High prices spark fresh gold rush in California

Financial Times ^ | 3/28/08 | Matthew Garrahan

[kiriath_jearim]

It has been almost 160 years since the first California gold rush but, with prices hitting record highs, prospectors are once again flocking to the state’s rivers and deserts in search of the precious metal.

Gold’s ascent – prices crossed the $1,000 an ounce barrier this month and remain well above $900 – has sent sales of mining equipment soaring.

“There’s been a dramatic change . . . our sales have risen four-fold in the last three months,” said Harrigan McGregor, owner of GoldFeverProspecting.com, an equipment retailer in northern California.

“This is the second big California gold rush. We’ve had a lot of phone calls from people who are quitting their jobs and prospecting full-time.”

The growth of prospecting by individuals has been accompanied by a sharp increase in commercial mining activity. Commercial claims, most of which involve gold mining, rocketed to 2,274 in the first quarter of this year, up from 132 in the same period of 2005, the Bureau of Land Management says.

Roger Haskins, senior specialist for mining law at the BLM, said the high price of gold was “obviously driving [mining] activity up tremendously”.

“We have a market imbalance at the moment and there’s more demand than supply,” he added. “Gold sits in a little niche because it’s speculative . . . People buy it as a hedge for the future.”

Membership in the Gold Prospectors Association of America “has tripled in a very short space of time”, said Corey Rudolph, an official of the southern California-based group, which organises events for recreational miners.

The hotspot is a 320km strip known as the Gold Belt, or “Motherlode”, which runs near Highway 49 (named for prospecting “49ers” of the 19th century) and the Sierra Nevada mountains. Mr Rudolph said 5-10 per cent of available gold had been mined. “There’s still a lot of gold out there for the smart guys.”

The market in second-hand gold is also booming, with southern California pawnshops reporting increased trade as people sell unwanted gold items. Depending on the quality, these items can be refined and resold.

However, Mr McGregor said raw gold can fetch even higher prices. “If you find a nugget larger than your pinkie finger, it could sell for up to 30 per cent more than the spot price.”

[kiriath_jearim]

[abb]

[SierraWasp]

Well, I see it's time to replace those signs around the perimeter of my Sierran Gold Country property:

"We shoot every 3rd trespasser and the 2nd one just left!"

[Popman]

Artist: Marshall Tucker Band
Song: Fire On The Mountain

Took my fam'ly away from my Carolina home
Had dreams about the West and started to roam
Six long months on a dust covered trail
They say heaven's at the end but so far it's been hell
And there's fire on the mountain, lightnin' in the air
Gold in them hills and it's waitin' for me there

We were diggin' and siftin' from five to five
Sellin' everything we found just to stay alive
Gold flowed free like the whiskey in the bars
Sinnin' was the big thing, lord and Satan was his star
And there's fire on the mountain, lightnin' in the air
Gold in them hills and it's waitin' for me there

Dance hall girls were the evenin' treat
Empty cartridges and blood lined the gutters of the street
Men were shot down for the sake of fun
Or just to hear the noise of their forty-four guns
And there's fire on the mountain, lightnin' in the air
Gold in them hills and it's waitin' for me there

Now my widow she weeps by my grave
Tears flow free for her man she couldn't save
Shot down in cold blood by a gun that carried fame
All for a useless and no good worthless claim

And there's fire on the mountain, lightnin' in the air
Gold in them hills and it's waitin' for me there
Fire on the mountain, lightnin' in the air
Gold in them hills and it's waitin' for me there
Waitin' for me there

[thulldud]

So, what you're telling us is that, when the price of something rises, people scramble to produce more of it?

What a concept!

[kiriath_jearim]

“So, what you’re telling us is that, when the price of something rises, people scramble to produce more of it?
What a concept!”

***

Well, I’m not saying it. The writer of the article seems to be saying it.

[thulldud]

I know that. I was responding to the article, of cuss.

[PSYCHO-FREEP]

Alaska Mining equipment sales are going nuts this year.

There are vast reserves of Gold there yet to be found. I have friends there doing just that at the moment.

