ELKO — Gold prices that burst past the $1,400-an-ounce mark on a couple of occasions in late 2010 and stayed well above $1,000 an ounce all year were good news for northeastern Nevada.
The higher prices inspired new mining and exploration projects and attracted more exploration companies to Nevada, which meant more jobs.
The Nevada Legislature also looked at the mining industry to help with the state’s money crunch, including hiking mining claim fees this year.
Gold’s highest London afternoon fix price for the year was $1,421 per ounce on Nov. 9. That was a one-day spurt, followed by prices in the range of $1,390 down to $1,337 before hitting $1,403.50 per ounce Dec. 3, $1,415.25 on Dec. 6 and $1,420 on Dec. 7.
Prices for the remainder of December through Monday didn’t hit the $1,400 mark again, but they are still well beyond the opening gold price in January of $1,121.50 per ounce.
Silver prices also were on the upswing in the last few months of 2010, reaching a London fix high of $30.50 an ounce on Dec. 7.
Analyst David Morgan, who is sometimes referred to as the silver guru, said in late fall silver had gone from a ratio of 68 to 1 to the gold price on Aug. 1 to a ratio of 52 to 1 to gold now.
“There is much more interest in silver as a safe haven at over $20,” he said then.
Looking ahead, predictions for gold and silver prices in the new year are optimistic.
Richard Baker, who has a blog called the Eureka Miner’s Market Report, predicts the gold price on the Comex market will break $1,570 an ounce before July 4, and the silver price will break $36 an ounce by then.
Barrick Gold Corp.’s president and chief executive officer, Aaron Regent, said at a Toronto conference hosted by Scotia Capital earlier this month he expects the gold price to continue its upward swing, according to Mining Weekly.
“We think that there’s still lots of room for gold to increase in price from here,” he said.
Regent cited reflationary efforts by governments, concerns over sovereign debt, trade imbalances and talk about currency wars as being “very price supportive” for gold.
Although the gold price broke records this year, the price isn’t really a record when inflation is taken into account.
Back in September, when the price hit a then-record of $1,293.50 per ounce, John Dobra, director of the Natural Resources Industry Institute and an associate professor of economics at the University of Nevada, Reno, explained the price wasn’t a record in today’s dollar terms.
He said there was a bubble in 1980 when the price hit $852 an ounce, and that would be $2,300 an ounce in today’s prices.
“Then, it retreated and didn’t get back to that point for 20 years,” Dobra said.
The market is looking at gold as an investment vehicle because of the uncertainty in the financial markets, but it’s not in a bubble when looking at inflation-adjusted numbers, he said.
Going back to January 2010, a Gold Survey Update from the precious metals consulting firm of GFMS stated more investment money would be heading to the gold market in the first half of the year, pushing gold to record high prices.
The 40-page report predicted gold prices would exceed $1,200 an ounce by the second quarter of 2010. This compared with a 2009 average of $972 per ounce.
The high London afternoon fix price for the second quarter of this year was $1,261 per ounce June 28.
GFMS Chairman Philip Klapwijk said at that time there “has been much discussion about whether the gold price has already peaked, but our base case is that the economic recovery will prove sluggish.”
The high gold prices had an impact on the share prices for gold producers with operations in Nevada.
The world’s largest gold producer, Barrick Gold Corp., posted share prices in a 52-week range of $33.65 per share to $55.72 per share. The price Monday was $51.60, down 3 cents.
Newmont Mining Corp. shares were at $60.09, up a penny, and Newmont’s 52-week range is $42.80 to $65.50, while Goldcorp Inc. shares had a 52-week range as of Monday of $32.84 to $48.94 and were at $44.58, down 27 cents, on Monday.
Kinross Gold Corp. shares were at $18.42 Monday, down 11 cents, and that company’s 52-week range is $32.84 to $48.94.
The shining gold price also enticed people to sell their old gold jewelry and gold coins.
