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Every tax season I spend part of an afternoon collecting all the brokerage accounts statements that land in my mailbox and inbox during the year from all over the world. I tally up any capital gains and losses, interest earned and dividends received so my accountant can prepare my tax returns.

This year, I actually took notice of my dividend payments. I’ve always liked getting paid overseas. The cash quietly collects in my accounts and then one day I’ll notice it and use the money to buy more stocks.

What caught my eye this year was the size of my payments. They seemed … large.

I went back and looked at where I originally bought the stocks, did a little math, and discovered that with several of my global holdings, I’m earning dividend yields today of 10% or more. And this is on solid companies that, as I found out with a bit of research, have been raising their dividends regularly during the many years I’ve held the shares.

And that brings me to our topic today: A key component of any portfolio strategy must be dividend yield. Throughout time, dividends have accounted for as much as 40% of a portfolio’s total return. And in my view, the best yield to seek comes from overseas, where companies – even the small ones – are more-inclined to pay you a larger dividend and where you capture the benefit of stronger currencies.

Dividend Payouts by Many U.S. Companies
Have Been Slashed

The dollar is being destroyed and it’s no secret that U.S. interest rates will remain at near-0% at least until the end of 2014 – probably much longer – and yields on traditional income investments, such as government bonds and certificates of deposit, have nothing to drive them even marginally higher.

At the same time, in the wake of a decade of two savage bear markets, dividend payouts by many U.S. companies have been slashed, suspended or eliminated altogether in recent years – to the point where U.S. yields are now among the lowest in the world, and a far cry from their historical average of 4.3%.

The average yield on the S&P 500 is now just under 2%, thanks largely to the practice among many U.S. companies of plowing cash previously destined for shareholder payouts back into the balance sheet in the belief that company growth is ultimately more beneficial than dividends to shareholders.

However, there is strong evidence that shows higher-yielding stocks not only provide enhanced income for shareholders, but are less risky. Numerous studies have also shown that stock portfolios tilted towards higher-yielding companies have paid off handsomely.

These days, I know this is especially the case with yields on many investments in companies in Asia, Europe, even Africa, where the culture of high dividend payments has remained intact.

Sure, if you dig around, you can find a few U.S. companies like PepsiCo, General Electric and Merck that fork out yields of more than 3% and offer the possibility of share price gains, but these are rarities.

Savvy sovereign investors know that the key to a better return is to think globally. Internationally, you can easily find yields of 4%, 5%, 9% – often higher.

As I write this, I am looking at a list of small, dividend-paying stocks in Australia. I see yields that range between 5% and 13% in industries across a wide spectrum.

According to data from Thomson Reuters, the average payout from the Chinese equity market – available through easily traded Hong Kong shares – has jumped from 0.79% to 3.15%.

Dividend yields are also rising in Hong Kong, Taiwan, Singapore, Malaysia and the Philippines. The average yield in Singapore – Asia’s best performing market in terms of dividend payout – has jumped to more than 4.5%, compared with 3.9% half a decade ago. Many individual companies are yielding substantially more.

Better still, many overseas dividends are in currencies much stronger than the U.S. dollar and over time they will rise significantly against the greenback.

Yield is Rooted Deep in Europe

But the top-yielding region in the world remains Europe, in spite of the Continent’s chronic financial crisis. Dividend payment is rooted deep in Europe’s investment culture.

Germany’s Siemens, for example, which makes everything from household appliances to ultrasound devices used in hospitals around the world, yields 4.3%, while U.S. competitor General Electric yields 3.4%.

Meanwhile, in the pharmaceutical sector, the U.K.’s GlaxoSmithKline yields 5.5%, while New Jersey-based Merck pays out a 4.3% dividend yield.

Even U.K. supermarket behemoth Tesco, whose shares have lost nearly 20% of their value over the past year, yields 5.1% – which, to me, indicates that in spite of its share price tumble its long-term prospects remain strong.

I believe that every investor needs a counterweight to the tough times ahead, a source of income when nothing else is working.

And my search for yield outside the U.S. is all part of a dual strategy. While dividends have already emerged as one of the most crucial forms of income this year, it has never been more important to shift a chunk of your wealth outside the greenback and to seek dividend payments overseas.

Until next time, stay Sovereign…

Jeff Opdyke

P.S. I continually search for interesting investment opportunities that you can profit from. And I’ve uncovered a little-known “unclaimed” dividends program that the privileged have been profiting from for years. And recently, a handful of average investors have found a way to tap these “unclaimed” dividends and get actual checks deposited into their bank accounts every month. If you want to know how to claim these payouts, check out my latest special report here.

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I attended a banquet in Beijing in 1989, not long after the Tiananmen Square massacre. It was a strange time to be in China. A senior government official at my table denied the massacre had even taken place.

As the subject switched quickly to economics, he also told me of his government’s multi-decade plan for slow growth.

Well, that wasn’t very accurate either.

Growth – yes; slow – not even close.

Chinese economic growth has surpassed the wildest dreams – and fears – of the west. But as China’s global power has expanded, so too has their dinner-table sophistication and the investment opportunity…

Even back then, I knew China was the demand side of the equation in the commodities markets. Today, the Chinese are driving automobiles instead of riding bicycles. They are using computers. They are drinking fine wines.

The Chinese have also changed their diet from basic rice to more complex grains and animal proteins. This dietary transformation lies at the very heart of a very profitable opportunity.

As Chinese Wealth Grows, the Price of Grain Rockets

In 2001, China joined the World Trade Organization. Since then, the slow and steady march of the Chinese economy has turbo-charged the price of grain. The following chart shows how price in the key grain markets of soybeans, corn and wheat has skyrocketed since 2001:

Please click here to view larger image

Global demand for crude oil continues to grow. Exxon Mobile predicts that energy consumption will rise by 40% by the year 2040. Much of that demand will come from China.

