In 1933 the American government gave its citizens an ultimatum to hand in their gold at a set price. It carried a penalty of up to ten years in prison for anyone who did not comply. Within a year, the government raised the official price by 70%. Before the order, the gold belonged to its owners; a year later it was outlawed.
The past six years have been marked by significant change. Social contracts have altered, the monetary structure is crumbling under its own weight, and the world order has shifted to a different balance. Nobody knows what will replace any of it, and neither do we. How can we set ourselves and our assets up to be resilient in turbulent times and to avoid having a single point of failure?
– This article will not dive into possible catalysts to usher civilisations onto a new system, but preparing for a scenario in which a global AI hack heightens the surveillance state and introduces a new global monetary system might be useful. It is a probability that the G7 takes seriously in its planned war games, which are orchestrated with all major players as part of such an event. –
RESIDENCY
In our case, we look at ways of keeping ourselves and our family safe from such major upheaval. This starts with having no single point of failure in our estate. It means having the right papers to travel to relatively safe countries and to bank internationally. Depending on one’s nationality, multiple residencies might be needed to be location-independent. A European passport would help in many instances, as some of them even allow intercontinental movement. This route has become incredibly hard in recent years owing to the crackdown on tax regimes with passports as part of the deal. Nevertheless, obtaining a residency within a European country (Cyprus, Malta, Portugal, Greece, Hungary, Latvia) is possible by acquiring property or investing in a local fund, which depends on the country’s requirements. Besides the EU, there are a couple of promising countries that have favourable requirements, such as Turkey, the UAE, Georgia, Costa Rica and Malaysia. Turkey is an interesting one, as a passport could be part of the equation. Directly obtaining a passport is possible in certain Caribbean countries without actual presence being required. Mapping out possible residencies to move independently and stay operational at the height of turmoil is one of the best exercises to do, as these events come when you least expect them. Plan it carefully with a legal and financial advisor to ensure it is tax-optimised and the requirements are met.
OWN YOUR ASSETS
Moving is one thing, ensuring that your assets are safe is another. Brokers tend to lend securities and allow margin that can carry a high risk for the participants as well as for the broker during a catastrophic event. To keep securities safe is to have them in your name, which is called direct registration (similar to owning shares in a private company). Direct registration is possible for some eligible US securities and requires real effort. A relatively simple next step is to have the securities in segregated custody. This is mostly done by private banks in Switzerland that keep the securities segregated from the bank’s estate, as property belonging to the client in the event of bankruptcy. This is not the case for securities at an ordinary brokerage firm, which holds the securities in “street name”, with the account holder as the beneficial owner. This shouldn’t be a major issue during a bankruptcy (if the amounts fall within the legal coverage), but in case of deficient records, fraud, a custody shortfall or lengthy proceedings, it might vanish. If for some reason the sketched AI catalyst takes place, evidence is great, but a clear ownership structure is pre-eminent. Capital has moved significantly in recent years to places like the UAE, Singapore and Hong Kong, to diversify certain assets by jurisdiction.
Holding the securities in different segregated accounts across the world seems safe, but additional reassurance could be achieved by storing physical metals. This can easily be done in popular places like Switzerland, Singapore and the UAE, but it is possible in almost any jurisdiction. One of the requirements could be that certain governments cannot obtain it directly. That is what happened in the US in 1933, and the USSR and other nations also confiscated gold and even securities.
With these set-ups, it is important that the ownership structure is clearly defined, whether the assets are registered to a trust or to a natural person. The same applies when death, health problems or travel restrictions are at play. This is an overlooked hygiene point that has to be set up sufficiently to be active automatically and safe from abuse.
Another simple way to keep some value outside a system collapse is having Bitcoin in self-custody. That means that your Bitcoin is stored on a physical storage device such as a Ledger, Coldcard or Trezor. There have been several security issues with these hardware wallet devices, so research is required before acquiring one. A wallet can be copied, so no holding depends on one physical wallet at one particular location. Additionally, a wallet can be stored in a safe or taken along on a keychain.
BARBELL THEORY
Nassim Nicholas Taleb’s barbell theory provides an investment concept during times of major change. Assets are placed on two opposite sides of the barbell, with the middle spread thinly. It is a theory that could insure against a total wipeout. This could mean investing in metals, commodities and treasury bills on one side and highly speculative assets, such as AI stocks and stock options, on the other. We are a bit more positively geared towards the success of humanity and insure ourselves with metals, BTC (as a cash alternative), short-term T-bills and commodity-driven companies on one side, while we invest heavily in companies that we fundamentally regard as successful and mispriced on the other. We stay away from investing in assets that are highly speculative and trendy and are supposed to shape our tomorrow.
One change of law or unexpected disruption can become an obstacle between you and your estate. Nobody knows what the next system and its transition will be like. A structure without a single point of failure does not need to.
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