H.B. 317 Utah's Sound Money Dilemma

Imagine you awake one morning with terrible chest pain. You suddenly realize that during the night you've had a massive heart attack and you will immediately need open heart surgery.

What would you do?

Would you run down to the kitchen, pick out the sharpest knife and start to cut open your chest?

Why not?

Ah, because you are a lawyer or a banker, not a surgeon and you don't have decades of experience in complicated open heart surgery. You wisely decide to get professional medical help then seek out the smartest, most experienced cardiologists and take their advice.

Why?

Cardiologists are the heart experts, they have a decade or more of first hand experience in treating heart patients and you need the best most experienced EXPERT. Cardiologists are widely viewed by their community and industry as being the most experienced and sharpest minds available for this type of work. You seek out the best and accept their knowledgeable proven advice.

On November 28, 2011, journalist Robert Gehrke wrote depressing but accurate article for the Salt Lake Tribune entitled "Gold, silver legal tender in Utah, but a long way from replacing the dollar".

Gehrke points out that in March of this year, Utah's Governor Gary Herbert signed into law H.B. 317 making gold and silver U.S. minted coins legal tender in Utah. The new law permits gold and silver coins to be accepted for their precious metal value and not just the face value on the coins. Unfortunately, this new sound money reality has had little or no impact on everyday business in Utah.

Gehrke's article even describes how an Orem, UT man was able to buy goods from a few local companies and pay his LDS Church tithing with precious metal, however, the Utah County and state treasurers totally rejected the precious metals payments. (even though it is law in Utah)

In these 4 points below, his article summed up H.B. 317.

1. Declaration of gold/silver coin legal tender status pursuant to the monetary authority expressly reserved to the states under article 1, section 10 of the U.S. Constitution;
2. Voluntary exchange clause to acknowledge state and federal concurrent monetary powers and to ensure that state authorized legal tender will trade at market value;
3. State tax exemption in recognition of the fundamental premise that any tax laid on money would effectively demonetize it; and
4. Mandate for further study towards implementation of a full-featured complementary currency system.

Unfortunately, we can now recognize that progressing toward sound money in Utah has more than one issue hindering actual progress.

1. No person in Utah involved with this project has any hands on experience with a digital gold currency system. I understand, the new law does not directly address the idea of a digital gold currency but this project is 100% headed in that direction.
   
2. No one involved with this project in Utah has ever used gold & silver as everyday money. In fact very few people in the U.S. have been involved with any precious metal currency.
   
3. No one in Utah has any real experience conducting a campaign to introduce this new kind of money to merchants and consumers. We all know that Utah is "Life Elevated" TM because a sporty ad campaign told us. What is "sound money" to Utah?
   

Gehrke tries to point out in his article that "the real game changer" would be private companies storing metal and issuing a debit card balance against the stored value. There is no mention of how the balance would be stored or the transactions recorded. This card product, he tells us, would permit customers to draw on the metal's value and shop around town using their shiny new "gold cards". In fact we've heard rumors of several folks in Salt Lake City that could now be testing the debit card idea. Kudo's to those people.

Lets take a look at what is being suggested here by Gehrke. It's a private vault where anyone can deposit real gold or silver U.S. minted coins and have a daily balance by weight. The card product would permit access to the value via an ATMs and POS transaction.

I'm having a real deja vu moment right now. Where have we heard all of this before? Can you say e-gold Ltd.?

In my possession, I think I still have a few dozen old debit cards that provided fast access to my e-gold, 1MDC and Pecunix balances throughout the last decade. Some of them I used for shopping, especially buying gas at the pump and airline tickets.

What Gehrke writes "could" happen in Utah has already been done before at least 70 times over the past decade. POS shopping, ATM access to cash and even instant precious metal funding of the cards via JP May's excellent software has all been accomplished very successfully before by e-gold Ltd. and other popular digital gold currencies. What we are reading in Gehrke's article is deja vu all over again:-)

Wake Up Utah

The digital gold currency business, which has been operating for over a decade, is a 100% perfect match for the merchants, consumers and private vaults in the fine State of Utah. The commercial system needed today in Utah is not a simple bank debit card for shoppers, it is a registered e-gold style digital gold currency model, with many debit card operators offering independent cards and competing for Utah's consumer base.

Having a decade of experience with introducing everyday consumers to the benefits of digital gold currency, it is also my belief that digital gold is a perfect match for Utah's big business.

Utah needs to quickly look beyond the mom and pop local operations in SLC. The smart minds in Utah who have successfully passed H.B. 317 need to be explaining the overwhelming benefits of digital gold currency to all Utah corporations. The benefits of lower fees and instant settlement that accompany digital gold currency can quickly attract corporate business from the rest of the United States. A digital gold currency works very well using U.S. minted gold and silver coins. Look at the model which Utah now supports.

