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How to Play the Great Energy Flip-Flop of 2008 - The Sovereign

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Feel The Freedom of Total Wealth
July 2008
In this Issue:
4 Take Just One of These
Simple Steps Today and
Save Thousands in Taxes
In the Next 10 Months
Higher taxes are coming.
Take these three steps to
legally slash your tax bills
now, before you have to pay
Uncle Sam again.
How to Play the Great Energy
Flip-Flop of 2008
Investor Obsession with Oil and Gas Leaves this
Alternative Fuel Down more than 50% off its 2007
Highs — and We’re Buying!
Crude oil is going gangbusters! Newspapers, magazines and cocktail party
chatter are literally overwhelmed by soaring energy costs lately. Everyone is
stunned by oil’s relentless rise since early 2007.
6 The $5 Trillion Dollar Flush
Six billion gallons lost in the
U.S. every single day creates
one of the most incredible
investment opportunities of
the 21st century for you.
8 The Politics of Plunder:
How to Protect Your
Wealth from Our Next
President
Whether Obama or McCain takes the White House,
you stand to lose money.
Find out what to do now to
protect your assets while you
still can.
10 The Three Currencies
Everyone Will Want When
Oil Hits $200 a Barrel
As everyone moans over
higher gas prices, these
three countries are quietly
reaping the gains. This FDICinsured CD lets you buy all
three right now.
Website Password
IMPORTANT UPDATE: This
month we’re introducing
a new website that offers
individual passwords for
each member. Please check
your email for your NEW
permanent password for the
members-only section of The
Sovereign Society’s website
at www.sovereignsociety.
com. If you have not received
this information, please
contact member services at
888-358-8125.
Vol. 11 No. 7
Eric N. Roseman
Over the last 12 months, West Texas intermediate crude oil has surged 104%
— even more than rough rice, tin, and cottonseed — all spectacular performers
year-over-year.
Energy is now the hottest commodity game in town since mid-2007. Prices
recently topped US$139 per barrel. Global supplies remained strained or in net deficit to the
tune of roughly two million per day. Throughout 2007 and into 2008, global demand has
grown to approximately 87 million barrels per day versus 85 million barrels of supply – in
other words, we need two million more barrels of oil a day than we have. That shortfall is
causing all sorts of inflation panics as food and energy costs soar worldwide.
As global investors and speculators drive crude oil prices to record highs in 2008, everything from natural gas to jet fuel has witnessed massive gains. In many ways, crude oil’s spectacular rally is showing signs of manic obsession on the part of speculators and index-based
investors. They’re throwing tens of billions of dollars at energy contracts.
Amazingly, only one alternative fuel has failed to join this incredible bull market in
energy over the last 12 months. But that’s all about to change.
In fact, I would say buying this commodity right now is like buying oil back when it was selling at US$26 a barrel in 2001. This commodity is that cheap—and has that kind of potential.
As investors and traders continue to scramble aboard the oil frenzy, only this one alternative
energy source is simultaneously emerging from a wicked bear market — nuclear power.
From Boom to Bust in Under 12 Months
From its all-time low of just US$7 per pound in 2001, uranium prices soared to an all-time
high of US$136 per pound by June 2007 or a cumulative 1,843%. Then the party ended.
Like most commodities that post mind-blowing multi-year gains, supply factors eventually
overwhelmed uranium prices. From its all-time high last year, uranium has crashed 56% to
just US$60 per pound in late May 2008. It’s truly unbelievable that uranium prices are still
this cheap while crude oil and natural gas are still selling for such high premiums compared to
Continued on Page 2
Celebrating 10 Years With The Sovereign Society
From the Publisher
Cover Story | Continued
Energy Flip-Flop/Continued from Page 1
Turn the Lazy Days of Summer
Into Heydays for Your Wealth
their historical averages. Plus, nuclear facilities are in
high demand. Right now, new reactor construction is
undergoing a renaissance, especially in the emerging
markets and Western industrialized economies. These
markets desperately need new facilities.
Let’s face it: The world is a different place than it was
just six months ago.
We’re now facing significant unemployment figures,
painful inflation, bank failures, slashed interest rates,
record foreclosures, a disappointing stock market, and
overall just a frustrating, slow economy.
I’ve been following uranium for years as part of my
Commodity Trend Alert (CTA) signature investment
service. I’ve never suffered a loss making a uranium
recommendation this decade when prices were
soaring. Two closed positions in uranium previously
gained a cumulative 616% and 275%, respectively
since 2005.
In short, it’s time to take action. Take advantage of the
slower summer months and focus on getting your asset plan
in order – to protect yourself from whatever may come next.
This month we’re focusing on ways to do just that…
But at this bargain-basement price, I’m incredibly
bullish on uranium as a turnaround alternative energy play amid skyrocketing oil prices. The extremes
for both of these energy sources are simply too compelling to ignore!
This month, Eric Roseman has a brilliant new way to
play US$139 oil with the only alternative energy play that’s
still 50% off its all time high. Mike Burnick explains how
to buy the scarcest commodity on earth with an ETF that
promises to soar as this commodity continues to disappear.
Exploiting the Oil/Uranium Flip-Flop
Mark Nestmann has four different ways to legally cut
back your taxes next year. Plus, Bob Bauman prepares
you and your assets for our next President’s rule. TSI
If you measure how much uranium you can buy
for one barrel of oil, the crude oil to uranium ratio
currently sits at a multi-year high of 2.2 pounds of
uranium for every barrel of oil. Twelve months ago,
that ratio was negative – as in you couldn’t buy ANY
uranium for what oil cost you. Oil was MUCH
cheaper at US$70 a barrel, while uranium hovered
around US$120 per pound. That’s the exact opposite
of where we are now. This is a serious flip-flop!
Carpe Diem!
Erika Nolan
Erika Nolan has been Executive Director
of The Society for nearly 10 years. In 2007,
she founded N&C International Wealth
Consultants, LLC, with a partner.
Publisher
Associate Publisher
Investment Director
Director of Research
Legal Counsel
Erika Nolan
Shannon Crouch
Eric Roseman
Mike Burnick
Robert Bauman
Membership Director
Managing Editor
Franchise Editor
Graphic Designer
Conference Director
Uranium prices crashed last year for several reasons.
High prices, massive speculation, and new supplies as
a result of booming exploration activities in Canada
and Australia finally put an end to the “bubble.”
David Newman
Kathlyn Von Rohr
Jeff Saunders
Bruce Borich
Elvira Amankwa
For years, uranium prices languished below
US$10 per pound. At the time, abundant inventories
swamped demand. But as inventories declined, the
price soared until uranium finally hit a record high
in June 2007. A swarm of speculators jumped on the
uranium bandwagon and propelled this bull market
forward. They loaded up on more than 18 million
pounds of uranium by 2006.
The Sovereign Individual is published 12 times per year for US$49/year by The
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В©2008 Sovereign Offshore Services LLC. All Rights Reserved.
Protected by copyright laws of the United States and international treaties. This
Newsletter may only be used pursuant to the subscription agreement and any
reproduction, copying, or redistribution (electronic or otherwise, including on the
worldwide web), in whole or in part, is strictly prohibited without the express written permission of The Sovereign Society.