The contrast between the demand for oil in fast-growing China and demand in the rest of world is obvious. But why is this important for grains? Well, it turns out that as prices for crude oil increase, demand for biofuels such as ethanol and fuels made from other grains also increases.

And therein lays the logic of another profitable vertex – as China’s thirst for fuel increases, so too does the price of both grain and oil.

Further Reasons for the Long-Term Surge
in Grain Prices

There are further reasons for the long-term surge in the price of grain…

An Appetite that will Drive Prices Higher: In 2008 droughts, floods and other climate events caused grain prices to soar as crop yields decreased. But based on projected consumption of grains in China, even in a perfect crop year where soybean, corn and wheat yields are at a peak, rising demand from China will support even higher price levels.

The World’s Top Grain Importer in Less Than a Decade: China is fast becoming the world’s largest importer of agricultural products, and within the next five to 10 years it will be there.

Thanks to the fact that China’s per capita farm land is less than 40% of the world’s average, the mass importation of soybeans is inevitable.

Demand Keeps Rising: Last year, China used up her strategic stockpiles of soybeans as the price of edible oil skyrocketed. The country supported local manufacturers of edible oils by supplying soybeans from stocks bought at lower prices. China then showed up as a buyer of soybeans when the market moved lower during the third quarter. Soybean prices recently peaked at over $15 a bushel!

The Chinese still have an appetite to replace their strategic stockpile.China has also become a net importer of corn this year after 14 years of self-sufficiency. The domestic demand for animal protein has increased China’s demand for corn and soybean meal.

The U.S. Dollar Has Also Pushed Prices Up: The long-term bear market in the U.S. dollar has also contributed to higher commodity prices across the board. Grain prices have moved higher in part because of the falling greenback.

China is competing for finite stocks of food-stuffs: China last year imported 54.8 million metric tons of soybeans – some 80% of its domestic consumption. As the Chinese include more meat in their diets, the country has become a key player in the global corn trade. Meat is an efficient protein source as the animals eat lots of grains. Human consumption of meat requires many times more grain production than an all grain diet would. Current projections are that China will import five million tons of corn this year. It is already the top importer of soybeans and cotton and a major importer of sugar.

The Bottom Line

China has undergone dramatic changes since 1989. Today it is an advanced nation with advanced desires and appetites, and there is only so much land on the globe suitable for growing staples.

We have only seen the beginning of a rally in the grain markets. The increasing sophistication of the Chinese appetite has created an environment for grains to continue to move higher.

And you should expect much higher prices in the years to come.
Shares in food processing companies such as Bunge (BG) are poised to rise. These types of companies are a good way to play the bull market in grains. Buy these stocks on dips. BG also processes grains into other products like ethanol, soybean meal, soybean oil as well as other processed products. And, for the more adventurous, the grain futures markets offer investors the opportunity to buy futures and options.

Make sure that you include long-term exposure to grains in your investment portfolio!

Your eyes and ears in the commodities market,

Andy Hecht

P.S. We have only begun to see the rally in the grain markets. And I see another commodity in particular that’s in the perfect position to take a meteoric rise in value in the coming years – natural gas. I see natural gas looking a lot like silver did twenty years ago… before it went on an 800% climb. To find out how you can profit from natural gas’s coming boom, click here.

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In the memorable post-World War II movie, The Third Man, Orson Welles delivered this memorable soliloquy: “In Italy, for 30 years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, 500 years of democracy and peace, and what did they produce? The cuckoo clock.”

Swiss cuckoos, indeed!

Last Wednesday, Minnesota U.S. House Representative and former Republican presidential candidate Michele Bachmann announced that she had become a full citizen of Switzerland.

On March 19, she was issued Swiss citizenship based on her husband’s dual U.S.-Swiss nationality. Under Swiss law, Bachmann had been a de facto Swiss citizen since their marriage in 1978. The couple’s three youngest children are also now dual U.S.-Swiss citizens.

On Friday morning, however, Bachmann – up for re-election in Minnesota’s 6th Congressional district – changed her mind, announcing that she had requested that the Swiss government withdraw her newly acquired citizenship. “I am, and always have been, 100% committed to the United States,” she stated, as if that had ever been in question.

No doubt the politics of her re-election campaign influenced her stark reversal. Bachmann does have a partially re-drawn district and has been criticized for absenteeism during her failed presidential run.

Why she made her Swiss citizenship public is a mystery.
The number of Americans with Swiss origins is estimated to be about only one million, with no known concentration in Minnesota.

Dual Citizenship is a Must

Regular readers here and the thousands of who have bought The Passport Book know that I advocate acquiring dual citizenship. Dual, even multiple citizenship, for Americans has been upheld as a legal right by the U.S. Supreme Court in several cases.

A second passport is solid insurance against tyrannical government. How many millions of Jews and others would have survived the Nazi Holocaust had the proper papers allowed their escape? And with the uncertain trends in American government and politics, even members of the U.S. Congress may someday need an escape route.

And although Democrats have done their unjustified best to smear Switzerland as a haven for tax dodging and money laundering, of all passports, the Swiss is one of the best. It offers visa-free travel to many countries. However, acquiring Swiss citizenship is difficult, usually requiring years of residence to qualify, and even then may be subject to local canton approval.

Very few people are naturalized each year and Rep. Bachmann was eligible only by virtue of her marriage in 1978, which took place 14 years before the current, stricter naturalization law pertaining to spouses was adopted.

With the lack of civics education among all Americas today, it is easy for the news media to portray dual citizenship as somehow unpatriotic. That ignores the fact that millions of Americans are legally dual citizens, often without their even knowing it.

The Millions of Possible Dual Citizens

For example, 40 million U.S. citizens, nearly 12% of the population, can trace their ancestry to Ireland. If they can prove that a parent or grandparent was an Irish citizen, they, too, can obtain an Irish passport and citizenship, and thousands have. Likewise, of the 31.8 million Americans of Mexican origin, many are eligible for dual U.S.-Mexican citizenship.

