Richest & Deepest Gold Mines In The World ~

[AJrWennerGren]

Richest & Deepest Gold Mines In The World ~

Gold mining and a unique relic ~



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This is the head frame at the mighty Empire Mine,
as it appeared in 1963.

The structure was blasted into eternity in 1969
when the owners said liability concerns were
too great to allow the wooden tower to remain.

For more than 90 years, between 1850 and
the United States entry into World War II,
the rich quartz mines of Western Nevada County
shipped an annual average of $8 million
in gold bullion to the San Francisco mint.

The Empire, Pennsylvania, Champion, North Star,
Golden Center and Idaho-Maryland,
among others, were the richest and
deepest gold mines in the world.

In Grass Valley, the North Star's central shaft
descended vertically 3,000 feet into the earth.

Incline shaft extensions and other passages
reached a depth of 10,500 feet from
the surface.

Hard-rock gold mining began here and experienced
far-reaching innovations, allowing years of
sustained and profitable production.

In 1942, by order of the federal government,
all gold mining was curtailed for the duration
of WWII as being "nonessential" to
the war effort.

Many of the miners went into military service,
some took employment in San Francisco Bay Area
shipyards, and still others worked at mining
metals vital to the war effort
in other locales.

Peace returned in 1945, and some of the mines
reopened anticipating a return
their pre-war output.

However, the cost to rehabilitate the mines,
coupled with inflated costs of production -
especially wages and new machinery -
rapidly approached and then exceeded
the value of gold produced, leaving
no profit or reinvestment capital.

In 1934, the federal government had fixed
the price of monetary gold (bullion)
at $35 per troy ounce and became the
only legal purchaser.

The mines were forced to sell only to
the U.S. mint, thereby binding them to
an artificially static price.

There were no restrictions on specimen gold
and nuggets for jewelry.

In 1956, an era came to a close when the
mighty Empire, the area's largest mine
and greatest producer, "pulled the pumps"
and stopped pumping ground water, which
allowed some 300-plus miles of underground
workings to flood.

Within two years, all machinery, tools
and equipment from the Empire, Pennsylvania
and other mines had been or was in
the process of being auctioned.

Today, except at the Empire, which has
become the Empire Mine State Historic Park,
all that remains is a foundation or two
and an occasional corrugated building to
mark the location of the gold mines that
were once the economic base of Nevada County.

Records show that more than half of all gold
produced in California came out of the ground
in this county.

An interesting experiment in gold mining
technology took place at
the big-producing Idaho-Maryland mine
in Grass Valley in 1935-36.

At a location on the mine property close
to Brunswick Road, the company's engineer
J.B. Newsom bored an experimental vertical
shaft 5 feet in diameter some 1,125 feet
into the earth through solid rock.

The traditional method to sink vertical or
incline shafts called for drilling, blasting
and then "mucking out" the loose rock.

Timbering followed to provide support for pipes,
power cables and other necessary equipment.

Timbering was expensive and required constant
and costly maintenance.

The vertical bore required no maintenance and
the necessary cables could be bolted to
the shaft walls.

Also, steel cage guides for underground transport
to and from the surface were easier to attach
to the smooth surface of the shaft than to
an uneven one caused by blasting.

The experimental shaft passed near the 500,
750 and 1,100-foot working levels of
the original Idaho-Maryland workings.

Newsom designed and built special equipment
for the drilling experiment.

A rotating, vertical core barrel drill and
a core puller both drilled and removed
sections of rock which were usually 7 feet
in length, weighing approximately 11 tons each.

According to records kept by Errol MacBoyle,
the mine's general manager, the greatest
footage drilled during the experiment
was 21 feet through solid rock in three days.

Evidently, the experiment did not produce
the expected results and the shaft
was never utilized.

Two of the shaft core sections were saved
and placed locally on public display.

One is at the Nevada County Fairgrounds;
the other is in Calanan Park in
Nevada City.

History often repeat itself ~

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[AJrWennerGren]

A skilled speculator and the experienced investor,
however, take a longer view ~

The key is to identify major trends in the markets,
understand why they’re occurring, and stay with them
for as long as possible. ~

Jitterbugs that worry about daily movements will eat
their capital up with commissions, fees, taxes,
and bid/ask spreads in the process of whipsawing
their accounts to death with the vagaries of
their own psychology.

