Gold Fever Gripping the Australian Outback
Four years ago, Marco Nero was on top of the world. He was earning more than $1 million working as a film effects designer for some of the world’s most prestigious digital animation houses.
His mind, however, was elsewhere.
Mr. Nero, 40, was increasingly spending his office hours poring over Web sites for anything he could find about an unlikely subject: gold. Like Humphrey Bogart’s character in the classic 1948 film “The Treasure of the Sierra Madre,” he realizes now, he was developing a full-blown case of gold fever, a condition whose genesis he traces to a trip to a prospecting supply shop in the Sydney area.
“I happened to talk to the gentleman that was behind the counter, and he showed me a 2-ounce gold nugget he had and it was a beautiful piece. I held that in my hand,” he said. “I was probably hooked at that point.”
Shortly thereafter, despite protests from friends and family, he quit his job to hunt for gold.
Last week, as concerns about the health of the global economy widened, gold hit a nominal high of $1,813 an ounce after a steady three-year climb. (Adjusting for inflation, gold prices would have to reach $2,300 an ounce to set a record.)
Gold prices are up 23 percent since the beginning of this year alone. As a result, more and more people are giving up lucrative jobs in cities in Australia for a chance at the quick riches and adventure offered by old-fashioned prospecting.
Australia is the world’s second-biggest producer of gold, after China. Domestic mines produced 266 tons at a value of 12 billion Australian dollars ($12.42 billion) in 2010, the consulting firm Surbiton Associates said in its latest survey of the Australian gold mining industry. By comparison, the United States produced 240 tons in 2010.
An influx of out-of-towners to prospect in Australia has been a boon for small-business owners in former gold rush towns, many of which have fallen on hard times in recent years.
Take, for example, the tiny outback hamlet of Mudgee, about 170 miles northwest of Sydney. In 1851 it had a population of just 200, before ballooning to 20,000 after the discovery of gold in nearby Hargraves, which was ground zero for the first gold rush in the history of New South Wales.
But the fortunes of Mudgee flagged along with gold prices in the last century. Young people moved to the cities in search of steady work, while punishing droughts drove away farmers. Today, there are just 8,000 people spread sparsely along lonely streets built for more than twice that many inhabitants.
Slowly but surely that has begun to change, said Kim Ellis, 47. She and her partner, Lincoln Parsons, are the proprietors of Nuggets From Down Under, a prospecting supply shop in Mudgee. Ms. Ellis says that she has seen more new arrivals walk through her shop in the last six months than in the previous five years — and that is without counting the huge number of weekend warriors and hobbyists.
“As gold prices are increasing, that’s increasing the interest in gold because of the monetary value but also because of the lifestyle,” she said. “In the last six months I’ve seen probably four people — that’s just involved with my store — four people that are quitting their jobs, selling up and going prospecting full time.”
Four may not sound like a lot, but for a town like Mudgee, every new addition is noticed — and welcome.
“People have never been really game enough to let go of their security of having their job and their home,” Ms. Ellis said. “But what I’m seeing is lifestyle change and that this is something where you can actually make money. It can be a life-changing event. All you need is a nugget, and it’s a life-changing event.”
For some, the look and feel of prospecting has changed little since the great gold rushes of the 19th century: stick a corrugated pan in a shallow creek, sift and hope.
Hunting for gold
But for the more discerning prospector, high-technology metal detectors like the Minelab GPX 4800 — about $6,000 — provide that extra advantage when hunting for the gold that may be just below the surface of the rough soil in the outback.
The global financial crisis and a general rise in commodity prices — oil and food, in particular — are the major factors propping up gold prices, analysts say. Recently, the dispute in the United States over the deficit ceiling and the downgrading of the debt rating by Standard & Poor’s have prompted an increase in the price of gold as investors have sought out an investment that is a traditional haven. Volatile stock markets and the debt crisis in Europe are also giving a lift to the metal.
“The bull market is still very much intact,” said James Steel, chief commodities analyst for HSBC in New York.
One defining feature of the current gold rush, many say, is the age of those joining up. Whereas prospecting for gold has traditionally been a hobby associated with the elderly, many of those moving out to the country are well below retirement age.
“It used to be mostly old folks at the club, but these days I’ve noticed there’s quite a few younger fellows showing up, and I think that’s mainly because of the price of gold,” said Dean Eisler, vice president of the Prospector’s Home Prospecting Club in Sydney, which runs package tours to prospect for gold.
Brian Dumesny, a 46-year-old military contractor from the city of Townsville, Queensland, in the northern Australian tropics, certainly fits that bill. A breakup with a partner helped him decide on a change of scenery, but it was the price of gold that gave him the confidence to change professions as well.
“I’ve always liked it,” he said. “Even since I was a young boy I did a little bit of panning and such, just messing around, but I guess now that in the last few years the price of gold has increased so much that it’s become so much more viable.”
Mr. Dumesny said the last nugget he had found weighed 0.3 ounce.
“Four or five years ago that was worth only a hundred bucks, and now it’s worth a bit over three hundred dollars,” he said. “So you don’t have to find a lot to be comfortable, if you know what I mean.”
That logic appeals to Mr. Steel, the HSBC analyst. Is he surprised to hear that ordinary people in Australia have been throwing in the towel on city life to prospect full time? Not at all, he says. It is a phenomenon he has seen across the world, in places like Brazil, the United States and Australia.
“What I’d like to do is go to Australia and open up my own outback saloon,” he said with a laugh.