| MINING NEWS ARTICLES
November 7, 2008
Elko Glitters as Town Avoids 'Going to Hell in a Hand Basket'
By Stewart Bailey
Bloomberg.com: News
Nov. 7 (Bloomberg) -- Jim Winer is so confident the gold- mining town of Elko, Nevada, will sidestep the recession barreling down on the U.S. that he's developing houses, offices and a shopping mall.
``Everyone's hiring,'' said Winer as he drove past the site of a 55,000-square-foot office complex he's building for Denver- based Newmont Mining Corp. ``Business is really good.''
The desert town is booming as investors seek refuge in gold while U.S. home prices slump, foreclosures rise and stocks recede. ``Help Wanted'' signs beckon along the main street as retailers and hoteliers gear up for growth in the heart of the biggest U.S. gold-producing area.
``As long as the economy is going to hell in a hand basket, Elko is going to be just fine,'' said Wendy Ispisua, who sells houses in the town's suburb of Spring Creek.
Gold has performed better than equities since it started climbing from $253.90 an ounce in July 1999. While bullion prices have almost tripled since then, the Dow Jones Industrial Average has fallen by a fifth. The Dow has lost about a third since recording its highest-ever close on Oct. 9 last year, while gold is little changed.
Gold traded at $733.90 an ounce in New York yesterday after touching a record of $1.033.90 in March.
Newmont Mining Chief Executive Officer Richard T. O'Brien said prices will climb once the inflationary impact of a worldwide bailout of banks becomes evident.
`Bullish' on Gold
``As we see the U.S. continue to print money, I think we will see gold prices come back,'' O'Brien said in an Oct. 29 conference call with investors. ``We remain bullish on the long- term prospects for the gold price.''
Newmont and Toronto-based Barrick Gold Corp., the world's two biggest gold producers, are Elko's largest employers, providing jobs for about 3,500 of the 44,000 people who live in the town and its suburbs.
Elko is a four-hour drive from Reno, Salt Lake City and Boise, Idaho, the nearest major cities, and lies in Nevada's gold-rich highlands. Newmont discovered the metal about 23 miles (37 kilometers) from the town in 1962, in what would later be known as the Carlin trend, the largest gold deposit in the U.S.
``The Elko economy goes with the gold price,'' said Ramon Zugazaga, a Basque immigrant who for 25 years has served 3-inch (7.6-centimeter) thick steaks and chops to miners and their families at his restaurant, Baltoki. ``The mining economy is good, the gold price is high and people have money to spend.''
Mood Damped
While the mood in Elko may be damped by the meltdown of world financial markets, the immediate effect is limited to what people have lost in retirement savings, said Ispisua.
The rate of foreclosures in Elko County, at one in 961 households, is a 10th that of the rest of Nevada and less than half the national average, according to Irvine, California-based RealtyTrac, which monitors the U.S. housing market.
Median home prices in Elko fell less than 1 percent in September from a year earlier, Ispisua said. In August, prices dropped 31 percent from a year earlier in Las Vegas, Nevada's biggest city, and 17 percent in the 20 major metropolitan areas of the U.S., according to the S&P/Case-Shiller Home Price Index.
Unemployment is steady at 4.1 percent, compared with Nevada's 7.1 percent and the national average of 6.1 percent, said Winer, a member of the town's chamber of commerce. At night, Elko's bars, restaurants and casinos are packed.
A global shortage of skilled mining labor ensures workers make a good living. Average annual pay for Barrick's employees, including overtime and bonuses, is $79,000, spokesman Lou Schack said. The median U.S. household income last year was $50,233, according to the U.S. Census Bureau.
`Rolling the Dice'
``If you're living and working in Elko, you probably want to stay in Elko,'' said Wayne Loman, mining sales manager for the local branch of closely held Cashman Equipment Inc., a reseller of Caterpillar Inc. construction and mining machinery. ``If you leave, you're probably rolling the dice.''
That much is evident 290 miles away on the outskirts of Reno. Weeds and grass grow over foundations of a halted condominium development. A fence surrounds the property and some completed units stand empty.
In contrast, there are few ``For Sale'' signs in Elko, where a housing shortage has forced as many as 140 workers to live in motel rooms, said Elaine Barkdull Spencer, executive director of the Elko County Economic Diversification Authority.
It wasn't always that way. Between 1998 and 2004, with gold prices at less than half the current levels, things were ``pretty ugly,'' said John Mansanti, general manager of Barrick's Goldstrike deposit, the largest U.S. gold mine. Local businesses fired staff to keep costs in check and housing was easy to come by, he said.
For now, pickup trucks continue to fill parking lots of the 28 motels that line Elko's main strip. Many carry an extra spare tire, a telltale sign they're probably driven by geologists who drive into the desert as they seek new prospects.
``The sign of prosperity is the pickup trucks with two tires,'' said Mansanti. ``That's an exploration vehicle.''
To contact the reporter on this story: Stewart Bailey in New York at sbailey7@bloomberg.net.
Last Updated: November 7, 2008 03:00 EST
20081107
Return to the Mining News Articles Archives Page
|
