A Quiet Boom : Nevada ‘88: More Gold, Less Rush

Out here on Route 376--the road to nowhere--business at Greg and Susie Scott’s cafe has increased threefold since January, and Scott is looking for financing to build a casino.

“There’s big money in the valley now,” he said.

In Goldfield, prospector Richard Ridgway and his partners climbed down an abandoned mine shaft 210 feet deep and brought up several buckets full of ore. “Half way down I thought, ‘Goldarnit, we’re just spinning our wheels,’ ” he said, “but the sample came back from the assay lab and it looks like we’ve got a good claim.”

And in Reno, Phil Davis pulled into town in his pickup, a .357 magnum under the seat, to collect the royalties from his mine. He said he would accept only cash, so John Livermore, a partner in the Cordex investment syndicate, counted out $100,000 in crisp $100 bills. Davis stuffed the money into a satchel and headed back to his trailer at Battle Mountain, four hours away. “I don’t trust banks,” he said.

Bigger Than Comstock

This is the Nevada gold rush of 1988, and it’s a big one, even bigger than the legendary Comstock Lode bonanza of more than a century ago. It has made Nevada the leading gold and silver producing state and has enabled America to pass Canada as the third largest gold producer in the world, after South Africa and the Soviet Union.

Nevada is expected to mine 3.3 million troy ounces of gold this year--a windfall worth $1.4 billion that the miners of the 1800s left behind for the simple reason that they couldn’t see it. In those pick-and-shovel days, you didn’t mine what you couldn’t see and touch. Today, with new technology, it can be profitable to sift through 40 tons of ore just to recover one ounce of gold. The gold particles--in deposits often located by satellite--are so fine they are invisible even under a microscope.

Mining Invisible Dust

In a new recovery process called heap-leaching, hillsides are dug up and carted away by $700,000 trucks that can carry 150 tons of ore in one trip. The ore is ground into nut-sized chunks and soaked in diluted sodium cyanide to dissolve out the gold. The product is then poured into 75-pound bricks and shipped by armored car to refineries to be “four-nined”--made into gold that is 99 and 99/100% pure.

An ounce of gold can be produced for $200 in heap-leach mines, so it can be a profitable venture when the precious metal brings about $400 an ounce on the open market.

“A hundred years ago, you or I could go out and stake a claim and make a fortune,” said Rod Higgins, executive director of the Nevada Mining Assn. “The fact now is that the best the average prospector can hope for is to have his claim taken over by a mining company. Gold mining’s too expensive to be a one-man operation any more, and it’s not a labor-intensive operation like in the old days. It’s capital-intensive.”

So, gold fever has not swept Nevada as it did after the Comstock strike of 1859 and the Goldfield strike of 1902. There has been no stampede of immigrants from out of state. The miners who come today, unlike those bearded, brawling men of a century ago, are likely to have had college educations and carry business cards as geologists or engineers. What the boom has done is to revive dying towns and rekindle some individual dreams--dreams that are more cautious than those of the gold-rush past, when people lived on hope and boom towns became extraordinarily careless with human life and natural resources.

Round Mountain, where mining began in 1904, had dwindled to a town of 75 residents 20 years ago. Today, 750 people live around Echo Bay’s open-pit gold mine, which looms out of the hillside like a fortress with earthen parapets. Theirs is a quiet, peaceful community of mobile homes, 60 miles from the nearest bank (in Tonopah) and 235 from the nearest movie theater (in Reno), and one has the sense that if times turned bad, the whole place could pack up overnight and be gone by morning--as happened in other towns across the Nevada hills, such as Wonder, Jacobsville, Ophir and Star City.

Star City, said a federal report in 1868, just seven years after the town was built, had become a “flourishing town with two hotels, post office, and daily United States mail, a Wells Fargo express office, a telegraph office connected by a special line with Virginia City, and a population of more than 1,000 souls. So sudden has been its decline that the daily mail, the express office and telegraph office are all in operation yet, though the entire population consists of a single family.”

Prefab Boom Town

Such lessons of the past have not been lost on the ‘88ers of Round Mountain. They earn good money--about $14 an hour, compared with the $25 miners used to make for a 60-hour week in the Comstock era--but even with the world’s largest heap-leach mine working around the clock, the only signs of prosperity are the new cars and pickup trucks parked outside the General Store and the Hungry Miner cafe. Even the post office is a prefab structure that could be torn apart at a moment’s notice.

“It’s hard to put your roots down if there’s nothing to put them into,” said Treesa Lear, who carefully tracks the price of the Echo Bay stock shares she and her husband own. “If the mine went down, my parents would stay--they’re ranchers--but my brothers would leave. I’d probably leave, too. Even in these good times, you don’t feel like you’re really going to live here, so people don’t invest much back into the community.”

