Gold diggers inspired by record prices

updated 4:18 p.m. ET Jan. 25, 2008

GIRDWOOD, Alaska - The snow is still 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.

But for Mike Telgenhoff and his companions, 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 drysuit. “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, Alaska expects to see more and more people trekking to the edge of the continent in search of gold. Gold reached a new high of $924.30 Friday, before easing back to settle at $910.70.

Telgenhoff and two other miners normally have this narrow valley southeast of Anchorage all to themselves after the winter freeze. But once the spring thaw arrives, 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 year before, said Brandon Johnson, the director of operations. As a result, the association is preparing to hire more staff.

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 Those grizzled prospectors have long since been replaced by recreational gold hounds — mostly seasonal workers and retirees.

Roughly 150 families in Alaska live off gold they have collected, 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.”

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