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As gold prices climb, prospectors head for Alaska

Posted: Monday, January 28, 2008

GIRDWOOD - New snow, knee-high, conceals the tumbled boulders lining the banks of Crow Creek. The water temperature hovers near freezing and the air is several degrees colder. For the men crouching up to their chests in the glacier-fed stream, it is an ideal day to search for gold.

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Al Grillo / The Associated Press
Al Grillo / The Associated Press

"We do real good in the wintertime because the crick's so low," said Mike Telgenhoff, before clambering up the bank in a sopping leather hat and drysuit. He settled onto an overturned bucket at the brink of a smoky fire. "I've made a lot of money at it, but I've spent a lot, too. You don't get rich doing this."

Telgenhoff is part of a trio of miners who normally have this narrow valley all to themselves after the winter freeze. But with gold prices spiking at more than $900 an ounce this year - an all-time high - these hard-core treasure seekers anticipate more company than usual after the spring thaw.

As the beguiling commodity soars in value, other citizen prospectors, both amateur and veteran, are taking up the pursuit. Membership in gold prospecting clubs is climbing nationwide, along with sales of pans, dredges, metal detectors and other small-scale mining equipment.

A trade show in January hosted by the Gold Prospectors Association of America in Orange County, Calif., typified the trend.

"I saw more people walking out with more metal detectors and sluice boxes than I can remember in a long time," said Ken Rucker, general manager of the 45,000-member association. "That $900 is really getting to people."

The organization, recently sold by the Outdoor Channel, is the largest gold prospecting association in the country. Hundreds of calls and e-mails are pouring in, new memberships are steadily mounting and the number of renewals at the close of 2007 was twice as high as the year before, said Brandon Johnson, director of operations. As a result, the group is preparing to bring in more staff.

"I predict that in the near future, membership will grow significantly faster," Johnson said from the association's office in Temecula, Calif. "We're in the first or second inning of growth."

Investors typically turn to gold during times of political and economic instability. The falling dollar, threat of a recession, political upheaval in the Middle East and rising cost of oil and other commodities have boosted the metal's appeal as a safe investment.

To be clear, a rush rivaling those in 19th-century California, Alaska and Canada's Yukon Territory is not about to happen. Those grizzled prospectors have long since been replaced by recreational gold hounds - mostly seasonal workers and retirees.

Roughly 150 families in Alaska live off gold from their claims, according to state officials, but scores of longtime prospectors say a career in small-scale mining is generally unpredictable, tough on the body and yields little to no profit.

"If you love ditch-digging, you'll just love gold mining," said Steve Herschbach. He owns Alaska Mining and Diving, the go-to mining supply shop in the city of Anchorage. "It's just hard labor. I knew a guy up in Nome who did really, really well, but he was like a human backhoe. The guy could just shovel all day long."

A stanza from "The Spell of the Yukon," a poem by Robert Service, encapsulates the mantra of most modern prospectors: "There's gold, and it's haunting and haunting/ It's luring me on as of old/ Yet it isn't the gold that I'm wanting/ So much as just finding the gold."

"It's great to just go out and maybe find a little bit and just enjoy being out in nature," said Rick Segebrecht, a plumber in Oregon, Wis., who started prospecting there five years ago. "And there's always that chance every time we go out, you could find the big one."

Mining clubs are popular with hobbyists, such as Segebrecht, who want to avoid the paperwork and fees required to stake claims. The groups have forged various agreements over the years that allow members to mine on government or private land.

The New 49ers, a club in the former gold mining settlement of Happy Camp, Calif., has access to 70 miles of federal mining claims along the Klamath River, which cuts through town. On a much larger scale, the GPAA enables members to operate dredges and sluice boxes, or simply spend a day sifting through dirt with a pan, on hundreds of thousands of acres across the U.S. and Canada.

"That's almost the only way to get into mining anymore because there are so many bureaucratic steps," said New 49ers President Dave McCracken. "We take care of all the legal and political stuff that surrounds this activity."

The rare individual who does stake a claim must navigate an array of state or federal regulations to establish mineral rights and adhere to the Clean Water Act and other environmental protections.

In Alaska, the state still enforces a 19th-century law requiring prospectors to mark the four corners of each parcel with a post. Herschbach, who holds a large swath of claims in the Alaskan interior, said he and other serious miners use GPS to plot out their territory. Maps posted on government Web sites lay out which claims are occupied.

State officials said their data indicates a recent uptick in gold mining. Lately, the number of abandoned claims has dropped significantly, while the number of permits issued to small miners rose steadily from 233 in 2002 to 315 in 2007, said Rick Frederickson, the acting mining section chief at the Department of Natural Resources.

Even so, he believes the era of the self-sufficient Alaskan gold miner is long past.

"It's more of a lifestyle than anything else," Frederickson said. "A lot of these guys are pretty elderly and I don't see a lot of young people who want to do that for a living."

Toni Logan Goodrich, who co-owns Oxford Assaying and Refining Corp. in Anchorage, said she believes high prices are bringing a younger demographic to mining. It's a shift from 10 years ago, when she wondered whether her business of purifying and assessing the value of gold would survive.

"I was thinking, 'I'm 30, what am I going to do? In 10 years, all my miners are going to be dead,'" she said. "I think it's becoming profitable and younger people are getting involved."

Goodrich displayed the impressive amounts of "color" unearthed by her Alaska mining clients, who generate 95 percent of the business.

Many prospectors liken the hunt for gold to a weekend of gambling in Las Vegas. Others love the feel of the soil, the illusion of wildland self-sufficiency, the palpable link to America's past.

"We like to see the gold at eight or nine-hundred dollars an ounce, but we were doing this when gold was a hundred an ounce," Telgenhoff said.



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