So why not become a dual U.S.-Swiss citizen?

As a Swiss citizen, Bachmann not only would have the right to live and work in Switzerland, but to run for political office there.

In recent years, U.S. citizens with dual citizenship have served as officials in the governments of Yugoslavia, Armenia and Estonia. Mohamed Sacirbey, who grew up in the U.S., didn’t set foot in Bosnia until he went there in 1995 to become its foreign minister.

A retired U.S. government employee, Valdas Adanikus, was elected president of his native Lithuania, while a former New York City attorney – and still a U.S. citizen – Leonel Antonio Fernández Reyna, is in his second, non-consecutive term as president of the Dominican Republic.

Of course, many are having fun with Bachmann’s odd behavior.
“A majority of Americans would be very pleased if she took herself and her family and moved permanently to Switzerland,” U.S. citizen John Penn said in a comment on the website of Swiss Radio International (SRI).

There is little doubt that government bureaucrats and tax collectors see dual nationality as a threat to their control over the citizens they profess to serve. Regardless of Bachmann’s politically split personality, for your own future, if you qualify for dual citizenship and a second passport, act now.

Faithfully yours,

Bob Bauman

P.S. Not only is the government seeking to revoke your rights, but all around the world, governments are taking steps to eliminate paper currency. My colleague, Jeff Opdyke, shares that the shift to electronic transactions will change everything from the way you pay bills, shop online and even tip your bartender. It will also give governments more power to monitor how you choose to spend your money. To find out how you can protect yourself – and profit – from the coming “Death of Cash,” click here for his latest special report.

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I was about 11 or 12 years old, listening to my mom – a travel agent at the time – talking to a co-worker about finding a way to get a client to Minneapolis. Absent-mindedly, I chimed in to say, “You could have him fly on Allegheny from New Orleans direct to Pittsburgh, and then he can connect to Minneapolis.”

My mom and her friend looked quizzically at me for a moment. Then my mom asked, “How could you know that?”

“I read the Official Airline Guide when I get bored,” I said.

I spent many an afternoon at my mom’s travel agency studying air routes, and I spent much time as a kid traveling the world with her. Today, I reflexively pay attention to which airlines fly where and which carriers add new routes – to the point that it took me about 30 minutes on Sunday to coordinate and book my upcoming multi-city tour of Southeast Asia on four different Asian airlines. I do so, in part, because I am forever seeking my next overseas adventure.

But, more importantly, I do so because as a global investor, the knowledge often points me toward investment opportunities – particularly when new routes connect unexpected cities.

Air Routes Tell You Much More than Just Where Airlines Fly

Think about why it is that airlines add a new route to their network. It’s not because the CEO or the chief pilot think flying between London and Karachi is cool. They do so because the folks who run airlines see demand for linking two locations, either with passenger service or cargo service … or both.

In short, it’s driven by commerce.

And that tells you how countries are beginning to relate to one another. It tells you an economic rationale exists for connecting two dots on a map. And where there’s an economic rationale, there’s money to be made as an investor.

The individual routes don’t often mean much. After all, most public companies aren’t so parochial that they’ll dramatically benefit from increased tourism or cargo in Karachi.

But long before the rest of the world finally sees the increasing trade-flow data between two countries, new air routes have already served as an early indicator for me that something is up that I might need to know more about as a global investor.

They tell me a great deal about where the world is headed and where future profits will emerge.

That’s why I pay attention to my personal “air-route indicator.”

New York to London? That’s So Yesterday…

In the 1970s and ’80s, carriers like Japan Airlines, British Airways, American Airlines, Delta and others were busy adding routes between the U.S. and Europe, Europe and Japan, Japan and the U.S. Indeed, New York-London, London-Tokyo, and Tokyo-New York were some of the busiest international routes when those three financial capitals ruled the world.

Today, New York-London is 32nd on the list of busiest air routes, measured by total seats available. All the international routes above it link rapidly growing Asian, African and Middle Eastern cities – many of which united for the first time only recently.

I specifically watch for new routes, because that’s where you uncover the potentially interesting investment opportunities.

Case in point: Emirates, the flag-carrier for Dubai, in January launched service to Rio de Janeiro and Buenos Aires. The flights to Rio are a first for the carrier and deepen Emirates’ connection to Brazil. The flight to Buenos Aires marks the first economic ties between the United Arab Emirates and Argentina.

Most folks who come across such news nuggets miss the value. They don’t really care that a non-U.S. carrier is now linking Arabia with South America. But I look at air routes like these as grist to make other links that point to possible investments.

Where the “Air-Route Indicator” Points Today

In this case, the new Emirates routes tell me that countries in the exceptionally dry Arabian Peninsula are looking for relationships with other countries around the world that can feed the Arabian people.

Oil-rich Arabian countries have spent billions of dollars in recent years converting sea water to potable water they can then use to grow crops and become self-sufficient with their food needs. They’ve now begun to realize their folly and, instead, are buying real crop land and access to raw commodities.

That’s where Brazil and Argentina fit into Emirates’ route map. Both are vast countries with lots of land and which produce great quantities of soy, wheat and sugar.

From that perspective, linking Dubai with Rio and Buenos Aires is purely an economic decision – a way for Emerati businesses and leaders to tap into the land and agricultural bounty that exists in Brazil and Argentina.

For an investor, that has all sorts of meanings. You could decide to scour Argentina and Brazil for stocks to own in food production, land management, even transportation. You could play a more-Sovereign angle and buy ag land in the region, somewhere safe like Uruguay, where you’re protected by strong rule of law.

Or you could, as I have done, look for the consumer-product companies back in the United Arab Emirates that serve the growing food-and-beverage demands of the expanding middle class.