I do have a crystal ball, but I do also have
a sense of market history.
Most of the people that were active players in the
last real gold bull market, from August 1971
to January 1980 (which took gold from $35 to over $800)
are now either dead or retired.
Most of the players in today’s markets only know
of gold as a dog, dropping from over $800 to
under $253 in July of 1999.
Those few who even watched it came to see every rally
over a 22-year slide as nothing more than a
selling opportunity.
Understandably, people tend to predict the future
by the past.
So they expect both bull markets and bear markets
to go on forever.
Right now most of those who’ve even noticed gold
has moved from $252.80 at the bottom to its present
levels see it as just another rally in a
never-ending bear market.

How do I know they’re not right?
Well, nobody can know that until long after the fact.
But I’ve been long both the metal and gold stocks
since the early 70’s (I was early; generally speaking
only liars buy at the exact bottom), and I’m planning
on staying long for the indefinite future.

Why am I so bullish?
The purpose of this article isn’t to make a definitive
case for gold, but I will list six outstanding factors
worth noting.

1. THE FOREIGN TRADE DEFICIT.
The US is currently importing about $500 billion more
than it exports every year.
That’s been going on for many years, so there are
trillions of US dollars now held outside of the US.
Since US dollars are only “legal tender” within
the US, whether foreigners continue holding them
depends on whether they have confidence
in the dollar;
confidence can vanish like a pile of feathers
during a hurricane.
I would suggest that they’re becoming increasingly
aware that the dollar is, in fact, an “IOU Nothing”
on the part of the US Government,
which is itself bankrupt.

2. US GOVERNMENT DEFICITS.
The US Government is also running $500 billion domestic
deficits, and that number is not only grossly
understated—because of
(a) off-balance sheet spending;
(b) cash rather than more appropriate accrual accounting; and
(c) the adding of Social Security funds into
the general revenue—but it’s likely to
go way, way up.
Why? It’s being financed with some of the lowest
interest rates in history, and when rates cyclically
rise to more normal levels
(forget about 15% long rates of the last
generation—which I expect will be exceeded),
the deficit could reach a trillion.
That’s not counting greatly diminished tax revenues
and the greatly increased government spending that
always accompany a recession.
And I think we’re heading for something worse
than a recession.

3. THE WAR.
My guess is that the adventures in Iraq and
Afghanistan are, for reasons I won’t go into now,
going to get much, much uglier.
And likely spread to other parts of the Islamic world.
The US, which has troops in over 100 countries,
isn’t going to withdraw;
it’s going to become more involved.
This could be a $200 billion per year drain,
on top of the regular Defense Department
and Homeland Security budgets, for many years to come.

4. SUPPLY/DEMAND.
Although most of the gold that’s ever been mined
is available (either as bullion, coins, or jewelry),
the fact is that more is being consumed than is
being mined each year by a substantial margin—by
about 640 tons in 2003 alone.
Most of this deficit has been made up by sales
and loans from Central Bank inventory, compounded
by forward sales from gold mining companies.
The loans and forward sales constitute a short
position of substantial size that will have
to be covered.
And my suspicion is that, at some point
in the next few years, Central Banks will go
from being net sellers to net buyers.

5. THE REAL PRICE.
At $35 in 1971, gold was artificially suppressed
in price by government edict.
By the time it reached $800 in 1980, it was caught
up in a speculative mania.
Since then it’s been able to achieve something of
an equilibrium.
But $400 today is really only worth about $75 in
1971 dollars—so it’s quite under-priced.
And, in real dollars (whatever they may be), gold
isn’t down just 50% from its 1980 peak;
it’s still down about 85%.
I expect the conditions that drove the bull market
in the 70’s are going to be much, much stronger
this time around.

6. GOLD AS A CURRENCY.
Take your pick:
a piece of paper with less than zero intrinsic value,
or a tangible and relatively rare metal
that has been viewed as a store of wealth
over thousands of years?
In addition to holding the physical metal,
new services such as GoldMoney.com that offer
electronic transaction services based on gold
will revolutionize the ways you can buy
and sell the metal.

In essence, you want to own gold because
of all these reasons.

But above all because it’s the only financial asset
that is not simultaneously someone else’s
liability— which is why I expect Central Banks
around the world will increasingly be selling
dollars and buying gold in the future.

I believe we’re looking at a gold bull market
of historic proportions in the years to come.

Retrenchments such as we’re seeing now are
not only normal, but trivial.

You should use them to buy bullion and
aggressively add to your mining share positions.

Despite returns of 5-to-1 almost across the board
in these stocks, there’s every reason to believe
that when the gold bull really gets under way,
these stocks will be wilder than the internets
were in the late 90’s.


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