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What is Placer Gold Worth?
One of the best things about
Mine is its closeness to Anchorage. It lends itself to what I like to call "commuter
gold mining". The mine is only 45 miles from my doorstep, so rather
than camp, I normally drive back and forth daily. Dredging is hard work,
and the value of a hot shower and a real bed are not to be underestimated.
I left my house about 7:30AM Saturday
morning. The first day of May, and we had actually had snow overnight! Luckily
the amount was very small, and the roads were clear. I made my stop at the
gas station and filled up my jug of dredge fuel, and then headed for the
Moose at Crow Creek Mine - May 1, 1999
This picture shows that the snow had
melted very little from the previous weekend. I put on my drysuit in one
of the cabins, and returning to my truck I found a cow and her calf had
wandered up the road. Moose are relatively rare at Crow Creek, so it was
fun to see them. I tried to sneak around them to get to my truck, so I could
get my camera. Mama Moose kept an eye on me, and looked at me over my truck
as I opened the door. Unfortunately, she and her calf headed away as I finally
got to my camera, so another close-up photo got away.
I started dredging about 9AM. Conditions
were perfect, and so I mined continuously through the day, with just a quick
snack for lunch. I finally quit about 6PM because the water started getting
murky from snowmelt upstream. I managed to get about 8 hours of actual dredging
in, and was rewarded with about 2 ounces of gold. A very good day!
I got out of the house about 6:30AM Sunday,
and repeated my routine. On the way up Crow Creek Road, I happened upon
a spruce hen (grouse) scratching in the road. These birds are not very bright,
and generally believe if they don't move they are invisible, so it is easy
to approach them.
Grouse on Crow Creek Road
It was rather cold for May; water splashing
on my dredge was freezing, so I guess it was about 30 degrees. The sun came
out, and it proceeded to warm up. I kept working up the creek, but found
I was getting walled in by all the snow around me, so I stopped and hacked
away at the snow for awhile. Suddenly, the creek went from clear to muddy
brown. The warming temperatures must have caused a small mudslide upstream,
instantly creating a zero-visibility situation in the water.
I used to dredge in this kind of water.
In fact, Crow Creek is muddy with glacial silt for the entire summer. I
have gotten spoiled on clear water dredging to the point where I just don't
enjoy dredging by feel anymore. The nice thing about working in clear water
with a mask, is that you can see gold as you work along. It is a great motivator,
and allows one to stay in gold bearing material to a greater degree. The
gold deposits are limited in size, especially width. It is good to know
when the gold runs out, so time is not spent moving worthless material.
Another benefit is that the dredge nozzle is rarely clogged when you can
see what you are doing, as rocks are removed before they cause a problem.
Dredging blind results in more clogging of the nozzle and hose, which can
Mudslide upstream mucks up the water, and Steve in drysuit
I decided to quit for the day. I was
a bit beat from the long day before, so I was not that unhappy. I ended
up with about 3.5 hours actual dredging, and about 3/4 ounce of gold. Not
bad for a very short day. I was cleaning up the site when my friend Ben
showed up to see what I was doing. I rarely get pictures of me when I'm
mining, so he took a picture of me in my Harvey's drysuit.
The total for the weekend came to 2.7
ounces, for a grand total of 4.1 ounces in two weekends. All I need to do
is keep going at this rate, and with a little luck I'll have my first pound
(12 troy ounces) of gold for the year in four more weekends. The largest
nugget in the photo below weighs just over a pennyweight (1/20th ounce)
and is small fingernail sized.
Weekend take - 2.7 ounces of gold
My cousin Cathy emailed to ask "So
what is this all worth"? Good question. People tend to divide the gold
by the hours spent running the dredge, and get an unrealistically high figure.
My gold mining is a business, with all expenses reported as deductions and
all gold sales as income. I was once crazy enough to go dredging for a living
for a couple of years, and learned quickly this is no way to get rich quick.
Gold is priced internationally in troy
ounces. By comparison, there are 28 grams in a standard (avoirdupois) ounce,
and 31.1035 grams in a troy ounce, so a troy ounce is heavier. There are
only twelve troy ounces in a troy pound, however, so a troy pound is lighter
than a standard pound. An old joke goes "What is heavier, a pound of gold
or a pound of feathers"? A pound of feathers is heavier!
A troy ounce is further divided into
twenty pennyweights (abbreviated as dwt.), and each pennyweight into 24
grains. These are the same as the grains used on powder scales. So, 1 troy
oz. = 20 dwt. = 480 grains. A U.S. copper penny (not the new zinc plated
variety) weighs two pennyweight, or 1/10th troy ounce.