Ultimately, you don’t need to know that you can get to Rio from Dubai. You just need to know that some air carrier believes a strong, economic reason exists to do so. With that little bit of – admittedly obscure – air-route knowledge, you can begin to piece together a world of investment opportunities.

Until next time, stay Sovereign…

Jeff D. Opdyke

P.S. Air routes are just one trend that I watch to find profitable investments. All around the world, governments are taking steps to eliminate paper currency. The shift to electronic transactions will change everything from the way you pay bills, shop online and even tip your bartender. It will also give governments more power to monitor how you choose to spend your money. To find out how you can protect yourself – and profit – from the coming “Death of Cash,” click here for my latest special report.

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Every driver knows that gasoline prices move around. Sometimes it ticks down a little, but mostly it goes up. Every time we pull into a gas station these days, it seems the price of fuel has soared once again. In fact, the price of gas at the pump moves each week.

Imagine if the price of a loaf of bread behaved that way.
In the oil industry, gasoline producers and distributors never take the risk of selling their product for less than it costs to refine it. They have worked out a system in which gas price increases (or decreases) are immediately passed on to the consumer.

In fact, bread is already starting to act like gasoline.

Remember how the Arab Spring in 2011 began in Tunisia with dissent over the rising price of bread. Higher prices for the staple caused an uprising that continues to impact the picture of the Middle East today.

And higher food prices will change the picture of the world in the years to come, just as they impacted major global events in the past. Marie Antoinette’s immortal utterance, “Let them eat cake,” or “Qu’ils mangent de la brioche” when her subjects had no bread to eat, preceded the French Revolution.

Governments Today Are Well Aware…

Last year in Egypt, surging bread prices brought protesters to Tahrir Square. This year, in March, Iran purchased 180,000 tons of wheat from the U.S. as the rogue nation faces tightening sanctions. Other governments are also stockpiling grains. And stock-to-use ratios of grains, such as corn, wheat and soybeans are dropping to some of the lowest levels ever witnessed.

Last year the Chinese government, in an effort to keep a lid on ever increasing grain prices, sold soybeans out of strategic stockpiles to edible oil manufacturers in China. This kept the lid on prices and stabilized food price inflation in the giant Asian nation, but it also depleted strategic stockpiles of the important commodity. China has now had to come to market to rebuild stocks. And, prices have gone higher for soybeans in the interim.

World population has grown to more than seven billion people. In the emerging markets, such as China, increasing wealth has changed diets and the Chinese people are eating more sophisticated foods today. Complex grains and animal protein are rapidly replacing all-rice diets. And global population continues to grow. These factors are putting a long-term strain on food supplies and, as a consequence, the price of grains is soaring.

See larger image

Over the past 10 years, the price of corn has climbed 177%, soybeans 176% and wheat more than 100%. This is not because of poor crop yields or market manipulation. It is simply that more mouths are competing for crops that are grown on finite arable land.

Food Companies are Reacting to the Trend

Rising demand for food, and particularly manufactured food products containing grains and other crops, means that food companies are also feeling the pinch. Manufacturers know their clients want to lock in prices as far forward into the future as possible. But, at the same time, their suppliers are cutting back on price guarantees for grains, such as soybeans, corn and wheat that make the products.

I have recently seen an increase in the hedging activity of food manufacturers. The spread between Chicago and Kansas City wheat prices last year was evidence of the increase in the efforts to lock in future prices. These efforts forced Kansas City wheat to a huge premium, in some cases more than 20% over the Chicago price!

At the same time, the MF Global debacle last October (you can read all about in my recent article), chased a lot of hedgers, food manufactures included, from the markets. These hedgers lost faith in futures markets as a safe place to protect against price risk. As evidence of the disappearance of the hedgers, the Kansas City wheat premium to Chicago dropped to just 17 cents recently. Last year, that premium was as high as $1.45!

See larger image

Passing the Risk to the Consumer…

There are few options left for food manufacturers today. MF Global has cast doubt on the reliability of futures exchanges for many hedgers. At the same time, farmers and large grain suppliers are making it more expensive to hedge because of rising grain prices. They don’t want to risk selling in the future at lower prices than they will be able to source grains.

Therefore, the consumer will have to shoulder the risk of volatile food prices.

And there is already a model for this – gasoline prices.

So don’t be surprised if bread (and other foods) becomes as volatile as gas prices in the future. Every time we need to fill up our tanks, we really don’t know what the price will be until we pull to the pump.

I expect that soon we will face the same uncertainty when it comes to a loaf of bread or many other products on supermarket shelves. And, as we have seen, volatile bread prices could have riotous effects on the geopolitical state of the world.

Your eyes and ears in the commodities market…

Andy Hecht

P.S. Emerging market demand is already having a huge impact on food and oil prices, and it’s only going to grow stronger. I see one commodity in particular that’s in the perfect position to take a meteoric rise in value in the coming years because of it – natural gas. I see natural gas looking a lot like silver did twenty years ago… before it went on an 800% climb. To find out how you can profit from natural gas’s coming boom, click here.

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I am a Southern boy … which means I feel right at home when I’m traveling across Asia.

By that, I mean I fit right into the iced-tea drinking culture that’s now sweeping the region. Asians, as you probably know, are big on tea, though historically that has meant hot tea, often meticulously prepared and served in dainty, porcelain cups that look like something from my daughter’s doll house.

Increasingly, though, Asian consumers and workers on the go are ducking into convenience stores and grabbing bottled iced tea. And I’m right there with them. When I head back to Asia in June, I will, as I always do, plot the location of convenience stores nearest to my hotel so that I can pop in and snap up a few bottles of iced jasmine green tea to take back to my room.

All of this speaks to the rising middle class that I am always talking about to anyone who wants advice on how to make money investing overseas.

Wherever you find billions of people all coming into greater wealth, you have a consumer boom in the making. And all you need to do to profit is look for where it is that those consumers are spending their money … and then follow them.