[jsh3180]

<<>>> Gold mining companies are certainly scrambling to produce more gold. It's kind of like Oil, all the easy resource has been mined out long ago. Gold mine output has been dropping steadily for a number of years. Lower quality ore to deal with, insanely lengthy permitting processes to open new mines. A lot of gold is located in politically unstable countries that your big miners won't touch with a ten foot pole. Places like Venezuela, Bolivia, North Korea....all have substantial gold assets in the ground, but who is going to invest, only to have some dude like Chavez extort the profits from you. Safest places to mine gold are the continental US, Canada, Mexico, Argentina and some stable countries in Africa, such as Tanzania, The Ivory Coast and The Republic of the Congo. South Africa, where huge deposits lie are dwindling fast, the miners are going ever deeper and deeper underground to get at the remaining gold. These mines are now working at depths of up to 14,000 feet underground in deplorable heat and constant flooding. It's no help that the S African governemnt of Mbeki cannot keep ESKOM, the state owned electric utility running, because these mines require VAST amounts of electricity to operate. SO...........while they are scrambling to produce more, production numbers keep dwindling year over year. Those bitten by the gold bug and are out panning for gold or seeking nuggets in rivers, maybe 1 in 100 will hit paydirt, the rest are doomed to failure, most likely.

[sergeantdave]

Well, Mr. SierraWasp, it’s about time we buy an old mining cave up in the Sierras, get a dump truck and buy up all the old sluice boxes, dredging equipment and gold pans in second-hand shops. Then scatter all the junk around the site. Then melt down a few ounces of gold into pellets. Load the pellets into shotgun shells and go salt a mine.

I’ll buy the shotgun, you buy the dump truck and gold and haul the junk to the mine.

Whattaya think, wasp man?

We’ll split profits 60 (me) and 40 (you). Plus I’ll buy you a new hat and a dozen worms to go fishing.

[Popman]

Paint your Wagon

Great old movie for a rainy Saturday afternoon

Some of the worst singing by Lee Marvin and Clint Eastwood you will ever hear

[jiggyboy]

Too sweaty. If you want to make money on gold rising in price, buy some GLD or DGP for the IRA and let those jokers do the work. If you think it’s a bubble and gold is going down, then buy DZZ.

[Proud_USA_Republican]

People are now bidding on gold and silver oz bars on Ebay way over daily market values and still have to pay for the shipping. I’ve seen people bidding for silver oz bars 5+ dollars over current market price. Morons.

Bubble? Nahhhhhh........

[jsh3180]

<<>> Agreed that a stake in GLD, the ETF that purchase physical gold, is a good play on the precious metals rise, that is surely going to continue. I bought plenty of gold beginning in 2003 with gold near $300 oz, I kept buying right up until a year or so ag when gold was selling at $600-$650. I prefer to have actual possession of my gold, so everything I have is in US and Foriegn gold coins, pre 1933 variety. Gold francs, Swiss Helvetias, Mexican 20 and 50 peso pieces, and a host of other gold coin from Colombia, Brazil, Chile, Germany, Austria and so on. Problem with GLD, the ETF, the way I see it is that they SAY they are purchasing 1/10 oz gold for every share of GLD bought, to date though, no one has audited their warehouse to see if they actually have your gold or if all you have is a piece of paper saying that you own "paper gold". Now that I have accumulated a large stash of gold coin at much lower prices, I now play the gold mining company stocks. Gold mining companies profit immensely in a rising gold price environment. While their mining costs remain essentially the same, every dollar that gold increases flows directly to their bottom line as profit. I stay away from the major gold miners like Newmont and American Barrick and instead focus on the mid-tier and junior producers. I also steer away from strictly exploration and pre development outfits. I want proven reserves and mines that produce. There's a pretty fair number of junior and mid-tier companies out there. Today for instance Metallica (MRB) was up 7.66% and Great Basin Gold (GBN) up 4.17%. The profit leverage the miners have over the price of gold is substantial.

[bjs1779]

People are now bidding on gold and silver oz bars on Ebay way over daily market values and still have to pay for the shipping. I’ve seen people bidding for silver oz bars 5+ dollars over current market price. Morons.

That's because there is at least a shortage in the pipeline somewhere. More time is needed to determine how deep it is. One cannot determine the true price solely on paper contracts.

[pallis]

I know a few places I would be with sluice box and pan in hand, if I were still healthy enough to get to them.

[tubebender]

You’re just another greedy property owner!!!

[LomanBill]

These mines are now working at depths of up to 14,000 feet underground in deplorable heat and constant flooding.

 

Looks like the folks down at Cripple Creek Colorado found a solution for the heat and flooding problem...

 

They just moved the mountain.  

The big hole above is where Battle Mountain used to be.

 

Battle Mountain got moved to here:

 

Too bad it's no longer owned by a U.S. entity.

http://allafrica.com/stories/200801150052.html

[SierraWasp]

Wull, I’ll tell yew whut, Buster... I ain’t into sharin like some dumb dirty dope smokin Hippie!!! (grin)