Will We Look Back and Think How Ignorant We Were?

Will We Look Back and Think How Ignorant We Were?

I was talking about space exploration with a colleague the other day.

They looked at me rather incredulously and wondered if I was a little bit barking mad. No, I’m quite serious, I explained, and put the case for the view that my children will be astronauts.

Now I have touched on this before on the blog, but my views are more and more clear as time goes by: we will me a multiplanetary species.

In just 80 years, we have moved from discovering planets that we didn’t know existed to visiting them and taking HD pix of the planet’s surface.

We have landed on the Moon, sent missions to Mars and spent years taking in the glorious sights of Saturn’s rings through the twenty year space mission Cassini.

We have even sent probes to far-off comets and landed on them, a feat that is comparable to throwing a stone from Coney Island in New York’s harbour and knowing that it will land exactly on time for a person to catch that stone in Vilamoura, Portugal.

This last one – the Rosetta stone Philae – is an important one as it is the start of a new industry for the space age: space mining.

Space mining is tipped to be big business as, when we do start exploring the planets and further afar, we will need refuelling stations and mining asteroids for minerals and gases will be those refuelling stations of the future. Here’s a summary from Wired:

When Rosetta’s probe, Philae, landed on a comet it had the opposite problem of pretty much every other landing in human history: too little gravity. Rather than going kerplunk on impact, it bounced twice before finally coming to rest sideways—a harrowing landing a new Science paper describes in detail.

Landing on a jagged spinning comet with little gravity is absurdly hard, and it didn’t help that two out of three of Philae’s landing systems failed. But even this bumpy landing has importance for asteroid mining companies eager to excavate small bodies in space—potentially proving that their business is not as much like science fiction as it sounds.

The extremely low gravity of near earth asteroids is, after all, both a challenge and their primary advantage in space travel. Getting to space is expensive because of the massive amounts of fuel needed to escape Earth’s relatively mighty gravity. If asteroids can be mined for water, which can be broken down into hydrogen and oxygen for fuel, they could become depots for spaceships traveling into deep space—no return trip to Earth necessary to refuel, and a relatively inexpensive lift off after the pit stop is over. “It’s not so much you are landing on the comet, as you are docking with it,” says Chris Lewicki, president and chief engineer of the asteroid mining company Planetary Resources.

Planetary Resources and its competitors such as Deep Space Industries are still developing equipment to scout for valuable asteroids. Actually mining one is far off. But the Rosetta mission proves that landing on a small body and getting back physical and chemical data to assess its mining value is very much possible—even when things don’t go perfectly. Today’s issue of Science includes seven papers from the Rosetta team, detailing everything from the comet’s rock structures to organic molecules.

So, space mining is something of the future. In fact, it is something of today, with America, Europe, China, India and many other nations thinking of how to exploit the opportunities. For example, America passed the Space Act in 2015, which basically claimed rights to the galaxies before anyone else could get a word in edgeways.

The act represents a full-frontal attack on settled principles of space law which are based on two basic principles: the right of states to scientific exploration of outer space and its celestial bodies and the prevention of unilateral and unbridled commercial exploitation of outer-space resources. These principles are found in agreements including the Outer Space Treaty of 1967 and the Moon Agreement of 1979.

The US House Committee on Science, Space and Technology denies there is anything in the act which violates the US’s international obligations. According to this body, the right to extract and use resources from celestial bodies “is affirmed by State practice and by the US State Department in Congressional testimony and written correspondence”.

Crucially, there is no specific reference to international law in this statement. Simply relying on US legislation and policy statements to justify the plans is obviously insufficient.

Ever since NASA discovered signs of liquid water on Mars, concerns have been raised about the risk of contaminating the red planet.

You can read the full text of the US Space Act here.

In response to this maverick law, Luxembourg sent a salvo back this summer, by passing the first European Space Law which establishes legal certainty that asteroid mining companies can keep what they find in space.

Amara Graps, an asteroid mining advocate and independent consultant for the Luxembourg Ministry of Economy, claims that “this one is more flexible than the US version.”

The previously primary international space law standard, the Outer Space Treaty of 1967, didn’t make it clear if private companies own the resources they find, such as minerals, water and whatever else is out there. The U.S. Commercial Space Launch Competitiveness Act of 2015 made this explicit by allowing US citizens to “engage in the commercial exploration and exploitation of space resources [including … water and minerals]” but not biological life, as anything that is alive may not be exploited commercially.