Forget Coke. The Real Growth is in Tea

Hand in hand with the seismic shift of rising consumerism is the rise of convenience foods. That includes everything from iced beverages and packaged, instant noodles to fast-food chains and supermarkets. It mirrors the phenomenon that occurred in America and Europe in the decades following the Second World War.

The soft drinks sector – which now includes the burgeoning iced-tea market – is highly competitive in Asia. U.S. multinational juggernauts Coke and Pepsi have tapped emerging markets to help drive growth and they’ve been battling for dominance in Asia for several years now.

But soda is largely a slow-growth category in Asia compared to the cultural favorite, tea. Soda sales on an annual basis are growing in the low single-digits, while iced tea, according to market researcher A.C. Nielson, is growing at nearly 20% a year. That makes ready-to-drink tea one of the fastest growing sectors in consumer foods.

A big part of the reason is that Asians don’t yet drink as much as the West, though that’s now changing.

Per‐capita beverage consumption in China is just 25 liters. Indonesia, the fourth‐largest population in the world, mustered just 60 liters. Thais consumed 75 liters. Even westernized Taiwan and Japan were just above 100 liters each.

By comparison, the U.S. consumed some 262 liters per capita, on par with other Western nations.

Asians have some catching up to do … and their increasing disposable incomes are allowing them to do just that.

In short, beverage companies have big growth opportunities across Asia – and iced tea is shaping up to be one of the hottest (or maybe the coolest) sectors for investors who want to play the emerging consumer.

Listen to what U.S.-based professional investors say and you’re likely to believe that you should put your money into a big multinational like Coca-Cola that has its spigot in all kinds of markets big and small, developed and developing.

I say that’s the wrong approach entirely.

While Coke – and Pepsi – clearly has growth opportunities across Asia and will remain a force in the region, it’s not a pure play on emerging consumers. The company is so big now that it can’t move the needle much. In the past decade, Coke’s shares have gained just 3% a year on average, not much better than a bond.

As an investor in the New Consumer, I want returns that are far better than that.

66% Profits in the Rise of Iced Tea

That’s why I’m a fan of companies like Hong Kong-based Uni‐President China, one of the leading beverage makers in the Middle Kingdom. (It’s also doing bang-up business in another growth category, instant noodles).

Uni‐President spent the last few years rationalizing its product lineup and drastically cutting non‐profitable lines, particularly in the noodle segment. It has emerged as China’s No. 2 tea maker, with a 23% market share.

It has also expanded its production base across China by adding plants in provinces where the company currently has no production facilities, yet which are contiguous to where Uni‐President is already a successful brand. That move will lower transportation costs, increase penetration among those who already know the name and open up new markets with consumers new to the name – all of which will drive sales and plump up the bottom line.

Subscribers to my Emerging Market Strategist service have seen their Uni-President China shares surge by more than 66% in the time we’ve owned the stock. The shares are no longer a buy at current levels, but the company nonetheless represents the kinds of opportunities you need to seek in order to build your wealth on the back of the New Consumer.

Until next time, stay Sovereign…

Jeff D. Opdyke

P.S. Uni-President is the perfect example of an offshore company that’s not traded on U.S.-based exchanges, but has huge growth potential. I spend every day searching for these “censored stocks” that your broker will never tell you about. And missing out on these opportunities could be costing you thousands of dollars a year! To find out more about breaking free from domestic stocks, click here.

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Johnny Carson once joked, “The difference between a divorce and a legal separation is that the legal separation gives a husband time to hide his money.”

In the lounge at the Hamilton Princess hotel in Bermuda, about seven years ago, I was offered a choice. I was setting up an investment account.

The advisor leaned in and whispered, “Now, you don’t have to put your husband’s name on this account. It’s up to you. But if things go bad between you, and his name is on this account….well, it will be too late.”

I did the fair thing – I added Patrick’s name to the account. After all, the money was “our” money… earned by both of us. Now, after nearly 14 years of marriage, things are still rosy (knock on wood) and the majority of our wealth has been built together.

Putting money out of reach – from a spouse, children, business partners, or even employees – is a rather unsettling, but very popular topic. Just last week, the WSJ ran a full page story telling of how hiding money from your spouse has gotten harder… but the truth is there is a simple way to protect your wealth.

Discretion – Less is Really More

Money is easier to disguise when it never surfaces. This may not seem like a secret, but it is. Using a bit of discretion and living beneath your means may seem counter to the “American Way” but it’s smart.

Bragging and flashing cash is a big risk these days. The less you flaunt your wealth – and your personal details – the less likely people are to reach into your pockets. Often, you are your own worst enemy. A few of the wealthiest people I know look like average, every-day people.

My one good friend is worth tens of millions of dollars, easily. And for the duration of our decade-long friendship, I’ve rarely seen him dressed in much more than a pair of khakis, a button-down shirt and a muted cashmere sweater tossed around his shoulders.

Another friend of similar means chose to pay cash for his cars – buying mid-level Japanese models because he finds them reliable. He lives in a very nice, but modest house for his wealth. Outside of those closest to him, no one has a clue about his net worth.

A long-time Sovereign Society member, I’ll call him Paul to maintain his privacy, has been attending our offshore events for years. I met him in early 1999 and frankly, he was dressed like a building maintenance man. I still remember his bright yellow t-shirt and his tan Dickies. Years later, he still wears nearly the same outfit to our events, but I now know he owns multiple apartment buildings in New York City.

The other mistake many people make, other than flashing the cash, is volunteering private information. Telling people about your wealth is one of the fastest ways to get on the radar.

I fly roughly 75,000+ miles a year and I’m always amazed at the stories complete strangers tell me during the course of the flight. Small talk is fine…but revealing your net worth, bragging about your latest real estate development, divulging your portfolio assets, and the like makes no sense.

