Is Searching For Gold Cost Effective?

[berryman]

I realize this forum is all about prospecting for gold, but in the long run, I suspect that prospecting for it is probably less cost effective than simply buying it - - -

You can currently buy a 2.5 gram gold nugget on eBay for about $140; and because of their relative rarity, I suspect the odds that any of us will ever find a nugget of this size by prospecting for it are close to zero. When time, transportation and equipment costs are factored in, the actual prospecting cost per gram of the gold we find is probably greater than the cost of purchasing it outright.

I understand of course that, for most of us, it's all about the hunt and the thrill of the find. But if you want to put together a gold nugget collection (something more substantial than a collection of flakes and pickers), it would probably be more cost effective to simply purchase it.

What are your thoughts?

 

[steve herschbach]

My prospecting is a for profit business with a business license and business tax returns. My truck and trailer are owned by my prospecting company and all expenses, food, detectors, gas, depreciation, etc are tracked and written off. I pay my taxes on the profits and have not shown a loss since the 1980's. I do however have income from writing, claim leases, and other related activities that generate income and I only sell enough gold to keep everything in the black. The rest goes in the safe deposit box, though I intend to ramp up my gold sales soon after a couple year lull.

However for the vast majority of people you are no doubt correct. The difference is I have been doing this for 45 years now and spend a huge amount of time prospecting. Just got back yesterday from one expedition and am heading out soon on another. Basically during the summer I am home just enough to keep up with chores and to make sure my wife does not forget who I am.

It is getting harder and harder though. The fact is the gold is depleting faster than new technology can make up the difference. In my opinion it is really only the increase in gold prices that has kept it going. When I started detecting for gold in earnest in 1998 it was partially because the price of gold was around $300 per ounce making it not worth my while to freeze my posterior off dredging for gold in Alaska. If gold was only $300 per ounce now I would probably just shut the company down and go into hobby mode. That extra $1000 per ounce makes a big difference. Once a person is geared up with equipment it really just boils down to food, gas, and lots of time.

Unless the price of gold ramps up dramatically, not an impossibility with all the uncertainty in the world, I see the end coming for me. I am not getting any younger and it really is just getting harder and harder to find gold nuggets. I will eventually shift more into my other passion of jewelry detecting, and in fact am gearing up for a two week jewelry detecting trip soon. Precious metals are precious metals as far as I am concerned and I don't care what form it comes in. There is much more competition these days jewelry detecting but people will always lose jewelry and any good location replenishes constantly. Once you clean out a nugget patch it is gone forever. You can also detect jewelry anywhere people gather, but gold nuggets only occur in specific locations worldwide. At the point where it is easier for me to find a ring than a gold nugget that is the direction my detecting will take. But for now nuggets are still easier for me. Biggest yesterday was 1.5 grams.

 

[berryman]

Thanks for the insight Steve. I think it helps to keep the hobby in perspective. A couple of quick questions for you -

1. Where do you sell your gold?

2. What's your favorite jewelry-hunting rig - DFX w/BigFoot?

 

[steve herschbach]

I sell my gold directly on the internet and at premium prices. I am working on a new section for my website to sell nuggets this winter. I sell by the piece and generally get about $2,000 per ounce for my gold. Or I just do not sell it. But given enough time it always sells.

And yes, DFX with Bigfoot is a sweetie though I have also been enjoying the Gold Racer.

 

[berryman]

You're doing very well at $2000/oz.

The 2.5 gram nuggets I mentioned in my initial post are currently selling at about a 30% premium to the spot price of gold on eBay (approx. $1740 per oz vs approx. $1330 per oz.). Of course, the premium on larger nuggets would be even higher. Conversely. I just found some 2 DWT pickers selling on eBay for approx. $1275/oz (which is about a 5% discount to the current spot price of gold. Of course, flakes and pickers usually only run about 85% pure, so I guess the discount makes sense. The take away - there's a lot to evaluate when buying and selling raw gold.

 

[doc holiday232]

"is searching for gold cost effective"well,let's figure:
1. 100,000. motorhome
2.6 detectors--13,000.
3. sluice box,high banker,dry washer,hooka eqpt.dredge---5,000.
4. other goodies---2,000.
5. 10.3 oz. of gold--including a 5.1 oz honker, but I'm still a little shy.
6. Good luck