The Solar wind tonight is cooking at 459 km/sec and there are 7 sunspot clusters on the Sun today. In November 2013, Comet ISON could become one of the brightest and most active comets in years when it races through the hot atmosphere of the sun. Right now, though, it is just a dim speck in the deep-freeze of space near the orbit of Jupiter. Also check out Jupiter and the crescent Moon tonight. Spectacular. A coronal mass ejection (CME) swept past Earth on April 13th around 22:55 UT. The impact rattled Earth's magnetic field and induced electrical currents in the ground around the Arctic Circle.
Trust in Gold Not Bernanke as U.S. States Promote Bullion
By Amanda J. Crawford - Apr 8, 2013 12:01 AM ET.
Distrust of the Federal Reserve and concern that U.S. dollars may become worthless are fueling a push in more than a dozen states to recognize gold and silver coins as legal tender. Lawmakers in Arizona are poised to follow Utah, which authorized bullion for currency in 2011. Similar bills are advancing in Kansas, South Carolina and other states. In Utah, officials haven’t yet figured out how to accept gold and silver for tax payments -- though some residents have asked to pay that way.
U.S. Federal Reserve Chairman Ben Bernanke has pushed interest rates to near zero since the 18-month recession that began December 2007. Utah Precious Metals Association, established after passage of the 2011 law to advocate for the use of gold and silver coins, has established a pilot program in which members can make deposits that are held in gold and access money using a bill pay service.
The measures backed by the limited-government Tea Party movement are mostly symbolic -- you still can’t pay for groceries or gasoline with gold in Utah, but that day is not far away. They reflect lingering dollar concerns, amplified by the Fed’s unconventional moves in recent years to stabilize the economy by printing boatloads of magic money each month. BTW that money never reaches you or me. It is deposited way up there in the major credit markets, which is why the Stock market is busting out the roof every week. But like the magic beanstalk, it must come down eventually, although someone in the white house prays every day it will be on the next guy’s watch.
“The various State’s legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing,” said Gatch, who studies alternative currencies at the Edmond, Oklahoma-based school. “There is a fear that the government, or Bernanke in particular and the Federal Reserve, is pursuing a policy that will lead to the collapse of the dollar. That’s what is behind it.”
Bernanke has pushed interest rates to near zero since the 18-month recession that began in December 2007. The Fed said in March it would continue buying $85 billion in securities each month in a program known as quantitative easing that has ballooned its assets beyond $3 trillion and is aimed at keeping long-term borrowing costs low to support economic growth.
Consumer prices rose just 1.3 percent in February from a year earlier, according to an inflation measure favored by the Fed. That was below the central bank’s 2 percent target and compares with occasional bouts of more-than 10 percent increases in the 1970s and early 1980s.
Bets that inflation would pick up because of economic- stimulus measures helped fuel a 78 percent jump in gold since December 2008. The dollar’s rise to less than 1 percent below a one-year high set in July and monthly increases of about 2 percent or less in the U.S. consumer price index have curbed demand for bullion. Since reaching a record $1,923.70 an ounce in 2011, gold prices have fallen and are near a bear market. Gold futures for June delivery fell 1.2 percent last week, to $1,575.90 an ounce on the Comex in New York, after touching $1,539.40 April 4, a 10-month low for a most-active contract.
Texas Depository
In Texas, lawmakers are considering a measure supported by Republican Governor Rick Perry to establish the Texas Bullion Depository to store gold bars valued at about $1 billion and held in a New York bank warehouse. The gold is owned by the University of Texas Investment Management Co., or Utimco, which took delivery of 6,643 bars of the precious metal in 2011 amid concern that demand for it would overwhelm supply.
The proposed facility would also accept deposits from the public, and would provide a basis for a payments system in the state in the event of a “systemic dislocation in a national and international financial system,” according to the measure.
Should Texas take such a step, it would offer sovereign backing for deposits and make buying and storing gold easier, said Jim Rickards, senior managing director at Tangent Capital Partners LLC in New York and author of “Currency Wars: The Making of the Next Global Crisis.” He said the coin measures, while impractical, have symbolic value.
“We are seeing a distinct movement back to a world where gold is considered money,” Rickards said.
Inflation Protection
The measures give “people the option of using money that won’t lose any purchasing power to inflation,” said Rich Danker, economics director at the American Principles Project. The Washington-based public-policy group supports the steps as well as a return to the gold standard, which pegged the dollar’s value to bullion. President Richard Nixon formally ended the convertibility of U.S. currency to the precious metal in 1971.
“People in these states find the idea of having the option to use hard currencies appealing over these policies they have no control over,” Danker said.
The U.S. Constitution bars states from coining money and also forbids them from making anything except gold and silver coin tender for paying debts. Advocates say that opens the door for the states to allow bullion as legal tender. The measure being considered in South Carolina would recognize foreign or domestic minted coins as legal tender.
Utah’s law applies only to U.S.-minted coins, while other states are less clear on whether privately produced coins qualify. Arizona leaves the door open for private coins if they are declared legal by a non-appealable court order.
Tax Breaks
In Utah and some other states, the measures also eliminate state capital gains or other taxes on the coins. Critics say the state measures are unwieldy. In Arizona, Senator Steve Farley, a Democrat, unsuccessfully offered an amendment that would have recognized as legal tender other state commodities, such as citrus fruit, as well as sunbeams. The amendment was intended to reflect the absurdity of the bill, said the 50-year-old lawmaker from Tucson.