Among the few couples who have invested here are the Scotts. Their roadside cafe, known as Carver’s Country, includes a bustling restaurant with a video-rental library and a bar with a single table where Susie Scott deals blackjack Wednesday through Saturday nights. Across the highway they have built a coin-operated laundry and a car wash. One of the car wash’s first customers was a rancher who rode in to give his horse a good scrubbing.

“We’re doing 10 times the business we were when we bought the place in 1980,” Greg Scott said. “The payroll right here in Smokey Valley, we’re talking $1 million a week, with five mines operating. What I want to do now is expand the restaurant and build a casino. They’d make nothing but money, but I can’t get the banks in Tonopah to go along with us. They say if the mine goes, the town goes.”

Old-Fashioned Amenities

Tonopah, itself a great gold town at the turn of the century, is an hour down the road from Round Mountain. Jack Dempsey used to be a bartender and bouncer at the Mezpah Hotel there. The hotel is still in operation and its restaurant, named for the fighter, serves California Almaden wine and, before the entree, a cup of intermistal--”champagne and sherbet to cleanse the palate so you don’t taste the soup or salad with dinner,” the waitress explained as a dinner guest stubbed out his cigarette.

Gold has breathed new life into Tonopah, too, and the hotel’s bar and casino are crowded with construction workers, truck drivers and miners.

“The basic mining community is still a boom-or-bust economy,” said Anthony Roman, manager of the Valley Bank branch in Tonopah. “Round Mountain’s a perfect example. I like Greg, but how do you appraise something in Round Mountain or Goldfield? There’s nothing out there to compare it to. An apartment complex or casino may be very profitable as long as the mine is open, but then what happens? How do you know how long to finance a building for? So what’s the easiest way out for a banker? To do nothing.”

Such caution suggests that risk-taking is not part of the ’88 bonanza, but for more than half a century, from the California rush of 1848-49 to the Alaska boom of 1896-97 to Nevada’s second big strike of 1902-04, gold was the inspiration of the gamblers’ dream that built the West.

Gold brought men to open up the land beyond the Great Plains, and behind the miners and prospectors came the merchants, stagecoaches, saloon keepers, craftsmen and newspapermen. Gold built San Francisco and Denver. Gold lured the emigrants from Europe, China and Australia. Gold was responsible for settling California. (The population jumped from 14,000 to 250,000 between 1848 and 1852, and the $20-million worth of gold mined there was at that time the richest treasure ever found.) Gold brought so many people to the Rockies that Colorado was carved out of Kansas in 1861 to become a separate territory.

Minerals Bought Statehood

Were it not for gold and silver, in fact, Nevada might have never become a state. Because of its mineral wealth and the federal government’s need to pay for the Civil War, Nevada was granted territorial status in 1861 and statehood in 1864. It is the only state in which the provisions for taxes on mining are written into the constitution. After the mines eventually declined and the state’s population fell (to just 43,000 in 1900), some people suggested that Nevada should be deprived of statehood.

By 1902, a huge new gold strike had been made and Goldfield, just south of Tonopah, had swelled to 30,000 residents, making it the largest city in Nevada. Before the mines played out a few years later, Goldfield had staged a world lightweight championship with a purse of $34,000--the biggest ever offered for a boxing match. The town had 53 saloons and counted among its residents Virgil Earp. James Casey, the founder of United Parcel Service, got his start in business delivering telegrams in Goldfield at the age of 17.

Today, only 550 people are left in the town, but there are plans for reopening the elegant old Goldfield Hotel on Crook Avenue--said to be still haunted by a pregnant blonde. Virginia Ridgway, who runs The Gloryhole antique shop with her prospector husband, Richard, has visions of turning the abandoned high school into a convention center and of persuading a corporate headquarters to relocate in the semi-ghost town. The Gloryhole also serves as the bus stop, chamber of commerce, historical society, Western Union and notary public office, fish and game department for licenses and news bureau for the Death Valley Gateway Gazette.

Corporate Offices Wooed

“It would be very inexpensive for corporations here,” Virginia Ridgway explained. “Of course, right now your normal person doesn’t live in Goldfield. This is a town of ‘strangos,’ like myself. We’ve got some brilliant people--poets, mathematicians, inventors--and they look like bums. You see an old scuzzbag on the street and you have to remind yourself that he’s smarter than I ever hope to be in my life. It took me a while to get used to them.”

Whether the Ridgways will realize their dream of a reborn Goldfield remains uncertain, but Nevada’s current boom seems likely to last longer than the brief, spectacular bonanzas of the past. The state’s gold reserves are conservatively estimated at 60 million ounces, which would take 18 years to mine at the present pace. Deeper mining than used now and new technology could increase the size of the known reserves.

“This is an exciting time in Nevada, but in a way, I hate to see it happen,” John Livermore, the Cordex partner, said. “There’s been too much hype going on about the boom, and a lot of investors are going to get burned. Americans are optimists by nature, and we see something going up and up and think it’s always going up, but you can’t get away from the fact that always at the end, the boom goes bust.”