LEGAL NOTICE: This work is based on SEC filings, current events, interviews,
corporate press releases and what we’ve learned as  financial journalists. It may
contain errors and you shouldn’t make  any investment decision based solely
on what you read here. It’s your  money and your responsibility. The information
herein is not intended to be personal legal or investment advice and may not be
appropriate or applicable for all readers. If personal advice is needed, the services
of a qualified legal, investment or tax professional should be sought. We expressly
forbid our writers from having a financial interest in any security recommended
to our readers. All of our employees and agents must wait 24 hours after on-line
publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation.
The Rush to Go Nuclear
Uranium isn’t traded on any exchange. Prices are
set mostly through long-term deals between producers and power utilities. Major uranium producers in-
2
Alternative Investment Opportunities
Cover Story | Continued
clude Canada (25% of total global supply), Australia
(19%), and Kazakhstan (13%).
and industry are projected to dominate nuclear
power construction over the next decade.
As energy prices continue to skyrocket, the pressure is mounting on foreign governments to introduce
alternative energy sources. This process is already
underway in Europe. This trend is also growing in
Asia, Latin America and the United States. Also many
governments are increasing tax incentives and other
subsidies encouraging companies to use uranium.
According to the World Nuclear Association, global leaders are planning to construct 80 nuclear power
plants by 2016 – mostly in Asia. China currently
operates nine nuclear power reactors for commercial
purposes and has another six plants under construction. The plan is to boost nuclear power capacity by
40,000 megawatts by 2020.
Western Europe remains the global leader in
nuclear power. France, for example, generates more
than 75% of its electricity from nuclear power.
Europe is followed closely by Japan, which already
houses over 55 nuclear reactors supplying 30% of the
country’s energy requirements.
If you combine China’s needs with India’s demand
for electricity, you can practically guarantee current
spot uranium prices will not remain static for long.
Especially when we’re facing tight oil supplies, soaring coal prices and expensive cleaner-burning fossil
fuels like natural gas and liquefied natural gas.
Since mid-2007, the price of oil
has doubled as uranium
plunged more than 50%
25
0
0
Own Uranium Now!
The best way to ride the uranium recovery is to
buy a chunk of uranium – almost literally. The Uranium Participation Corporation (Toronto-U) is an
investment holding company which invests in uranium oxide and uranium hexafluoride. It’s the closest
investment vehicle to owning uranium. Plus, you get
daily liquidity on the Toronto Stock Exchange.
2008
25
2007
50
2006
50
2005
75
2004
75
2003
100
Barrels of Oil in US$
125
100
2002
Uranium US$/pound
125
In contrast to other fossil fuels, uranium is abundant, cheap and clean. It’s the best and most costeffective energy alternative that will matter in heavy
industrial polluting countries like China and India.
From its all-time high last year, Uranium Participation Corporation has plummeted more than 46%
through May 2008. This is an ideal entry point for new
investors as uranium demand continues to increase in
an environment of explosively high energy prices.
Meanwhile China and India both have plans to
construct over 40 facilities over the next 15 years,
according to Cameco Corporation.
The United States, however, hasn’t built a nuclear
plant since the 1970s. Currently, America is home to
100 nuclear plants in 31 states that generate a fifth of
the country’s total electricity. The U.S. aims to generate an extra 50 gigawatts of nuclear power by 2020,
increasing its current capacity by more than 50%.
As I said before, I would view buying uranium
today as synonymous to purchasing crude oil back
in 2001 at US$26 per barrel or corn at US$2.20 per
bushel. Uranium is that cheap. It’s the most distressed energy play in the world. Period.
Buy the Uranium Participation Corporation
at market on the Toronto Stock Exchange. The
symbol is U. TSI
Asia Will Continue to Dominate
Nuclear Demand
Eric N. Roseman serves as Investment Director for The
Sovereign Society. He also edits the commodity-trading
research service, Commodity Trend Alert. Visit
www.commoditytrendalert.com to learn more.
The long-term supplies of traditional fossil fuels
will continue to decline. As they do, governments
3
Alternative
Opportunities
Tax SInvestment
aving Techniques
By Mike Burnick
Take One of These Simple Steps Today and Save
Thousands in Taxes in the Next 10 Months
By Mark Nestmann, LL.M.
to have it taxed as an S-corp. Properly formed and
managed LLCs (other than single-member LLCs) offer excellent asset protection. File IRS Form 8832 to
have the LLC taxed as a corporation, then file Form
2553 to elect subchapter S status.
Chances are April 15, 2008 wasn’t a particularly
pleasant day for you. I know it wasn’t for me.
In my case, the good news was that I paid enough
in tax before the April 15 filing deadline to avoid
any penalties. The bad news — even after taking
all deductions — is that I paid nearly 20% of my
income in federal income tax. Not to mention Social
Security tax, Medicare tax and state income tax!
Use the Tax Plan You Already Have
Another way to save on taxes is through your retirement plan. You can contribute up to US$5,000 each
year to an IRA (US$6,000 if you’re over 50). Not only
are earnings within your IRA sheltered from tax, but
you can also take a tax deduction for your contribution if you meet certain income limits. Plus, retirement plans can offer excellent asset protection.
Fortunately, six months remain in 2008 to minimize your tax obligations before the next tax day,
April 15, 2009. Here are some ideas you can put to
work immediately and save thousands of dollars in
unnecessary taxes.
You can even take your IRA offshore. Numerous
offshore banks and asset managers now permit U.S.
investors to invest their IRAs in a variety of non-U.S.
investments. Sovereign Society Council of Experts
member Larry Grossman specializes in such “offshore
IRAs.” Learn more about Larry by checking out his
website at www.sovereignpensionservices.com.
Save Thousands in
Self-Employment Taxes
If you own your own business, you can save a
bundle in self-employment taxes (Social Security and
Medicare taxes). Just form a “subchapter S corporation” to operate the business. Have the corporation
pay you a “reasonable” salary. Then take the rest of
your compensation as a dividend payment. There are
no self-employment taxes on dividends you receive.
Business owners have even greater flexibility to
lower taxes with contributions to tax-deferred retirement plans. One of the simplest to set up is a Simplified Employee Pension Plan (SEPP). You can contribute up to 25% of your salary each year to a SEPP.
Let’s say your business made US$90,000 in profits
in 2008. If you took all US$90,000 as a salary, you’d
owe US$13,770 in self-employment taxes. But if
you took only a US$50,000 salary, along with a
US$40,000 dividend, you’d save US$6,120 in tax.
How to Get Around Any Penalties
One drawback of an IRA or other retirement plan
is that the IRS taxes your income at your marginal
tax rate when you begin receiving payments. You
can’t take advantage of the 15% rate on qualified
long-term capital gains or dividends. However, over
an extended period, this disadvantage becomes less
relevant. That’s because every year, the income or
gain within the plan is compounding tax-deferred.
Sometimes the IRS tries to challenge a dividend
payment and treat it like a salary. This challenge will
succeed if you pay yourself an extremely low salary,
or take most of your compensation as a dividend. Be
sure to pay dividends to all shareholders on the same
date in proportion to their ownership percentage.