In early December, U.S. Gold Refining Inc.’s Gold Road Show was in Elko, and one of the company’s buyers, Chris Bradshaw, said the high gold price is drawing more people to sell their gold jewelry and gold coins.
“This is gold country, so people know what they have,” he said.
They sell commemorative coins from the gold mines, as well as jewelry, and many of them “are trying to get a little extra money for the holidays,” Bradshaw said.
Not everyone is selling now, however. He said a number of people are hanging onto their gold because they expect the prices to go even higher.
The high prices and the area’s gold production also led to television segments about Elko and Battle Mountain being nearly recession-proof because of the mining and mining-related work.
ABC News called Elko the “city the recession forgot” in a segment aired Oct. 1.
Exploration interest grew with the higher metals prices and higher interest in other commodities.
Nevada Division of Minerals Administrator Alan Coyner said at the Northwest Mining Association convention in Spokane, Wash., earlier this month there is a lot of interest in exploration, not only in Nevada but in a number of states and the Yukon.
“We’re starting to see more multi-commodity interest, but gold is still the king,” Coyner said.
He said major projects he talked about at the convention included Fronteer Gold’s three major Nevada projects: Long Canyon in Elko County, Northumberland north of the Round Mountain Mine in Nye County, and the Sandman Project that Newmont is exploring near Winnemucca.
Another project Coyner cited was Midway Gold’s Spring Valley site that Barrick is exploring in Pershing County.
Ron Parratt, president and chief executive officer of Renaissance Gold, which was spun off after Fronteer acquired AuEx Ventures this fall, said at the same convention he is optimistic about exploration, and the higher gold prices have freed up more investment dollars.
“I think the investment community is putting more money into exploration. We’re seeing more activity than a year ago, which is good for Nevada,” he said.
“Nevada has got a lot of gold, and the price of gold is pushing exploration,” Nevada State Geologist and Director of the Nevada Bureau of Mines and Geology Jonathan Price said at the Nevada Mining Association convention in September at Lake Tahoe.
The Nevada Division of Minerals is “seeing a lot of activity now in the bond pool” that is a good indication exploration is increasing, Deputy Administrator Doug Driesner said in October.
The mining projects in northeastern Nevada that provided jobs were led by Barrick’s Cortez Hills operations that went into full production in 2010 while court battles continued over the project.
Cortez Hills and the Pipeline complex combined, which make up the Cortez Mine in Lander County, were expected to produce more than 1.1 million ounces of gold this year.
Barrick’s Bald Mountain Mine in White Pine County continued an expansion project that would create more jobs, and Yukon-Nevada Gold began mining again at its Smith underground mine at Jerritt Canyon north of Elko earlier this year.
Coeur d’Alene Mines also received U.S. Bureau of Land Management permission late this fall to expand its Rochester silver and gold mine near Lovelock.
Great Basin Gold continued test mining at Hollister in northwestern Elko County and brought its Esmeralda mill near Hawthorne into full production.
Bald Mountain Mine operated by Kinross also won BLM approval in 2010 for an expansion project that will include a new Gold Hills open pit, and Jipangu International’s Florida Canyon Mine received the green light to mine again at its Standard property.
The new year may bring new projects, as well. The BLM released the final environmental impact statement this month on Newmont’s Emigrant Project and expects to release the final EIS on Newmont’s Genesis Project soon.
Emigrant would be an open pit mine south of Carlin, and Genesis would be an expansion of an older mining area north of Carlin.
General Moly, which plans a molybdenum mine near Eureka, hopes the BLM will release the draft EIS soon on the Mt. Hope Project and that mining approval could come later in the new year.
When it came to seeking new revenue, the Nevada Legislature’s approval during a special session of a one-time increase in claim fees was an example of how higher metals prices increased the focus on the gold industry for more financial help.
The industry expected lawmakers to look at mining again in the 2011 regular session.
Nevada Mining Association Chairman John Mudge of Newmont Mining Corp., said in September the mining industry expects the next legislative session to be tough as mining is eyed for more revenue.
The higher gold prices also led to a sold-out Elko Mining Expo in June.