Luxembourg parliament passed their draft bill (PDF) in August 2017 and claim that the difference between the US space mining law and the Luxembourg space mining law is that in the US law, a majority of a company’s stakeholders must be in the US, while the Luxembourg law places no restrictions on stakeholder locations.

Luxembourg has also been pretty active in the space mining business, investing €25 million in the space mining company Planetary Resources last November. So space is a real thing, and it’s going commercial.

We can see this from all the investment, trials and developments by the likes of Elon Musk, Jeff Bezos, Richard Branson and co. SpaceX from Musk is probably the most advanced of the reusable rocket programs and, in a detailed cost breakdown on Space News, it appears that the launch costs per spacecraft will be under $40 million and used 30-40 times a year, which makes this an incredibly aggressive cost saving when compared with the over $100 billion invested in the 1970s Apollo moon shots. The difference is that reusability, and the increasing capability to build space ships that can fly into space, dock with asteroids, refuel and continue missions to Mars and beyond.

It is the reason why Elon Musk talks about humans becoming a multiplanetary species, and the idea of terraforming Mars into an Earth-like atmosphere within the next few decades.

Related: How American Is the US Dollar?

All of this is a possibility and so, given another century, where will we be?

And this is how my conversation with my colleague ended, with a vision of a century out. In the 2100s, it is highly likely that we will push further and further into space exploration. It is only natural as it is our innate nature to explore. Now that we have explored most of Earth, it is only the deepest oceans and the furthest stars that we can shoot for. And we will.

So I think that a century from now, we will look back at humans today in the same way that we look back a few hundred years at humans before the industrial revolution.  We will think of them as very basic and ignorant, because of all we have learned through technology and travel. Imagine another 100 years of technological developments and exploration of space. I am sure we will look back at our wonderings about life and resources on other worlds in the same way as we look at the creationists versus evolutionists debate today.

Before Charles Darwin’s The Origin of Species, the very idea of humans evolving from apes was stupid.

One stormy day during the Napoleonic Wars, a French ship was wrecked off the coast of an old fishing village clinging to the north-east coast of England. The only survivor was the ship’s mascot, a monkey that was washed ashore. The people of Hartlepool had never seen a monkey before – nor, for that matter, had they ever set eyes on a Frenchman. Mistaking its chattering for the language of the enemy, they convicted the monkey of being a French spy and hanged the animal on the beach.

A century from now, will we look back at ourselves and think how ignorant we were?

Chris Skinner
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Chris Skinner is one of the most influential and prolific thought leaders on the future of banking, finance and technology. The Financial Brand awarded him best blog and ... Click for full bio

Here’s Why Bitcoin Won’t Replace Gold So Easily

Here’s Why Bitcoin Won’t Replace Gold So Easily

What a week it was.

First and foremost, I’d like to acknowledge the horrific mass shooting that occurred in Las Vegas, the deadliest in modern American history. On behalf of everyone at U.S. Global Investors, I extend my sincerest and most heartfelt condolences to the victims and their families.

The memory of the shooting was still fresh in people’s minds during last Tuesday’s Hollywood premiere of Blade Runner 2049, which nixed the usual red carpet and other glitz in light of the tragedy. Before the film, producers shared poignant words, saying that in times such as these, the arts are crucial now more than ever.

I had the distinct privilege to attend the premiere. My good friend Frank Giustra, whose production company Thunderbird Entertainment owns a stake in the Blade Runner franchise, was kind enough to invite me along. Despite the somber mood—a pivotal scene in the film even takes place in an irradiated Las Vegas—I thought Blade Runner 2049 was spectacular. Even if you’re not a fan of the original 1982 film, it’s still worth experiencing in theaters. Hans Zimmer and Benjamin Wallfisch’s synth-heavy score is especially haunting.

CNET recently published an interesting piece examining the accuracy of future tech as depicted in the original Blade Runner, from androids to flying cars to off-world travel read the article here.

Still in the Early Innings of Cryptocurrencies

Speaking of the future, I spoke on the topic of the blockchain last week at the Subscriber Investment Summit in Vancouver. My presentation focused on the future of mining—not just of gold and precious metals but also cryptocurrencies.

Believe it or not, there are upwards of 2,100 digital currencies being traded in the world right now, with a combined market cap of nearly $150 billion, according to Coinranking.com.