1. No state tax on the metal transactions within the system.
   
2. All digital gold currency transactions clear instantly 24/7. No waiting for bank wire transfers, credit card processing, cleared funds and no holidays or weekend delays.
3. No charge backs, reversals or credit card fraud.
4. Fees are extremely low, much lower than bank credit cards or wire transfers. Because there are no charge backs, digital gold currency transactions are much cheaper.
   
5. Private digital gold systems are just what Utah needs: voluntary, cheap to operate, easy to use and transparent.
   

Here are two questions I dare anyone to answer.

(Q) How many new $ Trillions are being created this week by the Federal Reserve? Who knows?

(Q) What will your inflated dollar buy at this same time next year? Who knows?

Sound money digital gold commerce is very different and much safer than Federal Reserve inflatable paper.

Here are some questions that we can easily answer regarding digital precious metal.

(Q) How much gold was deposited or withdrawn from the Utah private vaults last week? That audited amount is published each day on the web site.

(Q) How much gold is on hand in the local private Utah vaults today? This is third party audited public info. Each day of the week, an actual metal balance is publicly visible in the digital gold system.

e-gold Ltd. even published the daily number of transactions and their approximate value. There were no surprises and no government agency can ever lie to you about the value held in the vaults or the account transaction stats. In a digital gold currency system this is public information and audits are conducted by third parties. Everyone, even non account holders, can quickly look up these stats, anytime on the web site.

Digital precious metal payments, even those that could be made to the State of Utah for taxes, can be instantly liquidated into a bank transfer daily. There is NO price risk to the State which may stem from an overnight or lengthy hold of precious metal. Metal can be liquidated into USD instantly 7 days a week.

Utah's bright future and how to get there

Mr. Larry Hilton, an attorney and insurance salesman who authored the Utah Sound Money Act is quoted in Gehrke's article as believing that "...Utah's transition to a gold-and-silver economy, according to Hilton, involves letting private individuals mint their own coins in various denominations that could be used for day-to-day transactions." It's not clear if this is still Mr. Hilton's point of view or Gehrke wants us to believe it. Unfortunately, this strategy might have worked in the 1970's, but today's everyday financial world runs on digital money, Internet payments, SMS and iPhone apps. In June of this year, PayPal President Scott Thompson predicted that within three years (2015) credit cards and a physical wallet could be obsolete. He said, "We believe that by 2015 digital currency will be accepted everywhere in the U.S. -- from your local corner store to Walmart. We will no longer need to carry a wallet." The future of money in America will be digital as in "digital currency"(not coins) ...the denomination of any payment can be scaled down to less than a penny. A tenth of an ounce American Gold Eagle coin today costs about $240, it's not likely you would be paying for your morning coffee with this small gold coin. I'm sorry Mr. Hilton but no one, and I mean no one, will be carrying a pocket full of heavy precious metal. It's just not safe or practical.

In a digital gold currency system, the precious metal coins are held securely in a vault insured and protected. Digital units are issued against those deposits. The value of those units fluctuates each day with the price of the metal, but users have an accurate price on each accounts as the market changes. It is not, nor should it ever be the merchants responsibility to know or calculate the daily price of gold. This can and is done electronically.

As gold enters the vault from a local Utah person's deposit, units are created and issued to them. This process is called digital minting. It was created in the 1990's and has been successfully used each day since that time. Millions of transactions take place each day using digitally minted units backed by precious metal.

Even my Malaysian friends who settle daily trade priced in gold dinar don't actually use a bag of pure gold coins, they use e-dinar.com the electronic version of a gold dinar. E-dinar operates almost exactly as a digital gold currency would in Utah. Gold dinars are held in an insured vault along with gold bullion and digital "electronic dinar" units are issued against that value based on weight. Incidentally, e-dinar began operation and continued for several years located on the e-gold Ltd. server platform.

To those smart minds in Utah, and to the journalists who like reporting on this stuff; please stop speculating on what "you" think might work for Utah. Don't keep going to the kitchen looking for the "really sharp" knife. Ask the experts. Compare and examine the successful private legal digital currencies around the globe. Please look at the digital gold currency systems which have been working flawlessly for the past 10-12 years. We know who built the software, you can get right on the phone today with them. We know who operates the systems. Additionally, these professionals employ lawyers and accounting firms that have worked with digital gold for years. Audits, insurance, accounting...this has all be done before and can be recreated in Utah. Digital gold has been successful before, please seek out the advice of the experts. Stop trying to reinvent the wheel. We have already have mastered the daily use of precious metal as money. Digital gold systems work and they will work well in Utah. I've had dozens and dozens of ATM cards and MasterCards over the last decade which were easily funded from a digital gold account. Copy success. Build or acquire an easy to use, transparent system of sound money commerce and protection for Utah businesses.