Gold is currently $285 per oz. (5/3/99)
so my 4.1 oz. is theoretically worth $1168.50. It is, however, more complicated
than that. First, there is the price of the gold itself. The quoted price
of gold is for 99.999% pure gold bullion, not gold in it's natural form.
Natural gold generally is 80%-90% gold, the rest being silver and other
impurities. If gold is sold to a refiner, you are only paid for the actual
gold value. Crow Creek gold is of a lower than average purity, running about
72% gold. If sold to a refiner, it is worth about $205 per ounce. Assay
and refining fees lower this figure even more, making this the option of
last resort for the small miner. Larger operations, with productions of
hundreds or thousands of ounces generally go to a refiner, as the fees are
a lower percentage of larger gold quantities.
Luckily for the small miner, gold in
its natural form is very rare, since most gold is refined. Gold nuggets,
in particular, are valued as gemstones rather than gold, and their value
has much more to do with their rarity and the general character of the nugget.
A one ounce gold nugget is rarer than a 4 carat diamond. Sold directly to
individuals, this type of gold is literally worth what you sell it for.
I feel the best indicator today is the price of natural gold as sold at
various sites on the Internet. Prices on the Internet find their final level
according to the worldwide demand for gold in it's natural form. A review
of various sites reveals that gold nuggets are going for $500 to $700 an
ounce, with choice specimens bringing as much as $1000 to $2000 per ounce.
Many sites on the Internet are selling gold by the gram, so remember there
are 31.1035 grams per troy ounce.
2012 Update: As the
price of gold increases the premium paid for natural gold tends to decrease.
The high price is in itself the premium. When people ask me why they can't
get a big markup over the spot price these days I point out to them the
price has gone so high so fast they are money ahead no matter what these
days. Still, a very good premium can be had for choice nuggets and specimens.
They just have to be truly exceptional.
I pay a percentage of 25% to Crow Creek
Mine of all the gold I recover from the creek. Usually a claim owner gets
10%-15% of the total, but Crow Creek is worth the higher percentage because
of it's easy access, and the support I receive from the mine owners. Keep
in mind a normal visitor pays a much lower fixed fee, with the miner keeping
all he finds. I and a few others work on percentage because we have access
to closed areas of the mine, and because we find more gold than the typical
miner. I will be working my own claims on Mills Creek later this summer.
I keep all the gold I find, but generally only average 1/4 to 1/2 ounce
of gold per day. So it is, that even after the percentage I pay, I still
end up with more gold per day at Crow Creek. This is very important to remember.
It is generally better to pay for access to good ground than to keep all
you find from poorer ground.
Therefore, of 4 ounces mined, I will
give Crow Creek 1 ounce. Since the gold I am finding is on the smaller side,
I will probably get around $450 per ounce for it on the average. So far
I've worked four days, with an average of ten hours per day. 3 ounces X
$450 / 40 hours = $33.75 per hour gross ($1350 total). All expenses, such
as transportation, gas, equipment costs, selling costs, etc. must be deducted
from this. Overhead for a dredging operation is fairly low, but it does
take it's toll. And finally, yes, taxes must be paid on the final profit.
I turn a small, but regular profit almost every year on my mining operations.
Wow, at today's $1700 an ounce prices I would
be making some serious money doing this today. At today's price I would
be making over $100 per hour!! Sad story is I and others mined out nearly
all of this very rich material since 1995, or I would be back down there
right now. I keep hoping for another super flood to reconcentrate the gold
at Crow Creek but so far 1995 was the last time stuff really moved in the
The final catch is that Crow Creek is
the best place I mine. Most other areas I mine have a lower return for the
time spent. Also, keep in mind that as a weekend warrior, I high-grade the
deposits. In other words, I take out the richest deposits and leave the
poorer grade material behind. Doing this full-time, one can expect lower
average returns due to the need to not work yourself out of ground too quickly.
Also note that I counted my first Saturday in the overall hours worked.
This time truly must be counted, and if a person mines gold for a living
it is these kinds of non-productive work days that really eat into your
profits. Downtime is the final factor. Any miner that spends a lot of time
in the field will eventually have equipment failures and shutdowns due to
floods and other factors. The bottom line is gold mining is not a way to
get rich quick, and in fact most miners go broke. Small scale mining is
best approached as a money-making (hopefully) sideline. Don't quit your
day job! I speak from experience. 2012 Update: Still true
today. The high price and television shows are creating all kinds of interest
but the fact is it is hard for one person to make a buck gold mining.
~ Steve Herschbach
Copyright 2000 Herschbach Enterprises