“Panning for Gold,” by Alpha Unit

The spike in gold prices this year is inspiring people to sell gold, buy gold, snatch the gold from around other people’s necks, and go out prospecting for gold. Some of the people who operate gold prospecting tours report that business has been surging of late.

If business is surging, the surge is being fueled by people who can already afford to go out looking for gold. Like one couple in Australia who gave up their jobs to be full-time gold prospectors. Such people often report that they’re able to make a good living at it. Other people claim it can be a profitable hobby. But you’re more likely to hear stories like the one by the retiree who says he found about $20 worth of gold in the past year – and how it’s taking him forever to recover the money he’s spent.

It takes money to make money.

If you want to get your hands on gold the old-fashioned way, there are people who will show you how. Prospecting tour companies will take you into the outdoors, educate you about gold mining, and provide a good time – but that’s it. Forget about finding another “Washington Nugget,” the controversial 8-pound hunk of gold – was it found in California or Australia? – that sold for $460,000 at auction in March. That is not going to happen to you, and veteran prospectors want you to know it. (Although you might get lucky.)

What you will typically get to do is a bit of gold panning, the easiest way to look for gold. You’ll need to find a stream to go panning in, preferably one where gold has been found before. What you’ll be doing is gathering gold from placer deposits – accumulations of gold resulting from the effects of gravity during sedimentation. The gold you find in these alluvial placers is what’s been washed downstream from the original vein. The gold accumulates at the base of the deposit, of course, since it’s denser than the sand and other materials.

Gold naturally occurs alloyed to some degree with silver very often (as electrum) or sometimes with mercury (as amalgam) and shows up either as variously sized nuggets, as flakes, or as microscopic particles inside other rocks. The technique involves filling a wide, shallow pan with sand and gravel that you’re hoping contain gold. You submerge the pan in water and shake it in various ways, some unique to the prospector, causing the gold to settle rather quickly to the bottom of the pan.

If you practice this a while and keep at it, you might be lucky enough to find gold and collect some of it. But you’re not going to be able to just weigh it and go get the day’s closing gold price per ounce. The impurities, such as the silver and mercury I mentioned, have to be removed from it first. It’s going to cost to refine the gold, even if you do it yourself (which is generally inadvisable, in fact, as it involves handling some pretty dangerous chemicals).

If you’re like a lot of the people who go out panning for gold, you’re not going to end up selling the gold anyway. Kelly Hall, Vice President of the Coarsegold Prospectors Club of Coarsegold, California, puts it this way: “I’ll probably end up giving it to my grandkids.”

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13 thoughts on ““Panning for Gold,” by Alpha Unit”

  1. It’s crazy how many gold bugs are coming out of the woodworks. I have one long time friend that’s a gold bug that keeps pressuring me to buy gold. Admittedly, he was telling me this a few years ago when it was half the price. I was going to do this but never pulled the trigger. Big mistake. I’m reluctant to buy any gold now because I’ve always lived by the mantra that by the time everybody is talking about it, you’re already in a bubble. I’m hearing gold advertised on TV and radio, friends talking about.

    In the end, it’s just a worthless shiny rock. I don’t know why it even has any value.

    Any gold bugs in here? If so how much upside do you think we’re looking at? Or is a crash imminent?

    1. It’s hard to say. An indirect way to invest in gold is through buying stocks in gold mining companies. The advantage of this is that you earn some ROI through dividends on top of your capital gain when selling those stocks. I’ve bought some gold stock. I don’t think I’ll get rich over night, but I’m a patient man.

      Just remember, that shiny metal won’t earn you squat, its merely a hedge against uncertainty. Gold stocks are an investment in the truest sense of the term.

      Here’s another tip for free: Silver’s on the rise too. In fact there seems to be a positive correlation between the prices of gold and silver. Silver is also notoriously volatile, so be careful.

        1. Not sure what you mean. In a recession Gold has some value for obvious reasons, however if our financial system completely collapses and society regresses into a state of nature, what you said above applies.