Unfortunately, S-corporations provide little asset
protection. If your business has significant assets,
then a limited liability company (LLC) is much
more useful to shield your company’s profits. You
can form a limited liability company (LLC) and elect
You also can’t begin withdrawing income from a
retirement plan until you reach age 59 1/2. If you
do, you’ll pay a 10% premature withdrawal penalty.
But you can easily avoid that penalty. Simply don’t
4
Move Abroad and Earn Up to $175,200/Year Tax-Free
Fed up with high taxes in the United States? If you are, move
your home and work abroad. Once you’re living in the country
of your dreams, you can earn up to US$87,600 annually free
of U.S. income tax. If your spouse accompanies you overseas, you can double this exemption and jointly earn up to
US$175,200, free of U.S. income tax.
You can exclude tax on additional income used to pay for your
housing expenses. In most cases, the maximum exclusion
for housing is limited to 30% of the exemption, or US$26,280
annually. These exclusions go up each year to keep pace with
inflation.
Fringe benefits that are non-taxable to a U.S.-based employee are also non-taxable overseas. Your employer can pay for
your health insurance, or contribute to a retirement plan, with
no additional tax liability.
You must qualify under one of two tests to be eligible for this
foreign earned income exclusion (FEIE): the bona fide residence test or the physical presence test:
• Bona fide residence test. If you have established legal
residence in another country for an uninterrupted period of
at least one year, you qualify under this test.
• Physical presence test. You qualify under this test if you’re
physically present in a foreign country or countries for at
least 330 full days during any period of 12 consecutive
months.
Under either test, you must prove that you have a new tax
home outside the United States. That means you live in a
jurisdiction that can tax your income on the basis of residence
or other ties. However, you need not live in a country that actually imposes an income tax. You must also file a U.S. tax return
every year you wish to take advantage of the FEIE, along with
IRS Form 2555.
The FEIE provides no exclusion for unearned income — rents,
royalties, interest, dividends, etc. You also remain subject to
capital gains tax and estate tax. And while U.S. Social Security and Medicare taxes don’t generally apply to wages for
services performed outside of the United States, if you’re selfemployed or work for a U.S. employer, you must pay Social
Security and Medicare tax on the same portion of your earned
income as you would in the United States. You also may be
subject to these taxes if you work in a country with which the
United States has signed a totalization agreement.
For more details about the FEIE, see IRS Publication 54, Tax
Guide for U.S. Citizens and Resident Aliens Abroad.
investments selected according to your objectives. The
investment income and the eventual payout vary, depending on how the underlying investments perform.
stash money into a retirement plan that you’ll need
before retirement.
Another tax-deferral idea is to contribute up to
US$2,850 annually to a Health Savings Account.
HSAs offer similar benefits to IRAs, except you can
access the funds anytime for qualified health care
expenses. You must combine your HSA with a highdeductible health insurance policy. The combination
of tax savings and lower insurance premiums more
than makes up for the higher annual deductible.
U.S. annuities are easy to purchase, but offshore
annuities let you target investments anywhere in the
world. They also offer enhanced privacy and asset
protection. They’re available for minimum investments of approximately US$50,000 from a variety of
countries, including Switzerland, Liechtenstein, the
Isle of Man, and Nevis.
The drawbacks of variable annuities are similar to
retirement plans. You pay tax on the income at your
marginal rate, and you can’t begin withdrawals until
you reach age 59 1/2. Plus, you can’t manage your
annuity’s investments without losing the tax benefits.
Don’t Pay Taxes on Income
You Won’t Spend
Are you paying taxes each year on income you
don’t need? Let’s say your US$400,000 investment
portfolio generates US$25,000 in income or gain each
year that accumulates in a bank or brokerage account.
If you don’t spend it, you’re paying from 15%-35%
(US$3,750-US$6,125) in unnecessary federal tax.
Not to mention you risk losing it in a lawsuit.
For more information on variable annuities, see my
report Amazing Annuities, available in the Sovereign
Society bookstore at www.sovereignsociety.com. TSI
Mark Nestmann, LL.M., is president of The Nestmann Group, Ltd.,
a consultancy assisting individuals
with wealth preservation solutions.
Link: www.nestmann.com. Contact
Mark at info@nestmann.com or by
phone or fax at (602) 604-1524.
To avoid paying the tax, and protect the portfolio
from litigation, consider placing the portfolio (or
part of it) in a variable annuity. In a variable annuity,
a portfolio manager invests some or all the funds in
5
Alternative
lternative
Investment
nvestment
Opportuni
pportunities
Global M
arket Perspectives
ties
By Mike Burnick
The $5 Trillion Dollar Flush
Americans Waste Six Billion Gallons of Water Every Day and
that Creates a Huge Investment Opportunity for You…
By Mike Burnick
In fact, water is fast becoming the world’s most
sought-after commodity. It’s a valuable resource
that most of us have taken for granted our entire
lives, but is getting scarcer with each passing day.
Not many people know this, but in a previous life
long ago, my friend (and Sovereign Society Membership Director) David Newman worked on offshore oil
rigs in the Gulf of Mexico. Today, 25 years later, David
tells great stories about spending weeks, sometimes
months-on-end working on the offshore platforms.
Water is running in short supply. It’s quickly
approaching crisis mode. The facts are sobering…
• One-third of the world’s population — billions
of people — don’t have access to fresh water
As a trained geologist, David’s job was to make
sure the drill bit and well pipe cut a smooth hole in
the ocean floor, in just the right spot to hit pay-dirt.
If David missed his spot by even a small fraction, you
could end up with a dry-hole, or worse, a blowout.
• According to the UN, global water consumption
will double every 20 years
• Half of the world’s population — will live under
conditions of “severe water stress” within the next
two decades.
But David’s not the only one with drilling experience in The Sovereign Society “family.” Patrick Nolan
(husband of our Publisher, Erika) spends his days
deep well drilling too, but Pat’s not after oil. When
he drills a well, he’s digging for an even more precious commodity…fresh water.
The fact is there’s just not enough fresh water to go
around in a fast-growing world that demands more
water for drinking, for agriculture, and for industrial
applications. The growing crisis in the world’s fresh
water supply means major profit opportunities are in
store for companies working to find solutions.
What Our “In-House” Hydrogeologist
Tells Me About the Looming Water Crisis
As just about any school kid can tell you, the earth
is about 70% covered in water. The trouble is, the
vast majority of this is salt water, which is not suitable for drinking or agricultural irrigation. In fact,
only 2.5% of all the water on earth is fresh water —
and 70% of that is currently in the form of polar ice.
As a fresh water hydrogeologist here in Florida,
Pat will tell you that the whole State of Florida (and
parts of Alabama, Georgia and South Carolina too)
depend on the complex Floridian aquifer for pretty
much ALL of its fresh water. This Floridian aquifer
system pumps out more than three billion gallons of
fresh water each and every day to support the drinking needs of 20 million people!
