With gold prices hitting $900, prospectors head to Alaska

GIRDWOOD, Alaska — The snow is knee-high along the banks of Crow Creek, where men are crouching up to their chests in near-freezing water, and the air is several degrees colder.

For Mike Telgenhoff and his companions, though, this is a fine day to look for gold.

"We do real good in the wintertime because the creek's so low," said Telgenhoff, dressed in a sopping leather hat and dry suit. "I've made a lot of money at it, but I've spent a lot, too. You don't get rich doing this."

But with gold prices reaching an all-time high of $900 an ounce and the economy slumping, more and more people are expected to trek to Alaska in search of gold.

Telgenhoff and two other miners normally have this narrow valley southeast of Anchorage to themselves after the winter freeze. Once spring arrives, however, they anticipate seeing additional prospectors.

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 recently 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 group has received hundreds of calls and e-mails from interested gold seekers. New memberships are increasing, and the number of membership renewals at the close of 2007 was twice as high as the previous year, said Brandon Johnson, director of operations.

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

The heightened interest is nowhere near that of the famous 19th-century gold rushes in California, Alaska and Canada's Yukon Territory. Those grizzled prospectors long since have been replaced by recreational gold hounds — mostly seasonal workers and retirees.

Roughly 150 families in Alaska live off gold, according to state officials. But longtime prospectors say 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, owner of Alaska Mining and Diving, a mining-supply shop in 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."

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

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

Prospectors' group

The Gold Prospectors Association, the largest gold-prospecting group in the country, lets members operate dredges and sluice boxes, which are metal or plastic channels designed to catch gold. Or they can spend a day sifting through dirt with a pan, on hundreds of thousands of acres across the U.S. and Canada.

Another club called the New 49ers in the former gold-mining settlement of Happy Camp, Calif., has access to 70 miles of federal mining claims along the Klamath River.

"That's almost the only way to get into mining anymore because there are so many bureaucratic steps," New 49ers President Dave McCracken said. "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.

Old law enforced

Alaska 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 Alaska 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 indicate a recent uptick in gold mining.

Toni Logan Goodrich, who co-owns Oxford Assaying and Refining 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 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 gold unearthed by her clients. In the workshop, her husband smelted 18 pounds of gold into a brick worth $250,000. Three fistfuls of gleaming nuggets and two quarts of gold flakes were nearby, with a value of an additional $500,000.

Many prospectors liken the hunt for gold to a weekend of gambling in Las Vegas. Others love the feel of the soil and the illusion of self-sufficiency in the wilderness.

"We like to see the gold at $800 or $900 an ounce, but we were doing this when gold was a hundred an ounce," said Telgenhoff, who earns most of his money through his contracting business. "We're going to continue doing this when gold drops again or goes up again or whatever."