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You may have read that Via Mat International
AG, the Swiss Logistics and precious metals storage company, has decided to
close all accounts with US citizens.
They do not explain
the cause for this, but mention taxation and tax structures in their letter
as one reason.
The decision by Via
Mat has no effect on Matterhorn’s US clients.
Matterhorn Asset
Management / GoldSwitzerland has
never accepted undeclared accounts. We go through very stringent compliance
procedures to make sure that all accounts are declared in the country where
the client is tax resident. Furthermore all clients are annually sent a
Compliance Review Form in which they must confirm that all account details
are correct including compliance with the fiscal regulations in the country
where the beneficial owner of the account is tax resident.
Precious Metals are
not regulated in most countries currently. However, this might change in the
next few years in some countries. If gold and silver become regulated, the
reporting requirements might become much more stringent. We believe it is
important for clients to be prepared for that eventuality both mentally and
practically.
As regards in which
country gold should be stored, we are constantly reviewing this issue. There
are storage companies in many countries. Outside of Switzerland the most
popular locations are in Hong Kong and Singapore. We have investigated both
these locations in-depth. In our view it is not right to diversify a holding
just for the sake of diversification.
As Mark Twain said:
“Put all your
eggs in one basket and watch the basket”.
Both these
jurisdictions have attractions but there are also some drawbacks. Hong Kong
is not a democracy and if there was ever a problem between China and the USA,
China could easily close off Hong Kong. Singapore has an authoritarian
political system, although a benevolent one. There is also a major US
influence in Singapore including an US naval base. However, since some investors
have asked us to store their gold/silver in Singapore, we are considering
opening a precious metals purchase and storage facility there.
Swiss bank secrecy
is virtually dead. Thus Switzerland is not the same as it was before US authorities
attacked UBS with their undeclared US accounts. However, undeclared accounts
are of course illegal to hold in Switzerland for US citizens so it is not
surprising that the US authorities could not accept this. Subsequently many
European countries have also reached agreements with Switzerland regarding
undeclared accounts in order to exchange information and tax these accounts
often with punitive rates. Due to major fiscal deficits in most countries,
authorities worldwide will continue to pursue tax evasion with vigour.
So although
Switzerland (CH) is no longer a haven for hiding undeclared accounts, it is
still one of the oldest and truest democracies in the world. Politics is not personalised in CH and the role of the President rotates
every year. Few people care who the President is.
Decision making is decentralised into the regions
(the cantons). Whenever someone feels strongly about any issue, be it the
price of sugar or immigration, it is sufficient to obtain 100,000 signatures
on a list in favour of the motion and the
particular issue will have a national referendum. Thus CH is one of the last
remaining nations with real People Power. Also, the Swiss are great believers
in independence and non-involvement by the government in their affairs. Having
personally lived in many countries for extended periods, I am of the opinion
that Switzerland is probably the only remaining true democracy which also
offers a quality of life and non-interference by government that is not found
in most other countries.
As regards Gold and
Switzerland, there has for very long been a tradition for the Swiss to save
part of their wages in gold by every month buying a Vreneli
(small gold coin). Also for wedding presents many Swiss receive gold.
Currently there are two gold initiatives in Switzerland. One is to introduce
gold as a parallel currency (which MAM is backing) The other initiative has
reached 90,000 signatures with only 10,000 to go for a referendum.
The referendum
would be to decide:
- To keep Swiss gold
physically in Switzerland (ie repatriate
Switzerland’s gold)
- Preventing/forbidding
the SNB (the Swiss National Bank) from selling any more of its gold
reserves
- Requiring the SNB to
massively increase their gold holdings to a minimum of 20% of its
reserves within 5 years, held within Switzerland.
The point I am
making here is that the Swiss probably feel more strongly about gold than any
other Western nation and is therefore unlikely to confiscate gold or tax it
punitively. It must also be remembered that Switzerland refines 70% of all
gold in the world which makes it an important industry for the country.
Switzerland would be foolish and unlikely to kill the goose that lays many
golden eggs.
What is absolutely
critical for investors is to store their precious metals in physical form
outside the banking system and outside their country of residency. The
investor must have personal access to his gold/silver which must be stored in
a politically stable and democratic country.
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