Fresh Water in
Short Supply
3% Fresh Water
New wells in Florida must be sunk very deep
—some are between 1,200 and 2,000 feet — just to
find reliable fresh water supplies. That’s further down
than some offshore oil wells. According to Pat, the
city of Highland Beach, Florida recently drilled this
type of deep freshwater well to serve its citizens…at a
cost of over US$1 million!
97%
Salt Water
1/3 of the world’s
population lacks
access to fresh water
It’s getting a lot more difficult these days to find
new fresh water sources, so Pat’s in the right business.
6
The Water Infrastructure Network says community water systems nationwide need US$12.1 billion
in infrastructure investment to improve municipal
water systems and prevent contamination. According
to the U.S. Environmental Protection Agency, 40%
of America’s lakes, ponds and reservoirs are polluted.
CGW Is Well Diversified
Top Fund Country Weightings (as of 3/31/08)
United States
35.07%
Finland
4.85%
France
19.53%
Italy
4.03%
12.95%
Brazil
2.41%
United Kingdom
Switzerland
9.51%
Hong Kong
1.72%
Japan
7.08%
Austria
1.20%
The global water crisis will result in an unprecedented spending boom of more than US$5 trillion
over the next 20 years, according to estimates. That’s
about US$250 billion in water-related spending
every year — a very big opportunity to profit if you
know where to invest.
Top Fund Holdings (as of 3/31/08)
Danaher Corp.
5.24%
Veola Environment
8.58%
ITT Corp.
4.44%
Geberit AG
6.58%
Nalco Holding Co.
4.25%
Kurita Water Industries, Ltd 6.04%
Itron, Inc.
3.93%
United Utilities PLC
Pentair, Inc.
3.41%
Suez
10.95%
5.89%
Diversify Your “Liquid” Assets
in a Single Trade
Part of the solution involves building new water
infrastructure in developing nations. It’s estimated
US$50 million will be invested each day on water
supply projects over the next few decades. Meanwhile,
aging water systems in modern countries are leaking
like a sieve, and badly need infrastructure upgrades.
Of course there are a dizzying number of ways to
invest in water. There are publicly traded water utility companies, water treatment stocks, clean-water
technology firms and more. You could even invest in
the pump, valve, and pipe makers that will cleanup from all this water infrastructure spending that’s
needed around the world.
Lack of Fresh Water is Truly
a Global Crisis
But for my money, the best way to go is to grab a
hold of a nice cross-section of the entire global water
industry in a single trade.
The World Water Council estimates that developing nations alone will need US$4.5 trillion in water
infrastructure investment over the next 25 years alone.
That amounts to hundreds of billions of dollars in annual spending to treat and purify drinking water, and
to improve deteriorating water delivery systems. But
this isn’t just a third-world problem...
The Claymore S&P Global Water Index ETF
(CGW) is an exchange traded fund featuring 50 of
the world’s top companies dedicated to meeting the
world’s thirst for fresh water.
This ETF tracks the Standard & Poor’s Global
Water Index, which includes water utilities, infrastructure firms, equipment providers, and instrument and material firms — each with a significant
presence in providing clean water.
In modern industrialized countries, municipal
water systems put in place centuries ago are woefully
inefficient and falling apart at the seams.
In Europe, most pipe systems date from before
World War I. And many of these nearly 100-year-old
systems have not been upgraded since then. Studies
show that between 40% and 60% of the fresh drinking water in Europe is lost before arriving at the tap.
Like so many other commodities these days,
water is running in short supply. This is one precious
resource that mankind definitely cannot do without.
The Claymore S&P Global Water ETF is a great way
to profit from the companies finding solutions to the
worldwide water crisis. TSI
Widespread contamination in Japan’s fresh water
system is becoming a serious issue. Australia has faced
droughts in recent years and now salt water is creeping
into fresh water wells — a major threat to farming.
Mike Burnick serves as a Senior Editor
and Global Markets Analyst for The
Sovereign Society. He edits his own
signature investment research service:
Market Shock Trader.
And in U.S., 30% of the pipes are between 40
and 80 years old…another 10% of pipes are over
80-years-old. As a result, about six billion gallons of
treated water leak from water systems every day.
7
Alternative
Investment T
Oechniques
pportunities
Wealth Preservation
By Mike Burnick
The Politics of Plunder: How to Protect Your
Wealth from Our Next President
By Robert E. Bauman JD
the equivalent income would be about US$200,000.
Taxpayers who earn this much fall into the top two
federal income tax brackets. So they already pay rates
of 33% or 35%. These already high rates would jump
to 36% and 39.6% if Obama has his way and President Bush’s tax cuts are allowed to expire.
The truth is that both the Republican and Democratic presidential candidates may differ in their
approaches to taxes and spending, but their fiscal
plans have one thing in common: Each could swell
the budget deficit and increase the national debt by
trillions of dollars. And that means more inflation
and a further devalued dollar.
In stark contrast, the Republican presidential nominee, Senator John McCain (R-AZ) favors extension of
the Bush tax cuts and promises “no new taxes.” However, he has his own spending programs that he may
or may not be able to fund with his proposed tax plan.
I’m not trying to frighten you, but it’s very possible a few of these apocalyptic scenarios could run
this course after the next President takes over.
Obama’s tax plan calls for a US$1,000 tax cut for
workers. The plan would effectively eliminate all taxes for about 10 more million low income Americans.
Sounds great, doesn’t it? Unfortunately, the plan
would also cost more than US$80 billion annually.
So let me take just a moment and give you the
ways and means to deal with them, both now and if,
God forbid, they do come to pass.
They Want to Spend MORE Than
You’re Willing to Pay
One can only wonder what death (estate) tax
Obama might want — especially when the current
lower estate taxes revert to 55% or more in 2010.
You can avoid this likely death tax increase by increase your gifting now.
One budget analyst tallied that U.S. Senator Barack
Obama (D-ILL) promises to spend an extra US$350
billion a year, on top of what we already to spend.
One solution: You can avoid the death tax and the
federal gift tax now if you can give up to US$12,000
annually to each donee. A husband and wife can
double that to US$24,000 per donee. Please see the
sidebar for more information.
To pay for all that he proposes, he’s calling for
major increases in all kinds of taxes. Based on his
U.S. Senate voting record, Obama is the most
extreme liberal in the Senate. His statements favor
increased taxes emphasizing socialistic income
redistribution.
More Bad News if You Make
Over $200,000 a Year
His theme is increase the tax burden further on “the
wealthiest” Americans who already pay the most taxes.
Obama wants still more taxes on the “wealthy.”
Of the 149 million households filing federal
income taxes for 2006, 3% reported income between
US$200,000 and US$500,000. Fewer than 1%
claimed income above half a million dollars. These
upper income taxpayers pay over 35% of all taxes.
Dan Mitchell of the Cato Institute explains: “One
of the most damaging provisions of Obama’s economic
plan is a scheme to remove the Social Security �wage base
cap.’ This means he wants the 12.4% Social Security
payroll tax to apply to a greater share of income. Currently, the tax is imposed on income up to US$102,000.
By imposing the tax on all income above US$200,000,
By “wealthiest” Obama means married couples
earning more than US$250,000. For a single taxpayer,
8
Obama would turn Social Security from an earned benefit into a welfare-style redistribution scheme.”