Say Good-Bye to Technology

Besides keeping your lips sealed, use discretion with today’s technologies. As the WSJ rightfully points out, smart phones, text messages, Facebook and computer transactions all leave a trail that can easily be picked up by a spouse. And, these trails are very hard – if not impossible – to wipe out. But, the WSJ falls a bit short with their advice.

I am a huge advocate of not using electronic communication for anything truly confidential. This is especially true when it comes to offshore accounts, trusts, etc.

If you want to ensure real privacy over your financial information, you have to go back to basics.

Elect to have any detailed financial statements from banks or brokerage firms held for you. Then instruct the companies to forward the documents to a lawyer. Normally, asset-protection or family attorneys offer this service, and this is especially true if you are a client. Opt to go to the lawyer’s office to open and review the mail, make any necessary phone calls or sign any necessary papers. Leave any documents you need to retain in the custody of the lawyer to ensure maximum privacy where it is shielded by the rules of lawyer-client privilege. Shred anything that isn’t worth saving.

My advice is to use discretion when it comes to your wealth, and that applies to everyone…except governments and tax authorities. There you must be fully transparent and fully compliant. Tax returns are not part of public record so they can’t be accessed without a lawyer and a judge.

Unfortunately, many people make their most private financial details “public” all by themselves. Keep your secrets to yourself. It will save you thousands.

In Wealth & Prosperity,

Erika Nolan

P.S. Along with protecting your wealth, finding opportunities to invest and grow that wealth are also important. And that’s where my colleague, Andy Hecht, comes in. A little over twenty years ago, he correctly saw that silver was massively undervalued, and ready to explode higher. When silver’s wild ride came to a close, it was up 800%. Andy says that right now natural gas is in the same position as silver was back in 1995, and the time to act is now. To take look at Andy’s research, simply click here.

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Berkshire Hathaway’s annual meeting is always a circus and this weekend in Omaha, Nebraska, was no exception. Chairman Warren Buffet and his chief henchman, Vice Chairman Charlie Munger, held court and answered questions for five hours. But this time, they made some of their craziest comments yet.

Munger said: “Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939, but civilized people don’t buy gold – they invest in productive businesses.”

Is he saying that Jewish families in Vienna in 1939 were not civilized? Or is he saying it is “uncivilized” to buy gold?

Either way, I think he’s a jerk – on both counts!

Berkshire Hathaway Claims to Hate Gold

There is no doubt that Buffet’s track record is impressive. Recently, the so called “Oracle of Omaha” has become a spokesman for higher taxes. President Obama has even nick-named his tax-raising plan the “Buffet Rule.”

Certainly, Buffet has never been shy when it comes to gold as an investment. In October 2010, he said, “You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all – not some – all of the farmland in the United States. Plus, you could buy 10 Exxon Mobiles, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?”

As an investor, Buffet has a point of view, and of course he’s entitled to that. I simply don’t agree with him. And here’s just one small reason why: since October 2010, Exxon Mobile’s share price climbed by around 27%. However, gold appreciated by 57% over the same period.

The Oracle of Omaha prefers Exxon Mobile. Which would you choose? Duh…

Last year, 88-year-old Munger said: “I don’t have the slightest interest in gold. I like understanding what works and what doesn’t in human systems. To me, that’s not optional; that’s a moral obligation. If you’re capable of understanding the world, you have a moral obligation to become rational. And I don’t see how you become rational hoarding gold. Even if it works, you’re a jerk.”

This weekend Munger took his vitriol to a new level when he raised the specter of Vienna in 1939. Think gold vs. Exxon Mobil. Who’s a jerk?

I guess Munger forgot that Berkshire bought 130 million ounces of silver in 1997 and pocketed several hundred million from the deal.

But Why Do They Own Jewelry Businesses?

Munger seems also to have forgotten that Berkshire Hathaway has significant stakes in two jewelry companies – Ben Bridge Jewelers and Borsheims Fine Jewelry. These companies sell gold and, as a stakeholder, Berkshire profits! Does Munger regard his customers as uncivilized jerks?

Why the anger at this investment vehicle Charlie? What about the central banks of the world who hold gold as a reserve asset? Are they also jerks? Central banks added almost 20% of all new gold production to reserves last year. Are they uncivilized?

I don’t really get his unabashed anger toward gold, an object that has been a store of wealth for centuries.

An essay written by Howard Buffet, the Oracle’s father, in 1948, noted: “Human freedom rests on gold redeemable money.”

In this essay, the elder Buffet went on to say that paper money systems generally collapse in economic chaos. He also wrote that a gold standard would restrict government spending and give people greater power over the public purse. Is it possible that a $16 trillion U.S. deficit and a huge ongoing debt crisis in Europe constitute a degree of economic chaos?

Was Howard Buffet also an uncivilized jerk?

Munger and Buffet are public relations machines and they use their considerable influence to sway public opinion. Some of our political leaders rally them on as public pawns. Munger and Buffet provide justification for Washington’s continued printing of worthless currency and tax-raising forays.

The Oracle and his sidekick don’t seem to understand that gold is not an investment – it is a currency, the ultimate currency! The price of gold simply reflects the economic mess we are in today.

And let’s not forget Buffet and Munger are master manipulators. They invest in companies on a different level than you and me. When they make an investment they often get a special kicker, a huge dividend. When he invests in a company, Buffet, through Berkshire Hathaway, structures a convertible preferred stock that ordinary humans cannot buy. We can participate in his investment only by purchasing stock in Berkshire Hathaway.

And when scandal hits their company, the press, regulators and politicians turn the other cheek. For example, David Sokol, an heir apparent, last year bought stock in specialty chemicals manufacturer Lubrizol two months before Berkshire Hathaway invested in the company. Sokol, who recommended the company to Buffet, stood to make a pretty penny from Berkshire Hathaway’s investment in Lubrizol. Didn’t Buffet ask if Sokol had an interest in the company at the time? Berkshire and Sokol parted ways in the wake of the Lubrizol affair.