Obviously not all of these cryptos will survive. We’re still in the early innings. Last month I compared this exciting new digital world to the earliest days of the dotcom era, and just as there were winners and losers then, so too will there be winners and losers today. Although bitcoin and Ethereum appear to be the frontrunners right now, recall that only 20 years ago AOL and Yahoo! were poised to dominate the internet. How times have changed!

It will be interesting to see which coins emerge as the “Amazon” and “Google” of cryptocurrencies.

For now, Ethereum has some huge backers. The Enterprise Ethereum Alliance (EEA), according to its website, seeks to “learn from and build upon the only smart contract supporting blockchain currently running in real-world production—Ethereum.” The EEA includes several big-name financial and tech firms such as Credit Suisse, Intel, Microsoft and JPMorgan Chase, whose own CEO, Jamie Dimon, knocked cryptos a couple of weeks ago.

To learn more about the blockchain and cryptocurrencies, watch this engaging two-minute video.

Understanding blockchain in two minutes

Will Bitcoin Replace Gold?

Lately I’ve been seeing more and more headlines asking whether cryptos are “killing” gold. Would the gold price be higher today if massive amounts of money weren’t flowing into bitcoin? Both assets, after all, are sometimes favored as safe havens. They’re decentralized and accepted all over the world, 24 hours a day. Transactions are anonymous. Supply is limited.

Have gold and bitcoin peaked for 2017

But I don’t think for a second that cryptocurrencies will ever replace gold, for a number of reasons. For one, cryptos are strictly forms of currency, whereas gold has many other time-tested applications, from jewelry to dentistry to electronics.

Unlike cryptos, gold doesn’t require electricity to trade. This makes it especially useful in situations such as hurricane-ravished Puerto Rico, where 95 percent of people are reportedly still without power. Right now the island’s economy is cash-only. If you have gold jewelry or coins, they can be converted into cash—all without electricity or WiFi.

Finally, gold remains one of the most liquid assets, traded daily in well-established exchanges all around the globe. Every day, some £13.8 billion, or $18 billion, worth of physical gold are traded in London alone, according to the London Bullion Market Association (LBMA). The cryptocurrency market, although expanding rapidly, is not quite there yet.

I will admit, though, that bitcoin is energizing some investors, especially millennials, in ways that gold might have a hard time doing. The proof is all over the internet. You can find a number of TED Talks on bitcoin, cryptocurrencies and the blockchain, but to my knowledge, none is available on gold investing. YouTube is likewise bursting at the seams with videos on cryptos.

Bitcoin is up 350 percent for the year, Ethereum an unbelievable 3,600 percent. Gold, meanwhile, is up around 10 percent. Producers, as measured by the NYSE Arca Gold Miners Index, have gained 11.5 percent in 2017, 23 percent since its 52-week low in December 2016.

Related: Gold and Bitcoin Surge on North Korea Fears

Look Past the Negativity to Find the Good News

The news is filled with negative headlines, and sometimes it’s challenging to stay positive. Take Friday’s jobs report. It showed that the U.S. lost 33,000 jobs in September, the first month in seven years that this happened. A weak report was expected because of Hurricane Irma, but no one could have guessed the losses would be this deep.

The jobs report wasn’t all bad news, however. For one, the decline is very likely temporary. Beyond that, a record 4.88 million Americans who were previously sitting out of the labor force found work last month. This helped the unemployment rate fall to 4.2 percent, a 16-year low.

Have gold and bitcoin peaked for 2017

There’s more that supports a stronger U.S. economy. As I shared with you last week, the Manufacturing ISM Purchasing Managers’ Index (PMI) rose to a 13-year high in September, indicating rapid expansion in the manufacturing industry. Factory orders were up during the month. Auto sales were up. Oil has stayed in the relatively low $50-a-barrel range, which is good for transportation and industrials, especially airlines. Small-cap stocks, as measured by the Russell 2000 Index, continue to climb above their 50-day and 200-day moving averages as excitement over tax reform intensifies.

These are among the reasons why I remain bullish.

One final note: Speaking on tax reform, Warren Buffett told CNBC last week that he’s waiting to sell assets until he knows the plan will go through. “I would feel kind of silly if I realized $1 billion worth of gains and paid $350 million in tax on it if I just waited a few months and would have paid $250 million,” he said.

It’s a fair comment, and I imagine other like-minded, forward-thinking investors, buyers and sellers will also wait to make huge transactions if they can help it. Tax reform isn’t a done deal, but I think it has a much better chance of being signed into law than a health care overhaul.

Frank Holmes
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Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm ... Click for full bio