The people of Cyprus had a very crude awakening to the issue of political risk on Saturday morning when they discovered their government and a bunch of EU bureaucrats conspired in secret to rob their savings accounts. It should serve as a wake up call for us all.

The Bundesbank’s explanation for moving to repatriate some of its gold reserves from the US and France serves as a clarion call for investors to internationalize their holdings.

A couple of items in the news last week provided illustrations of political risk – i.e. the ability of governments to seize assets within their jurisdiction at the flip of a switch. It is the risk that you take by locating anything of value within any single jurisdiction, whether it’s your business, your savings, or yourself.