One solution: Convert a reasonable portion of your
cash holdings into a stronger, reasonably inflationproof currency such as the Swiss franc or the euro.
And by all means, please keep that cash in an offshore bank without branches in the United States.
Lifting the wage caps on Social Security could be a
tax disaster for many individuals. As Dan said, you’re
supposed to earn Social Security benefits by contributing to them during your lifetime. But with this
new policy, Social Security would become a soakthe-rich policy that forces wealthy individuals to pay
for Social Security benefits for everyone.
What You Can Do Right Now
The first step: Be realistic and see the situation
as it is. Then take the proactive steps to defend and
expand your diminishing wealth.
One solution: Many professionals are adjusting
their behavior to protect themselves from this tax
grab. If you can do so, receive payment for this discretionary income such as stock options or bonuses
before a new Congress raises taxes.
Four months prior to the elections, the situation is
already grim. The dollar continues to face long-term
fundamental problems. The bipartisan deficit government spending continues to go unchecked. You need
to take action now to protect yourself — no matter
who is elected.
Let’s Be Fair: It’s Not Just Obama!
Let me get one thing straight: this is not just a
Democrat issue. John McCain has his own questionable financial policies in the works.
The best way to do that is to immediately assess
your situation, then design and implement your own
offshore plans that will protect assets, minimize taxes
and shift investments abroad before this apocalypse
descends on your wealth. TSI
McCain, who calls himself a “conservative,” wants
to extend and expand Bush tax cuts. On the surface,
this may seem like a good idea, but in reality these
tax cuts can only increase the national deficit and the
US$9.4 trillion national debt.
A former member of the U.S. House of
Representatives from Maryland, Robert
Bauman now is a senior writer and
legal counsel for The Sovereign Society.
He also wants to lower the estate tax and taxes on
dividends and capital gains. Oh, and he also miraculously promises to balance the budget in his first term.
Just Because We Have a New President Doesn’t
Mean Your Heirs Should Suffer…
By Mark Nestmann
Whether Obama or McCain takes the White House in November, it’s conceivable you could face higher estate taxes
in the future. If you have money you don’t need or don’t want to spend, you can give it away – and save your heirs
thousands in estate taxes in the future.
You can make a tax-free gift of up to US$100,000 per year from your IRA to a charity. This strategy also removes the
assets from your estate, if you’re wealthy enough to be subject to estate tax. However, you can’t claim an income tax
deduction for these donations.
You can also make annual gifts up to US$12,000 to anyone you want without reducing your US$1 million lifetime gift
tax exclusion. If you have three married children and six grandchildren, you could make a US$12,000 gift to each child,
each spouse, and each grandchild, for a total of US$144,000 annually.
This strategy not only removes these assets from your estate, but can also reduce your income tax. For instance, if you
make a gift of appreciated stock to your child, your child may be able to sell it in a lower tax bracket than you could.
But beware of the “kiddie tax;” if children under 19 (or most college students under 24) have unearned income exceeding US$1,700 annually, they’re taxed at their parents’ top rate.
For more information on tax-saving strategies, see Mark Nestmann’s article on page 4.
9
Alternative
WorldInvestment
CurrencyO
Wpportunities
atch
The Three Currencies Everyone Will Want
When Oil Hits $150 a Barrel
Plus a FDIC-Insured Way to Own Them All
By Erika Nolan
It’s official. The historic run-up in oil prices now
exceeds even the manic rise of tech stocks in the late
�90s, when these shares shot up 640%.
Oil is now up 697% in the last seven years. But
unlike tech stocks, oil has strong fundamentals going for it. That’s why prices won’t drop significantly
anytime soon.
But while we’re all moaning about higher prices
and scurrying for ways to cut back on our energy
bills, three countries are very quietly reaping all the
rewards…and you can too.
Three Countries Cheer Oil Prices On!
With oil prices steadily rising, you could say
these three countries have already hit pay-dirt. Their
neighboring countries are paying hand over fist for
their resources. And all three countries are quietly
tucking those assets away in their coffers, and building up their economies in the process. And of course,
long-term their currencies are also profiting, from
these soaring oil revenues.
These fortunate countries are Australia, Canada,
and Norway.
According to our Currency Expert, Jack Crooks:
“In a world with an insatiable demand for commodities, betting on the commodity-based currencies over
the long-term does seem to stack the odds in your
favor.”
For starters, Australia benefits from the growing
demand for raw materials from emerging economies
and specifically from China. As a commodity-based
currency, the Australian dollar is a popular currency
with investors seeking to take advantage of the growing global need for resources.
Meanwhile, Canada has the second largest oil
reserves in the world, and the oil-guzzling U.S. is one
of its best customers. As such, the value of the Canadian
dollar “or loonie” is closely tied to the price of oil.
And finally, Norway is the third largest net exporter of
oil. Norway’s population enjoys one of the highest standards of living and a generous pension program fueled by
oil revenue. Historically, the Norwegian krone also tracks
the price of oil.
Introducing the Long-Term Way
to Play Oil Currencies
EverBank has created a special new certificate of deposit
(CD) that gives you exposure to each of these countries, and their dynamite currencies. It’s called the NEW
WorldEnergy CD.
This CD was specifically designed to give you ultimate
diversification across three currencies for a lower price.
If you invested in each of these currencies individually,
you would pay US$30,000. But this CD — packed with
all three currencies — is available to you for a minimum
investment of US$20,000.
Best of all, this CD is FDIC-insured. That means
that any account you open at EverBank is insured up to
US$100,000, just in case.
Of course, this NEW WorldEnergy CD has already
enjoyed some impressive gains over oil’s recent run-up. In
fact, it’s jumped over 16% in just the past year. But these
commodity currencies will still pump up your long-term
currency portfolio.
And it’s the best way to fight against those higher gas
prices as oil prices head higher.
This CD is available in three to six-month terms. But I
recommend you hold these currencies long-term for superior protection in your currency portfolio.
For more information on the NEW WorldEnergy
CD, you can view EverBank’s page at http://www.everbank.com/001CurrencyCDIndexNewWorldEnergy.
aspx?referid=11961 or call EverBank at 1-800-926-4922.
10
TSI
Offshore Solutions
Go East for Your Private Banking!
Why Singapore and Hong Kong Are Quickly
Gaining Ground as the New Money Havens
By Jack W. Flader, Jr.
Once they set up shop in Singapore or Hong Kong,
these private bankers can continue to ply their trade
without worrying about Europe’s longest arm grabbing their clients’ wealth.
Not so long ago, the joke was that you couldn’t
walk down the central districts of Hong Kong and
Singapore without tripping over a plethora of lawyers.
Second, the Asian Pacific Wealth Report boasted
in 2006 that high-net worth individuals in the region hold assets equivalent to US$8.4 trillion. That’s
up by more than 10% from 2005. And they also
forecasted that annual growth would jump 8.5% per
annum to US$12.7 trillion by 2011.
Fast forward to 2008, and you still hear the same
joke. Only this time, you can’t walk into a power
breakfast, lunch, cocktail hour or gala dinner without
tripping over a mass of well-groomed private bankers.
