tale, but its privacy and asset protection laws are arguably the world's strongest. And with a host of excellent legal entities designed for wealth preservation, strict bank privacy and no tax treaties or tax information exchange agreements with any country other than Austria, Liechtenstein has it all. Liechtenstein banks are integrated into Switzerland's banking system and capital markets under terms of an 80-year-old customs agreement. Many cross-border investments clear in or through Swiss banks.

In Vaduz, Liechtenstein's capital, I met with officials of SwissFirst Bank (Liechtenstein) AG, the Sovereign Society's new Convenient Account banking partner. Their modern headquarters is bright and open, as is the attitude of their officers, who are working with Rob Vrijhof to provide banking service to our members.

The minimum for opening a current account at SwissFirst is US$70,000. These accounts include all basic banking services, plus the ability to purchase a wide range of investments, as well as obtain a credit card tied to the account. For a larger investment (US$250,000), you get personal asset management with access to a wide range of investment and banking contacts. One of the asset managers you can choose is Rob Vrijhof's firm; Weber, Hartmann, Vrijhof & Partners Ltd. in Zürich.

While in Vaduz, I had an informative conference with attorneys at First Advisory Group, the leading law firm in the principality. This was a good refresher course in family foundations, trusts and corporations. Some of these asset protection and investment entities date as far back as the 1920s, when Liechtenstein enacted the world's first asset protection laws.

Back in Zürich, Rob took me on a visit to the stock, bond and currency-trading floor at Bank Julius Baer, one of the leading private banks in Switzerland. Here you need a minimum of US$1 million to open an account. The up-to-the-second efficiency of Bank Julius Baer is something to behold. Electronically connected to the stock exchanges of the world, Bank Julius Baer conducts a virtual 24-hour watch on world money trends.

A Superlative Insurance Industry

Switzerland's insurance industry is world-renowned for its long history of stability and its many profitable insurance and related products. To learn more about Swiss insurance, I visited with Marc Sola and Maria Amstad, partners in the Zürich firm of NMG International Financial Services, Ltd. NMG specializes in offshore life insurance and annuities, both of which offer deferred tax benefits for U.S. persons along with superb asset protection benefits. These products also offer an avenue to invest in offshore mutual and other investment funds usually denied to U.S. persons because of restrictive American securities laws.

An Attractive National Mix

Although Zürich is in the German speaking part of Switzerland, the country's fusion of German, French and Italian ingredients forms an attractive national culture. To see Switzerland and meet the Swiss first-hand is to temper all the clichés you've ever heard about the country. You come away with a deep appreciation of the people and their land. And you see why, for centuries, foreigners have stashed trillions of dollars there.

The Swiss reputation for trust is earned and deserved. Come see for yourself.

WHY GOLD IS MOVING HIGHER
Frank Holmes: What's Driving Gold?
Tuesday, January 3, 2006

These are good times for gold investors, according Frank Holmes, Chief Investment Officer for U.S. Global Investors. In a recent webcast, Holmes told listeners: "We have a unique situation where all critical drivers for gold are pointing in the same direction." Holmes identified six key drivers and talked about why they are all pointing to higher gold prices.

"There are many components here that are driving gold, and they sort of rotate around," says Holmes. "It's not linear."

Currently, we are in a secular bull market in commodities because gold is the ultimate money, says Holmes, and because demand is now exceeding supply. "When paper money is being printed at an extreme rate, gold becomes more significant as a reserve currency," says Holmes. "It starts to show up in people's portfolios, and in governments."

According to Holmes, gold prices are currently being driven higher by:

* Fear of a slowing GDP, which leads to negative real interest rates. Gold is attractive when real interest rates are negative. Currently, there is a global wide fear of a slowing GDP. Historically, when Americans have been concerned about inflation, the price of gold has surged.

* Oil exporting countries are increasing their percentage of gold reserves. There has always been a strong interrelationship between gold and oil, and historically, gold and oil have always moved in the same direction. "With 3 billion people consuming 20 million barrels of oil per day . . . it is more likely that gold will rise before oil falls, because oil won't fall much," says Holmes. Russia announced in November plans to double gold reserves as a portion of all of its reserves, from 5% to 10%.

* China, which now has a trade surplus, is increasing its foreign reserve gold exposure. Incomes are increasing dramatically in China, and citizens are becoming big consumers of American and Chinese goods. The new Shanghai Gold Exchange, combined with the liberalization of citizens to freely buy gold and the culture's affinity toward gold, make gold an attractive asset.

* Low gold prices in the 1990s led to cuts in exploration and falling production - which has ultimately led to a decrease in supply.

* Lower interest rates have curtailed hedging - which also has led to diminished supply.

* The War on Terrorism has resulted in deficit spending and a weaker U.S. economy. The cost of war is hard on a country's currency, and a weaker U.S. currency always results in higher gold prices.

According to Holmes, the supply side of gold is running at a significant deficit to demand. South Africa, the U.S. and Australia - which combined represent 36% of gold mining supply - have all seen declines in gold production. The world's largest gold companies can't find large deposits, and rising energy prices have hurt the cash flow margins of most large producers.

With the key drivers all pointing toward higher prices, Holmes says a gold price of $600 to $650 over the next 12 months is a "high possibility." (January 3, 2006)

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