        2. I’m talking about complete societal collapse which is what the survivalist doomsayers bank on. And they push this fear on us and then tell us the only way out is GOLD. But gold doesn’t mean crap if nothing else means crap. When “uncertainty” turns into certainty.

        3. “But gold doesn’t mean crap if nothing else means crap. When “uncertainty” turns into certainty.”

          Local collapse increases the value of gold. If the US collapses, the value of gold would skyrocket. Only a near extinction event would make gold worthless. It’s a special metal.

    2. “Or is a crash imminent?”

      The price of gold is a measure of financial instability. Financial instability is a product of mass speculation. Mass speculation is a product of learning curve.
      Present gold run-up is reaction to 2008 financial mess. Lesson learned. So, yeah, a crash is imminent. Stay away from gold.

  2. I bought gold yrs ago and recently, like when it was $600 an ounce, now it’s over 1800. Gold is a commodity, it’s legal tender everywhere. There are even outdoor markets in the U.S. where food is sold by farmers and crafts by artisans where dollars aren’t welcome, you trade or pay in gold or silver. The gold is specially made from small hammered pieces.
    6 yrs ago I bought 4 pieces 1/2 ounce U.S. eagles for around $300 each, they’re now bringing $930 a piece, offered from the place where I bought them from, CNI. I also bought a few sovereigns and $5 U.S. pieces to give to my nephews and best friends kid as gifts. They’re happy now. Gold stocks are traceable and subject to tax. real gold isn’t. It accrues and is tax free and doesn’t show up to negatively affect any grants or public assistance you may qualify for. And when you buy U.S. coins, you don’t pay sales tax.
    A person could buy $10,000 in 1/2 ounce eagles and put them in a short length of PVC pipe and bury it. It’s a hedge.
    As for prospecting, I’ve been metal detecting for 30 yrs, and I have a detector specifically designed to find gold. That’s the way to go.
    Nuggets can be found…they aren’t generally big, maybe the size of a lentil, but at 1800 an ounce 3 or 4 of them is a nice days pay. And occasionally people find nuggets the size of a pea.
    Believe it or not, nuggets like that are worth more in their natural state, they’re often variegated and swirled with white quartz, lumpy and irregular, and are real popular for pendants. In fact, alot of jewelers will make fake nuggets from gold using a process involving rice, cuz they bring high prices and sell well. And of course they can use lower carat gold.

    1. Dano

      “”They’re happy now. Gold stocks are traceable and subject to tax. real gold isn’t. It accrues and is tax free “””

      True. However unlike other financial assets, Gold does not generate any cash flows. Land and stock will net you a capital gain should their value increase, but in the interim they generate their own cash flows too (rent/dividends). Gold does not. It ties up your capital untill you make your capital gain at some point in the future.

  3. Fair point dota, this shows that Gold has it’s up points and down points, I should’ve mentioned that an investment in gold should be one part of a diversified…i hate the word “portfolio”..it’s so capitalistic…I’ll just say network of savings and investments. But even with things like real estate and CD’s, rates are at .03%… and rents have to cover maintenance, taxes, insurance, mortgage and upkeep. I have an apt. that rents for a $1000 a month, but the tax & insurance is $2500 a yr and the maintenance is $2200 a yr..and I just had to come up with $5000 for a new AC (needed a crane to get it on the roof) and $1000 for a new fridge. And then there’s the occasional assessment. Luckily I own it outright.
    And look where real estate wound up. Land and houses that’re worth half what they were. I have a lot that went from an assessed value of 40K to 8K. A large portion of people that started a 401K yrs ago now have less in it than when they started.
    Gold is something no one can touch. If you get sued, or fined, the gold is there, yours, getting more valuable, untouchable. You don’t have to show up at a bank to cash it in. No signatures. No skimmed exchange rates. The only real drawback to owning gold is it can get stolen. Gold never loses weight thru oxidation, as silver does. Gold doesn’t oxidize and doesn’t tarnish.
    Pull an 8 escoudo gold piece from a Spanish wreck that’s been in highly corrosive salt water for 300 years and it comes up just as shiny and perfect as the day it sunk.
    Gold is cool. .

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