The “Go East” mentality of private bankers has
created opportunities for many as well as concerns
regarding the realities facing the industry.
What Hong Kong and Singapore
Can Offer You
Why Bankers Are Going East
It is clear to those bumping into private bankers
every day at upscale restaurants, that the banking industry here is growing at top speed. This offers many
opportunities such as...
The onslaught of private bankers is heading east in
earnest largely for two reasons.
First, the European Union’s infamous tax savings
directive has forced bankers to pick up and move
from Europe. The now infamous tax demands bankers to withhold taxes from their clients.
• Access to international equities, bonds and foreign exchange that may not be available via your home banker
• Strong banking privacy
• Protection from anyone who might want to sue
you in the future
• All the investment potential you would expect from
a private bank in Switzerland or Liechtenstein
• An easier way to buy Asian real estate as local banks
are well-versed in lending within their territories
• The peace of mind that comes with having a
portion of your savings far beyond the economic
troubles of both Europe and the U.S. right now.
This effort to coerce greater transparency has
chased the well-heeled Swiss, Austrian, and Liechtenstein private bankers to Hong Kong and Singapore.
Looking for Your Own Private Banker?
Here Are Two Places to Start…
LGT Bank
Singapore
Tel: +65-6415-3800
Email: Marcel.Furrer@lgt.com
Website: www.lgt-bank.com/pba/en/lgt_in_asia/singapore/
Minimum Balance: US$250,000 (in addition client must
have a total net-worth of S$2 million.)
So by all means, go east for your private banker,
but be prepared for the rough and tumble, competitive environment of Asia’s crowded private
banking arena! TSI
DBS Bank
Hong Kong
Tel: +852-2218-8037
Fax: +852-2235-5757
Website: http://hk.dbs.com/
Minimum Balance: US$1 million or equivalent
Jack W. Flader, Jr. is CEO & Group
Managing Director of The GCSL
Group of Companies Limited, Hong
Kong. To learn more, email jack@gcsl.
info or visit www.gcsl.info.
11
Alternative
pportunities
Money, MInvestment
arkets andOM
essiahs
By Mike Burnick
A Critical Lesson in “Crusoe” Economics:
What You Must Know to Survive the
Coming Attack on Inflation
By John Pugsley
I say: Before swallowing this illusion, apply “Crusoe” economics. Imagine Robinson and Crusoe are on
an island. Robinson fishes and Crusoe makes bread.
They barter, exchanging one fish for one loaf of bread.
The price of a fish is a loaf of bread, and vice versa.
While the presidential candidates have focused
their pre-election posturing on war, healthcare, and
jobs, an unmentioned elephant has wandered into
the room. His name is inflation.
One day Robinson only catches one fish, so he
brings half a fish to market and doubles his price,
demanding a loaf of bread in exchange. If Crusoe
agrees, has this caused inflation?
Of course, everyone else has noticed the elephant
— including the world press. For example, one
recent issue of The Wall Street Journal mentioned
inflation in no less than 19 articles. The average inflation rates around the world have nearly doubled in
the past year — from 3.6% to 6.3%.
No. Inflation is a rise in the price level. If Robinson raises his price, Crusoe must lower his proportionately, or no trade takes place. If one price
Food and energy prices are rising even faster. In the
doubles and the other falls in half, the price level
27-nation European Union,
“Whether McCain or Obama wins, remains the same. Producers
food prices rose by more than
can’t cause the price level to rise,
the public will demand that the
7% since 2007.
no matter what they do.
inflation elephant be shot.”
Yes, these higher prices
The thing missing in the “costare painful. But beware.
push,” “demand-pull” fallacy is money itself. When all
Increasing prices are not the threat. In fact, like a
other goods are priced in terms of the money commodbitter medicine, they are a natural cure for a dangerity, and the money supply increases, all prices appear
ous imbalance in the economic body. Higher prices
to be rising at once. All prices, that is except the price
represent a needed readjustment between the quanof money fall in exact proportion to the rise in price of
tity of goods, and the money in circulation.
other goods.
If price hikes are allowed to run their course, they
would lead to a new era of prosperity. But policymakers won’t allow that to happen.
Money is produced by central banks and governments, not by you or me. Whether McCain or
Obama wins, the public will demand that the inflation elephant be shot. A near universal belief in these
absurdities almost guarantees the next president will
aim the gun at businesses and consumers. Prepare
yourself for price controls, rationing, excess-profits
taxes, and a tsunami of regulations.
Like an addict who refuses to go through withdrawal, the public will demand politicians “do
something.” Rather than confessing to their own
inflation-causing shenanigans, the politicians point
the finger at the private sector itself. They blame the
very consumers and businesses that are damaged.
Solutions? Keep reading. Our “Total Wealth”
strategy is your bullet-proof defense against the
elephant gun. TSI
Misguided economists also promote this absurdity.
They say the cause of rising prices is…rising prices!
They say “cost-push” inflation, and “demand-pull”
cause inflation. They tell us “cost-push inflation occurs when the prices of certain goods rise, thereby
driving up prices of other goods.” Similarly demandpull inflation happens “when too much demand pulls
a product’s price up, and that product’s higher prices
pulls up other prices.”
John Pugsley is the co-founder and
Chairman of The Sovereign Society.
John has also written several best-selling
books on his brand of “common sense
economics.”
12
World Currency Watch
Why a Few Misplaced “Stronger Dollar”
Words Could Force the Buck Higher
But It Will Take Time
By Jack Crooks
His remarks sent the euro soaring and the dollar
reeling. The dollar-rout continued and trumped the
dollar’s push to new near-term high.
Something you’ll learn once you’ve got a good
amount of trading under your belt is the markets
don’t owe you anything. And if you ever come to a
place where you think you’ve got them figured out,
expect a good beating instead.
Then Bernanke came out firing again. His comments
capped a strong dollar recovery and opened up the door
for follow-through strength. Bernanke stated simply
that he and policymakers will “strongly resist” a surge in
inflation expectations.
The last few months have certainly dished out a fair
share of beatings to global investors. After touching an
all-time low on March 17, the dollar’s consolidation
path is definitely offering up far more questions than
answers. And the financial market backdrop isn’t shedding a whole lot of light on the situation.
It’s fairly clear where the Fed stands. In the face of
a struggling economy, policymakers may not be able
to raise their Fed Funds rate. But with rapidly rising
prices, it’s a good bet that the Fed Funds rate won’t be
going lower than the current 2% any time soon.
Is This a Sign of a Dollar Bottom?
These are welcomed developments that at least
point in the right direction for the buck. But it could
still be a bit too soon to schedule a pause in the dollar’s long road down.
On the bright side, there are signs that we could
finally see the dollar bottom this time around.
Last month, President Bush got his two cents in
about the need for a stronger dollar. But of course
these comments have little clout, and merely mirror Treasury Secretary Hank Paulson’s agenda for a
stronger dollar. That’s an agenda that has mostly been
backed by empty words rather than substantive action.
More Dollar Talk, Not Enough Action
Ultimately, a bearish flag pattern is emerging. This
would imply an eventual break lower and then a powerful breakdown to new all-time lows for the buck.