“It is simply grandstanding to get people afraid that somehow President Obama’s agenda is going to drive us into hyperinflation and economic collapse,” Farley said. “We have enough real problems to deal with. I don’t see undercutting our entire financial structure as a priority.”
In Utah, officials haven’t yet figured out how to accept gold and silver for tax payments -- though some residents have asked to pay that way -- or integrate the precious metals into commerce, state Treasurer Richard Ellis said. Lawmakers have established a task-force to study implementing the law and to examine how the state can accept gold and silver, with their fluctuating values, for payment, Ellis said. He’s not optimistic that it will work, he said.
Regulatory Barriers
“People point to Utah and say we are leading the way, but nothing much has happened because regulatory hurdles have gotten in the way,” said Ellis, a Republican. If gold and silver is being used in the state as legal tender, it is probably only in transactions between individuals, he said.
The Utah Precious Metals Association, established after passage of the 2011 law to advocate for the use of gold and silver coins, has about two dozen members enrolled in a two month-old bill-pay service in which their accounts are held in gold, said Lawrence Hilton, the group’s chairman. Hilton envisions a future with an alternative monetary system based on precious metals in which merchants accept silver coin while gold mostly backs electronic transfers.
Gold Producers
The Arizona measure, sponsored by Republicans, won preliminary approval in the House of Representatives April 4 after passing the Senate on a party line vote Feb. 28. Gold is mined in both Arizona and Utah, while Nevada is the largest U.S. producer, according to National Mining Association figures.
The bill’s sponsor, Senator Chester Crandell, 66 of Heber, said he is convinced the move is the “logical thing for the state of Arizona to do.”
“I think you look at some of the things that are happening and the amount of money printed by the Federal Reserve and who has control of that money, and I think anybody would be concerned,” Crandell said. “Gold and silver have been around a long time and people are secure with it and we should give them an opportunity to use it.”
To contact the reporter on this story: Amanda J. Crawford in Phoenix at
Dutch company offers one way ticket to Mars (2:22)
March 27 - A Dutch company called Mars One is looking for volunteer astronauts to participate in the first manned-mission to Mars. The company wants to send four people to the Red Planet to start a colony in 2023 although there is one catch - the successful applicants will have no way of coming back. Jim Drury has more.
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BITCOINS
The Real Significance of the Bitcoin Boom (and Bust)
By Michael SivyApril 12, 20130
The volatile rise and fall of Bitcoins has prompted lots of stories explaining why the online virtual currency is a classic bubble. Many compare it with Tulipmania in 17th Century Holland, where the prices of rare tulip bulbs soared to absurd heights and then crashed, ruining the speculative investors who had bought them. But the Bitcoin phenomenon is more than a bubble. It says something important about the current and future state of the global economy.
The scale of the recent boom and bust has been staggering indeed. At the start of the year, a Bitcoin was worth $13.51. Earlier this week, it traded as high as $266. And on Thursday, it plummeted to less than $100, as one of the exchanges where Bitcoins are traded closed temporarily. This would be comparable to the exchange rate for the British pound soaring from $1.62 (where it was on Jan. 1) to $31.90 and then falling back to $12.
Such monumental appreciation and volatility is clearly the result of speculation – people buying the online currency just because they think its value will rise, not because they want to use it to purchase goods and services. But Bitcoins’ gains are not the result of speculation alone. They partly reflect the fact that the Bitcoin system is much better designed than previous online currencies. And more significantly, the runup also reflects anxiety about the safety of the global banking system and the stability of major international currencies.
The technicalities of the Bitcoin system are complex, but to make this online currency more successful than previous versions, the designers overcame two key challenges. First, to prevent counterfeiting, they attached a history of transactions to each currency unit – but allowed users to keep their transactions nearly anonymous. Counterfeiting is hard because fake Bitcoins would need an authenticated history to pass muster.
Second, they strictly controlled the supply of Bitcoins outstanding — thereby saving it from the disastrous fate of, for example, the paper currency known as assignats that were issued during the later stages of the French Revolution. Initially, assignats were backed by land and buildings that had been seized from the Church. If the French Government had issued only enough assignats for that property, there would have been plenty of assignats to spend until the property was disposed of. But the Government liked having extra money and didn’t cancel the assignats as the property was sold. In fact, France kept printing more, and within five years there was very serious inflation.
Unlike assignats, Bitcoins have no backing at all. What they do have, however – and what has turned out to be more important – is a formula limiting the growth of the supply outstanding. Over time the formula for the Bitcoin supply actually reduces the amount of new currency added to the system. And the new Bitcoins are not created by fiat, but in exchange for valuable labor: They are paid to computer hobbyists who monitor the Bitcoin system to keep it running and prevent counterfeiting.
Critics have argued that a currency like Bitcoins would be inherently deflationary because the supply can’t be adjusted in response to economic conditions. The same argument could be made about a gold standard, of course, or an extremely hard currency like the Swiss franc. Moreover, the relatively small supply of such hard currencies means that the inflow and outflow of hot money can make them highly volatile. The price of gold, for example, climbed from less than $300 an ounce 11 years ago to almost $1,800 late last year before dropping to $1,564 today; and the Swiss franc rose from $0.82 in 2008 to $1.38 three years later before settling back to $1.07.
But there’s a strong argument that the appreciation and volatility of all these currencies reflects reasonable concerns about the global economy and banking system. The economic debacle in Cyprus keeps getting worse, after all; in fact, the losses there figure to be far greater than any that have occurred in the Bitcoin universe. In addition, the Federal Reserve, the European Central Bank, and the Bank of Japan are pumping out money like French assignats.