Meanwhile, Munger also owned stock in a company called BYD, a Chinese auto maker. Munger held the stock for a few years before suggesting that Berkshire invested. Isn’t this the same situation as the Sokol affair? I guess not. When you are Warren Buffet and Charlie Munger the rules are different.

The SEC decided not to bring a case against Sokol, even though they surely would have done so if it were you or me.

Nothing More than a Public Pawn

Being a public pawn has its advantages. You get to avoid scandal, invest on better terms than everyone else and there’s even the possibility of manipulating markets through outrageous comments.

My advice here is simple: Forget what Charlie Munger and Warren Buffet say. They have been saying the same thing for a decade and gold has just gone higher. If gold dips buy it.

And if you have any doubts, consider this: Since January 2002, Berkshire Hathaway’s share price has climbed 65% and gold is up 483% over the same period.

Who is the uncivilized jerk, Charlie?

Your eyes and ears in the commodities market,

Andy Hecht

P.S. Fiat currency instability is driving the price of gold and it’s only going to grow stronger. I see another commodity in particular that’s in the perfect position to take a meteoric rise in value in the coming years because of it – natural gas. I see natural gas looking a lot like silver did twenty years ago… before it went on an 800% climb. To find out how you can profit from natural gas’s coming boom, click here.

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The current French election can be summed up by the phrase: “Plus ça change, plus c’est la meme chose” – the more things change, the more they stay the same.

One of the main problems with the election is that the presidency of the French Republic is a job description written for one man – Charles de Gaulle – and no one else has since filled the post with much distinction.

As a young legislative aide in the U.S. House of Representatives Chamber, I had the honor to witness an address to a Joint Session of Congress by Monsieur de Gaulle, a most impressive man.

De Gaulle served as the French president from 1959 to 1969, led the Free French in exile during the Second World War and founded the Fifth Republic of France. He is considered by many to be the most influential leader in modern French history. He was an immensely patriotic man, who held the view known as “Gaullism” – that France must be a major independent power responsible for its own national security and prosperity, beholden to no one.

I suspect he would weep if he were alive today.

Choosing Between Two Evils

The current president of the Fifth Republic, Nicolas Sarkozy, is up for re-election this coming Sunday, as the leader of the Union for a Popular Movement (UMP) – the successor to the Gaullist party – and he may lose the French Right’s lease on the Élysée Palace for the first time in 17 years, and become the first president to be denied a second term since 1981.

François Hollande, the socialist candidate – a colorless, 57-year-old career politician – says he dislikes the rich and considers the world of high finance his enemy. He narrowly defeated Sarkozy in the first round two weeks ago.

Hollande got less than one-and-a-half percentage points more than president Sarkozy, 28.63% to 27.18%. The far-right National Front Party candidate, Marine Le Pen, took 17.9% of the vote and has refused to endorse either man.

Most observers think the French are fed up with Sarkozy, but have no real enthusiasm for Hollande. But if France goes socialist at the top (parliamentary elections follow later this year), it could disrupt “half of the Franco-German motor that drives the European Union,” according to The Economist.

France has been “the swing country in the euro crisis, poised between a prudent north and spendthrift south, and between creditors and debtors. And it is big. If France were the next euro-zone country to get into trouble, the single currency’s very survival would be in doubt.”

But to hear the two candidates campaigning, you would never know that France is in desperate need of government fiscal and spending reform.

France Needs Reform

France hasn’t had a balanced national budget in 35 years. The national public debt is high and rising at 89% of GDP and public spending accounts for a whopping 56% of GDP, yet both candidates have proposed reducing the national budget by little more than 3% next year. Meanwhile, unemployment is persistent and corrosive at 10%.

Sarkozy has attacked Hollande’s Obama-like equivocation of his promise to employ 60,000 new teachers, 5,000 new police officers and to create 150,000 jobs for young people with his pledge to control spending and reduce the budget deficit. Hollande plans to do this by raising taxes.

As one observer put it, the French want change, but not for themselves.

Hollande’s proposed taxes on banks are not helping the fears of undercapitalized French banks either. BNP Paribas Société Générale and Credit Agricole are already suffering from new fears about the euro-zone crisis, centered largely on Spain. And Hollande says that if elected he will renegotiate the EU fiscal treaty, pledging to curb banks’ “risky” trading activities and increase bank taxes.

As such, shares in BNP Paribas, France’s largest bank by market capitalization, have lost a quarter of their value since mid-March. Société Générale and Credit Agricole have lost about 33% each over the same period. Credit Agricole’s shares even sunk to new lows, closing at €3.57 on April 23, their lowest level since the bank was listed over a decade ago.

The real problem is socialist Hollande’s objection to EU austerity plans for fiscal tightening. He wants to preserve the French social model at all costs. Hollande is not suggesting slower fiscal adjustment to smooth the path of reform: he is proposing no reform at all.

As The Economist says: “A French president so hostile to change would undermine Europe’s willingness to pursue the painful reforms it must eventually embrace for the euro to survive. That makes him a rather dangerous man.”

And as one English observer put it: “Still, if you have to choose between the naughty schoolboy and the decent, colorless adult for your president, your choice is likely to fall for the grown-up.”
Polls suggest this is what French voters will do.

History Repeats Itself

President Nicolas Sarkozy, frustrated by what he clearly sees as Hollande’s grandstanding on his call for a European growth pact, puts it bluntly: “The only way for France to recover control over its destiny is to repay its debts.”

However, as France has proven, history tends to repeat itself.
After the storming of the Bastille on July 14, 1789, the absolute monarchy was abolished in France. Through the Declaration of the Rights of Man, France established fundamental rights for French citizens and all men, without exception.

In the wake of turmoil and brutality that followed the revolution, Napoleon Bonaparte seized control of the Republic in 1799 and was appointed First Consul and later Emperor of the French Empire. Over the next 150 or so years, four republics rose and fell before the advent of Monsieur de Gaulle in 1958.