We have an iPad, smart phone, a standard cell phone and an Android tablet. While I'm out shopping at the mall and I can access all of my digital money and digital gold currency accounts from all of these devices. Yes, you can visit the coffee shop and pay for your morning coffee with digital gold using a cell phone. Just about any cell phone in operation today can safely access these digital metal accounts using something as simple as a java platform. All of this is possibly today, you can get on the phone next week with these operators & developers.

WebMoney Transfer permits 2 or 3 types of independent debit cards including a MasterCard to be linked to their system for instant funding, cash access and spending of the digital money(even backed by gold). E-gold Ltd. offered mobile payments as far back as the late 90's. Take a closer look back at e-gold's old technology....Gold got deposited with an insured vault, digital units are minted (created/issued) and accounts are accessed by the Internet and mobile devices. That was more than 10 years ago. We've been shopping with gold and conducting business with precious metal online for more then 10 years. These commercial platforms have all been perfected and are presently available for operators in Utah. The State does not need to be the operator. This style of digital gold commerce has been successful time and time again.

Please, Utah now has the laws in place, seek out the experts and make digital gold currency your next move.

Look at the facts:

1. No one carries a pocket of silver or gold around anymore. It's not safe or practical.
   
2. Digital gold accounts are accurately valued 24/7 based on global spot prices, there is no mystery to how a Troy ounce or a gram of gold is priced each day. ( http://dgcsc.org/goldprices.htm )
   
3. A digital gold account is divisible up to a thousandth of a gram. (that's less than a penny) This makes everyday commerce simple and convenient.
4. All of these digital metal accounts are accessible using today's mobile devices. iPhone, iPad, Android, cell phones etc.
   
5. FinCEN now categorizes digital gold currency as a stored value product. The regulation and laws on operation are just similar to a stored value debit card operation. Compliance with new U.S. regulations would be simple. It is NOT a mystery.
   

Gehrke's article also provides some discussion and quotes from Richard K. Ellis, Utah's State Treasurer. Mr. Ellis, who seems like a fine man, took office less than 3 years ago after serving for nine years as Chief Deputy State Treasurer.

Gehrke writes that Ellis is "not ready" to handle this new type of business. It is also abundantly clear from Ellis's statements that he has literally NO experience with precious metals or any kind of digital gold currency system. From the article, Ellis says: "There are a lot of things that put the treasurer in the middle of it, but I'm not anxious to necessarily be in that role," and "I haven't tried to make preparations to [accept payments] because there's just not a practical way of making this work." We disagree.

My I remind all of you reading that no fiat money system ever created in the world, going back to the time of Ghengis Khan, has ever survived more than 40-50 years before collapsing. It's quite possible that in the next decade the Mr. Ellis's of the world will be required to "make this work".

It is also important to note that there is no major role for the State Treasurer in any private digital gold currency system except some licensing and oversight.

In a system like e-gold Ltd., payments are made to the State throughout the day, and at the end of the day one person working in a state office, can type a few keys to liquidate that metal balance into a simple bank transfer to the State's bank. That's it. Sorry, but there are no heavy bags of metal to carry home each night.

We understand that what the the State of Utah is trying to accomplish here is nothing short of a miracle. Being the first at anything can create headaches for all involved.

While we applaud your efforts, we clearly recognize that the path to sound money success requires specific knowledge, experience and intense desire. Utah has a distinct honor of creating the first modern and legal "sound money" state currency. A legal alternative currency system for the benefit of Utah citizens and business owners.

It's also important to note, that, whatever emerges sooner or later from Utah won't really be competing on any level with the U.S. Dollar. You know, the Federal Reserve notes that trade in the Trillions each day around the globe. The sound money which emerges from Utah's action will be almost exclusively for the benefit and protection of Utah's citizens and businesses. Gehrke titles his article saying ".... but a long way from replacing the dollar". Sorry Gehrke, nothing is going to replace the dollar. This is not the "build a better currency" competition. This is intensely important for the people of Utah and getting it right, should be a top priority for the State.

This is not a DIY television show we watch for awhile until the next episode of "Dancing with the Stars" comes on.....this is the real deal and 300 million Americans in 49 other states are watching to see what emerges. Countries around the world, including China, are now watching and waiting. Do you know how many article in global news publications around China have referenced Utah's new legislation? Hundreds. This is a powerful moment in history for the United Sates and the State of Utah. What happens in Utah will influence the world for the next 100-200 years.

Please, seek out the sharpest minds and the most experienced operators in the digital gold currency industry. Find the most experienced businesses operating global non-bank alternative payment systems and copy what makes them successful. Wake up Utah! Make it happen.

I know at least two people in Washington are cheering for a BIG failure. (Ben Bernanke and Timothy Geithner) Let's make sure that next year they are very disappointed.