Until a clear resolution to the upside or downside,
expect a lot of talk and a lot of whiplash.
However, the President was just over in the MiddleEast trying to secure the current dollar pegs among
Saudi Arabia, the United Arab Emirates, and Qatar. The
potential for de-pegging among the Gulf Cooperation
Council (GCC) countries has been a talking point for
dollar bears over the last year or two.
If you don’t have the stomach for the whiplash, I
suggest you stay away from the buck for now. Instead
stay long the Aussie dollar and Japanese yen ETFs
that are currently in the TSI portfolio.
Mr. Paulson also mentioned a possible dollar intervention. Easier said than done, but he may get help...
EDITOR’S NOTE: With the right leverage, you
could use this dollar whiplash to make triple-digit
gains in the currency markets. See the insert to find
out how. TSI
Last month Ben Bernanke sent the dollar soaring
with inflation comments aimed directly at the consequences of a weak dollar. It’s VERY rare for central
bankers to discuss foreign exchange rates. But Big Ben
has gone as far as labeling a weak dollar as a major
negative. Talk about a change of heart.
Jack Crooks is the editor of World
Currency Options and The Money
Trader. He’s also president of his own
company, Black Swan Capital. Email
Jack at info@worldcurrencywatch.
com.
Of course, those comments were soon outdone by
European Central Bank chief Jean-Claude Trichet.
13
Portfolio Update
Our So-Called “Boring” Buys All Grabbed
Gains in the Past Month!
Now it’s Time to Stick to Foods, Drugs, Undervalued Commodities
and Japanese Stocks for MORE Gains This Summer
By Eric Roseman
Uranium Participation Corporation is the best way
to own physical uranium — now 46% off its all-time
high in 2007.
Most global markets are still being held hostage
by lingering credit concerns and bank write-downs.
But fortunately we’re not investing in what you’d call
“most markets.”
Water has also corrected sharply this year and
should be accumulated at these levels. Water infrastructure development is a tremendous long-term
growth story, especially in the emerging markets.
In the June issue, we urged members to focus on
gold and the mining shares following a correction
in April — and that proved well-timed. Gold stocks
have surged since May to over US$900/ounce. We
also recommended Japanese stocks, healthcare, global
infrastructure-related investments and two of the
world’s leading food companies.
The Claymore S&P Global Water Index ETF
(CGW) holds the world’s leading water engineering
and infrastructure companies.
Undervalued Global Themes
on the Move
We’re proud to say each of these recommendations
has already posted a gain over the last 60 days.
Another extremely overlooked theme remains Japan
– and for good reason. No other market requires more
patience as an investor than Japanese stocks. But we
still adore Japanese large-cap and small-cap stocks.
Defensive Investing is Not Boring
Historically, stocks barely make any headway in
the May to September period. But just because seasonal factors cause portfolios to yawn on Wall Street
doesn’t mean we’re hibernating.
Continue to buy or accumulate the iShares MSCI
Japan ETF and the Street Tracks Russell/Nomura
Small-Cap Japan Index. For extra lift or leverage, buy
the iShares Japan January 2010 $12 LEAP Calls –
already up 14% since April 1st.
Since recommending Swiss food and beverage
giant NГ©stle ADR two months ago, this European
goliath has already gained 7%. And Kraft Foods,
America’s largest packaged foods company has rallied
just under 2% in just a few weeks. These gains prove
once again that people need to eat and drink during
both bear and bull markets.
Sell Champion REIT and Vice Fund
This month, we’re selling Champion REIT and
the Vice Fund. Both investments have been a disappointment and should be sold. Asian real estate
investment trusts, or REITs continue to come under
severe selling pressure since last year. The Vice Fund
is now in a draw-down following a host of earnings
disappointments for most casino operators.
Tapping into Water and
Ultra-Cheap Uranium
This month, we’re adding two powerful commodities that recently corrected and offer great upside!
We continue to highly recommend the pros at
Tweedy, Browne Global Value Fund in the United
States and Oslo-based Skagen Global Equity Fund
denominated in Norwegian krone. Please note Skagen is not available directly to U.S. investors. TSI
Spot uranium prices have crashed more than 50%
from their peak last summer. Now this alternative
energy play is looking hot again. The Toronto-listed
14
TSI portfolio
Symbol/
Exchange/ Buy Price
Total
Investment
ISIN
Domicile
Added
Price
6/1/08
Returns Advice Notes
NEW BEST BUYS…TIME TO BUY:
Claymore S&P Global Water Index ETF
CGW
AMEX
TSI 7/08 25.54
25.54
New
Buy
Long-term precious resource
Uranium Participation Corporation
U
Toronto
TSI 7/08 C$9.84
C$9.84
New
Buy
Uranium oversold, cheap vs. oil
New WorldEnergy CD
EverBank
EverBank
TSI 7/08 20000.00 20000.00 New
Buy
Long-term Buy, USD Hedge
TIME TO SELL: The Vice Fund
VICEX
USA
TSI 1/08 $23.22
$20.48
-11.80% SELL Fund in draw-down; sell
Champion REIT
HK: 2778
Hong Kong SE TSI 3/07 HK$4.38 HK$3.65 -8.91% SELL Asian REITs under pressure
THE LATEST ON OUR OPEN POSITIONS: COMMODITIES
ASA
ASA
NYSE
TSI 2/00 14.89
82.20
499.06% Hold
Barrick Gold
ABX
NYSE
TSI 2/00 15.28
40.29
177.03% Hold
Kinross Gold
KGC
NYSE
TSI 3/07 14.08
20.11
42.83% Hold
Chicago Mercantile Exchange
CME
NYSE
TSI 4/03 47.10
412.10
797.20% Hold
ENI Spa ADR
E
NYSE
TSI 11/03 28.53
80.73
236.69% Hold
Gold bullion
none
TSI 4/04 428.63
897.00
109.27% Buy
Buy below $900
Goldcorp
GG
NYSE
TSI 1/05 14.87
40.58
177.04% Hold
Power Shares DB Commodity Index ETF
DBC
AMEX
TSI 7/07 25.86
41.09
61.83% Hold
Palladium none
TSI 1/05 175.00
438.00
150.29% Hold
SIPEF
SIP
Brussels
TSI 3/05 € 129.30
€ 521.19 328.33% Hold
Silver-Wheaton
SLW
NYSE
TSI 7/06 9.86
14.58
47.87% Hold
INTERNATIONAL VALUE Diageo
DEO
NYSE
TSI 4/03 37.25
77.03
136.70% Hold
Keppel
K02
Singapore
TSI 12/05 S$5.75
S$12.34 147.74% Hold
Kraft Foods Corp.