However, most prophetic of all were the words of French critic and journalist Jean-Baptiste Alphonse Karr in 1849, a year after yet another French Revolution but three years before Napoleon’s nephew became “Emperor of the Second Empire.” He wrote: “Plus ça change, plus c’est la meme chose.” And so it is today.

Faithfully yours,

Bob Bauman

P.S. The turmoil in the French elections should sound familiar to any American – out of control government spending and rising unemployment. We face the same problems here at home, and our politicians are just as unlikely to fix them as are the French. The only person you can count on to secure your own financial well-being is yourself. For my Offshore Confidential subscribers, I keep track of the biggest threats to your wealth, and the steps you need to take to protect yourself. To find out how you can become a member today – before things get even worse – click here.

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Yesterday, I told you that the big question at this year’s Total Wealth Symposium in Cabo San Lucas, Mexico, last week was: What happens to America after the November 6 election? The answer was that no matter who wins the presidential race, stashing your cash in a foreign brokerage account is an easy way to help protect your assets and your spending power from what’s to come in America.

Whether you want to trade stocks or simply park your cash overseas, a foreign brokerage account is, I have found though the years, the single best way to get your money offshore.

But how, attendees wanted to know, do you open a brokerage account in a country you might not have ever visited?

In my writings and the various presentations I give, I make it sound like opening a brokerage account outside America is easy. But, many of your fellow Sovereign thinkers who joined me in Cabo wanted to know, is it really that easy?

Looking for a Way into Southeast Asia

Several times over the course of last week’s symposium, attendees stopped to ask me about the various brokerage accounts I operate from in Asia, Africa, the Middle East and Europe. They wanted to know where I’m opening accounts and, more importantly, the process involved when you’re dealing with financial firms on the other side of the world.

Just last month I opened my latest brokerage account … in Cambodia. The process illustrates the steps you can mimic to successfully open a brokerage account just about anywhere overseas.

I began looking for a way into Cambodia last year as that forgotten, Southeast Asian nation began earnestly moving toward finally opening a local stock exchange. I like being one of the first, Western retail investors into newly opened stock markets, because of the opportunities for huge gains as government-owned companies are privatized.

Because of my years investing in Asia, I knew of a Cambodian brokerage firm that had set up shop to provide services to investors once the local stock market opened.

Now, you might not know of a local firm in whatever country you want to own an account, but that’s not a problem. All you have to do is go to the homepage of any local stock exchange (Google it; they all have websites) and look for the list of exchange members. Then, systematically contact each one by way of email until you locate a firm that will work with Americans. I promise you’ll find at least one … and often several.

I sent my standard email to SBI Royal, asking if the firm would accept U.S. clients. The reply was yes, but only after Cambodia’s stock market officially opened.

My Account was Open in Just One Week

Earlier this year, Cambodia finally cut the ribbon on its new stock exchange, with the country’s first stock listing occurring in April. So, I sent another email to the firm in mid-March and received a reply the following day with the various documents I needed to fill out – a brokerage application, an application for a local investor ID number, and an application required by Cambodia’s version of our SEC.

Along with those, I needed to include in the return packet a copy of my passport, a photo of myself and a reference letter from my Louisiana bank.

There was one step, however, that many Americans may find peculiar – the need to have every document, including the passport copy and my photo, notarized. Even lawyers look at me funny when I tell them I need to notarize a piece of paper as innocuous as a copy of my passport. But it’s necessary for the “know your customer” rules that banks around the world follow. If you’re not sitting across the desk from the person opening the account for you, the firm has no way to know that you are who you say you are. A notary stamp on a passport is the firm’s assurance that you are who you claim to be.

I dithered for several days while attending to other matters. But when I got around to completing the paperwork, it required very little time. I finished the applications in less than 30 minutes, and a friend who’s a lawyer, notarized all my documents in less than 10 minutes the next day.

That was on a Thursday night and a Friday afternoon. I dropped off the packet of paperwork with FedEx on Saturday morning, April 21, just before I took off for my week in Cabo. Four days later, while I was eating breakfast on a veranda overlooking the Pacific on a pleasant Wednesday morning, I scrolled through my emails that had arrived overnight and saw one from my contact at the brokerage firm.

He had received my packet and the $5 bill necessary to obtain an investor ID from the government. He had, he said, begun opening the account. Welcome to Cambodia.

In all, the process had taken about a week.

The Same Process Works Anywhere in the World

I did not leave out a single step in the process I just described. Nor did I downplay any hassles. My Cambodia experience was typical of how easy it can be to open a brokerage account overseas. In fact, some account openings are even simpler. My account application for Zambia was all of half a page of basic information on my name, passport number and address.

Aside from the required notarization and the added cost of my documents overseas overnight through FedEx ($96), opening my account in Cambodia was simple and painless.

This same process works in generally the same fashion, and with the same set of documents that need notarizing, no matter where you go in the world to open a brokerage account.

After all, if you can easily open a brokerage account in Cambodia, a country barely a decade into democracy, then opening accounts in big, stable economies like Hong Kong, Singapore and elsewhere are no sweat.

Until next time, stay Sovereign

Jeff D. Opdyke

P.S. Earlier this spring, I took 45 sovereign individuals with me on a tour of Latin America’s hidden gem: Uruguay. With some of the safest, strongest banks in Latin America, great real estate investment opportunities – not to mention fantastic food and gorgeous beaches – Uruguay has easily earned the distinction as the “Switzerland of Latin America.” Our tour attendees were able to learn from our panel of Uruguay experts, on topics ranging from residency requirements to farm investment opportunities. We don’t want to keep Uruguay a secret, though, so for a limited time, we’re offering recordings of these presentations to you as part of our “Insider’s Guide to Uruguay.” To find out how you can get a copy – and learn more about this offshore paradise – just click here.