Since gold remains in the news, let’s use the Way Back machine to take a trip to 1965 and the gold mining in the Nevada hills.
An article in the Sarasota Herald-Tribune on June 3, 1965 tells the tale of Mining Gold Bullion Just Another Day’s Work For Him.
Back then, Mr. Keppner, who worked for Goldfield Corporation, traveled once a week down the mountainside from the Getchell Mine to Winnemucca, Nevada to purchase supplies for the miners. He also took the week’s output of gold bullion to the post office. Using registered first class services, he would mail the gold bars to the US Mint in San Francisco.
Every week, Mr. Keppner carried four or five packages to be mailed. Each package included gold bars with a total worth of $13,000 to $14,000. Per the article, the packages weighed, on average, 65 pounds each.
Goldfield Corporation insured the bullion for its travel from the mine, roughly 50 miles northeast of Winnemucca, all the way to its arrival at the Mint in San Francisco. Their management claimed shipping via the post office was expensive, but it was still cheaper by $10 to $20 per bar than the alternatives of that time.
This story provides interesting insights into the mining operations of over 45 years ago. But, the article’s numbers seem flawed.
Back in 1965, gold prices were close to $35 per ounce. Using the $13,000 to $14,000 estimated value of each package divided by $35 yields between 370 and 400 troy ounces of gold in each of Mr. Keppner’s packages. Those troy ounces convert to less than 30 pounds of gold per package.
But, if the 65 pounds is correct, the value would be much greater. The 65 pounds converts to 948 troy ounces which at $35 per ounce equals just over $33,000 per package.
What the article doesn’t tell us is the purity of the gold bars. It could be that the mining facility did not have the ability to make the bars pure enough for the full per ounce rate of gold. Then again, they shipped them to the Mint rather than a refinery implying the bars were sufficiently pure for the Mint’s use.
As another alternative, it could be that $14,000 divided by 948 troy ounces gives the price per ounce the mine received. That calculation would be just under $15 per ounce. That can’t be right. The Goldfield Corporation would not sell their gold at less than 50% of the going rate of $35 per ounce.
As another fact, the article also stated that the Getchell mine produced about $3 million per year. If their rate was $15 per ounce, the mine produced over 200,000 ounces of gold in 1965. But, if the rate was $35 per ounce, the mine’s output was roughly 85,000 ounces.
Interesting, but let’s fast forward to recent times to view the mine’s output today.
The Getchell Mine (see photo) is part of the Turquoise Ridge property owned by Barrick (75%) and Newmont (25%). In 2010, Barrick’s 75% share of the gold at Turquoise Ridge was 124,000 ounces with Newmont’s at roughly 41,000 for a total output of 165,000 ounces.
Was the output in 1965 closer to 85,000 or 200,000 ounces? From this information we still don’t know for sure.
In looking at various mining historical information (Outline of Nevada Mining History, Nevada Gold Production Summary , Nevada Bureau of Mines and Geology), they describe how the Nevada gold mining outputs significantly increased beginning in the early 1990s. Since one historical graph shows roughly 200,000 ounces for all of Nevada in 1965, the Gretchell Mine’s output was probably closer to the 85,000 ounces.
In all likelihood, the description of the average weight of each box Mr. Keppner took to the post office back in 1965 is the flawed point in the article.
This fun exercise honored gold’s continued upward trend and its breakthrough of $1500 per ounce (at $1500.80) for a short time today.
Just think if you only had one of Mr. Keppner’s $14,000 boxes from back in 1965 — 400 ounces at $1500 per ounce equals $600,000 or a nice few bars of gold for the yellow metal’s upward climb to future breakthrough values.