KFT
NYSE
TSI 6/08 31.63
32.13
1.58%
Buy
Buffett and Activists Buying
Nestle ADR
NSRGY.PK
OTC
TSI 4/08 116.95
124.80
6.71%
Buy
Core defensive stock
Sofina SA
BE0003717312 Euronext
TSI 7/07 € 89.98
€ 76.38
0.13%
Hold
CURRENCIES, BONDS, & ALTERNATIVE INVESTMENTS
All-Weather Portfolio EverBank EverBank TSI 2/07 10000.00 11841.15 18.41% Buy
Long-term Buy, USD Hedge
Asian Currency Portfolio
EverBank EverBank TSI 8/07 10000.00 10961.27 9.61%
Buy Long-term Buy, USD Hedge
Goldman Sachs Group 2/2033 6.125% US38141GCU67 USA
TSI 3/08 98.50
92.00
-6.60% Buy
Corporate bonds undervalued
Telefonica Europe 2/2033 5.875%
XS0162869076 Europe
TSI 3/08 € 102.00
€ 98.15
2.10%
Buy
Buy ahead of ECB rate cuts!
Safety First Trust PPN (Japan Nikkei)
AFO
AMEX
TSI 1/08 9.60
9.49
-1.15% Hold
Currency Shares Euro Trust ETF (Short)
FXE
NYSE
TSI 3/08 147.00
155.44
-5.74% Buy
Euro-zone growth slowing
Currency Shares Australian Dollar ETF
FXA
NYSE
TSI 4/08 93.00
95.54
2.73%
Buy
Highest G-7 interest rates
iShares Japan Jan. 2010 LEAP $12 Call (LBXAL) EWJ
USA
TSI 3/08 2.50
2.85
14.00% Best Spec Leverage trade on Japan
Pioneer-Momentum Emerald
BMG6198G3123 Bermuda
TSI 11/98 102.80
231.84
125.52% Hold
CHAOS/MARKET HEDGE INVESTMENTS CurrencyShares Japanese yen ETF FXY
NYSE
TSI 9/07 86.78
95.40
9.93%
Buy
Carry-trade hedge
iShares Lehman Brothers Short Treasury ETF SHV
NYSE
TSI 12/07 109.85
109.96
0.77%
Hold
Market hedge
iShares Lehman Brothers 1-3 Year Treasury ETFSHY
NYSE
TSI 12/07 81.46
82.85
2.72%
Hold
Market hedge
iShares COMEX Gold Trust ETF
IAU
AMEX
TSI 12/07 77.45
87.97
13.58% Buy
Buy on weakness below $87
ProFunds UltraBear Investor Class
URPIX
USA
TSI 4/06 16.52
13.78
-9.71% Buy
Market hedge
Prudent Bear Fund
BEARX
USA
TSI 12/07 6.02
6.21
6.31%
Buy
Market hedge
GLOBAL EQUITY FUNDS
Arab Gateway Fund
VGG0504F1009 BVI
TSI 1/08 $29.85
$41.69
39.66% Hold
iShares S&P Global Infrastructure ETF
IGF
NYSE
TSI 4/08 45.39
47.68
5.04%
Buy
Global boom in infrastructure
iShares MSCI Japan Index ETF
EWJ
NYSE
TSI 1/08 13.29
13.57
2.26%
Buy
Japan hugely undervalued!
Street Tracks Russell/Nomura Small-Cap Japan JSC
AMEX
TSI 12/06 50.75
45.20
-10.94% Buy
Cheapest index in the world!
Skagen Global Equity Fund
NO0008004009 Norway
TSI 10/07 NOK 822.60 NOK 774.65-1.01% Buy
Best global offshore fund!
Tweedy, Browne Global Value Fund
TBGVX
USA
TSI 2/08 29.91
27.67
-7.49% Buy
Top global value fund since 1994
WisdomTree International Healthcare Sector ETF DBR
NYSE
TSI 6/08 25.11
25.80
2.75%
Buy
Great values, contrarian play
Notes: The TSI Portfolio is an equally-weighted strategy and does not include dealing charges to purchase or sell securities, if any. Taxes are not included in total return calculations. “Total return” includes gains from price appreciation, dividend payments, interest payments, and stock splits. securities listed on non-U.S. exchanges; total return also
includes any change in the value of the underlying currency versus the U.S. dollar. Keppel Corporation 2 for 1 stock-split on May 2, 2007; entry price reflects stock-split. Stoplosses: The TSI Portfolio maintains a 15% stop-loss on every stock, ETF and bond recommendation; stop-losses are not exercised for mutual funds unless otherwise noted; Put
options maintain a 50% stop-loss. Sources for price data: Yahoo! Finance (finance.yahoo.com), Financial Times Portfolio Service (www.ft.com), TradeNet (www.trade-net.ch/EN),
Jyske Bank Private Banking Denmark (www.jbpb.com). (www.jbpb.com), and websites maintained by securities issuers. Please note, all our prices above are based on the prices
that were available on the first day of last month, just before we went to press.
25% off all books and reports!
The Sovereign Society’s
Financial Freedom Celebration
Celebrate your Independence and Preserve the Freedoms Our Forefathers Fought For
With These Titles from The Sovereign Society — at a 25% Discount
See This Month’s Insert for More Details.
15
Travel The Sovereign Way
Master the Foreign Exchange Market In Just One Day…
The Sovereign Society’s
FX UNIVERSITY
This fall six of The Sovereign Society’s leading currency
experts will unlock the mysteries of the FOREX market — in
a town near you.
• Plus, the four previously inaccessible ways to invest
in �exotic’ foreign currencies of the best-performing
emerging markets.
It’s your only chance to meet the pros — from
EverBank, the Philadelphia Stock Exchange, and Jyske
Global Asset Management, at The Sovereign Society’s
FX University, where you can master currency trading in
just one day.
It doesn’t matter if you don’t know a “pip” from a “pair”
or you’re a seasoned veteran, the FX University has something for YOU.
No matter what kind of investor you are, there are
rock-solid, profitable opportunities available in the currency markets. These strategies can shield your savings
and let you grab double- and triple-digit gains as the
dollar falls.
“Outstanding in every way. The Sovereign Society
put the appropriate professionals with the skills
in one room for me. I can really appreciate the
opportunities now open (to me).” —M.C..
Sign up right now and receive a FREE copy of our
latest work, Cracking the Currency Vault: An Insider’s
Guide to Succeeding in the Forex Markets. You’ll
get this NEW currency trading manual – a $149 value –
FREE at the door when you join us for FX University.
Call right now at 866-584-4096 to reserve your spot
today. Or see the events page at www.sovereignsociety.
com for more details.
Coming Soon to a City Near You
And now — for the first time ever — you can master all
of the exciting opportunities available to you in just one day.
You’ll learn:
• How to trade currencies on the NYSE with a regular account for as low as $100.
• The Truth about the Spot Forex market. How to make
gains of 221% in just two days!
• Investing in foreign currency is dangerous, right?
Wrong! Two FDIC-insured investments give you the
added benefit of broader protection of multiple currencies.
One-Day Sessions From 8am to 5pm
Seattle — September 15, 2008
From Beginner to Expert…for $119 or Less!
San Diego — September 17, 2008
Dallas — September 19, 2008
Sovereign Society Pricing:
Bring a Guest and save 15%
Chicago — October 13, 2008
Member - $119
Member Guest - $101
St. Louis — October 14, 2008
Lifetime member - $109
Lifetime Guest - $93
Traders Ring - $99
Traders Ring Guest - $84
Philadelphia — October 16, 2008
Ft. Lauderdale — October 18, 2008
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