WKU Public Radio News Staff
Wed November 23, 2011
Boom Town, U.S.A.
Originally published on Wed November 23, 2011 5:12 pm
In the small-town of Elko, ambition looks like high-heel suede booties on the floor of the auto shop at the local high school.
Brandi and Kaylee look like the Olsen twins. And they're the best auto-shop students at Elko High. The girls have a plan. Everyday out the school window, they see trucks heading up to the gold mines. Day and night. So, the girls figure, why not open a truck repair shop after they graduate?
"In Elko we've been really blessed and really lucky to actually have a good economy," Kaylee says. "We can actually have our hopes and dreams."
Elko is one of the rare Nevada towns that's doing great. The town, which sits in the middle of Nevada's gold mining country, has boomed as the price of gold doubled over the past few years.
We visited one of the mines that's driving the boom: Barrick Goldstrike. The mine looks like a giant hole the ground, like the Grand Canyon — if the Grand Canyon were black and dusty and filled with explosives.
At the mine, you can't actually see glittery gold. It's all microscopic flecks buried deep underground that have to be crushed, baked, and squeezed out of the rock. It's an expensive process that's only worth it if the price of gold is high enough.
And if the price of gold drops too much, or if the costs of extracting it are too high, Barrick Goldstrike's billion-dollar operation grinds to a halt. And the money stops flowing into Elko.
That's why not everyone in Elko is as hopeful as Brandy and Kaylee. Lacey Foster, age 20, has one of the newest apartments in town. Her husband has a job at a mine. Although Foster is happy to move out of the motel, she's thinking beyond Elko.
"For now, for the next six months, we're just going to live here," she says. "And then hopefully we're going to buy a place somewhere else, in case the mining goes down."
Foster says she's seen it happen before. "The gold boom gets big, and then out of nowhere, it just stops," she says.
You don't have to look far to see evidence of this: Elko is surrounded by ghost towns that cleared out when the gold ran out.
Elko's mayor, Chris Johnson, says he's trying to run the town like it could crash at any moment. The city doesn't borrow much, and makes a lot of payments in cash
He's not the only one. Johnson says that he can't even get private developers to build new housing tracts in the town because few banks want to lend money to build houses in Nevada, even if it's a gold mining town.
But this is what you want from a boom. The thrill of success, with the understanding that it can't last forever.
GUY RAZ, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Guy Raz.
With all the economic uncertainty in the world, one thing is more valuable than ever: the price of gold has doubled in the last couple of years. And that's been great for northern Nevada. There are goldmines there, and mine towns are booming: tons of money, low unemployment. So why are people in northern Nevada anxious about the future? Robert Smith and Zoe Chace from our Planet Money team went to Elko, Nevada, to find out.
ROBERT SMITH, BYLINE: Elko is a city surrounded by goldmines, but you never actually see any of the gold.
ZOE CHACE, BYLINE: Oh, it's everywhere up here in the hills. It's just microscopic, trapped in little flecks in the rocks under our feet.
SMITH: So there was no old guy with a pick axe who came through here and - they walked right over these?
UNIDENTIFIED MAN #1: They walked right over these deposits.
SMITH: So there's nothing to see.
UNIDENTIFIED MAN #1: Right. Right.
SMITH: But you can tell the gold is here by the giddiness in Elko. You can see it in Guy Simpson, a mine manager with more jobs than he can fill.
GUY SIMPSON: We want to expand. We need people.
CHACE: You can feel it from Phil Christianson, who's in town to sell chemicals to the mines.
PHIL CHRISTIANSON: This place, honestly, it's like a beehive. It's lit up. I mean, I was lucky to get a hotel room here tonight.
SMITH: You can even hear the gold, if you follow the miners when they go off shift to spend their money at the karaoke bar.
(SOUNDBITE OF SONG, "TAKE IT EASY")
UNIDENTIFIED MAN #2: (Singing) We may lose and we may win, though we will never be here...
CODY SPRING: If you want to look for a party in a bar, you can find it here seven nights a week.
CHACE: That's Cody Spring, 22 years old, a baby-faced miner who makes $70,000 a year. And he wants everyone to know it.
SPRING: Any single girls in New York, if you want a young Nevada guy with lots of money, my number is 702-379-2210.
UNIDENTIFIED MAN #3: Yeah. And if you want an engineer, my number is 435...
SMITH: No, no, no, no. Whoa. Whoa. Whoa.
SMITH: That guy who grabbed the microphone is not an engineer.
CHACE: Apparently, that's something that dudes in Elko say just to get chicks.
SMITH: They brag about their jobs because the mine is in the money.
CHACE: And the money is in the mines.
(SOUNDBITE OF MACHINERY)
SMITH: OK. We got to go see what's driving this boomtown. We head on up to the mine, Barrick Goldstrike, or as I like to call it, the biggest damn hole in the ground you've ever seen.
CHACE: It's like the Grand Canyon, if the Grand Canyon were black and dusty and filled with explosives.
SMITH: This mine has been here a long time, but it's never been this busy. There are so many trucks working down there right now. The hole is now so deep, 1,200 feet, all because of the price of gold. Ask anyone, like manager Steve Kashan(ph).
CHACE: Do you know what the gold price is today?
STEVE KASHAN: I follow it fairly closely. It's just over $1,700 an ounce - somewhere around 1,730, I think today.
SMITH: The reason he has to know the price is because this gold here is really hard to get at. This gold has to be crushed and baked and squeezed out of the rocks.
CHACE: You have to put a lot of work in to get a little bit out. And it's only worth it if the world really wants it - if the price of gold is above the magic number.
SMITH: One of the mine managers, Al Plank, has a term for this.
AL PLANK: Economic gold, that's what we're looking for is...
SMITH: What does that mean, economic gold?
PLANK: That means that it has to have enough gold per ton of ore so that we can recover our cost.
SMITH: Is there a simple equation, because you know how much it costs to get the gold out, you just pull up on the Internet what the gold price is and boom, that's it?
PLANK: No. I'd say it's very complicated.
SMITH: Because if the price of gold drops too much, or if the costs of getting out of the ground go too high, then this whole operation grinds to a halt.
CHACE: And drags Elko down with it. We walked into town expecting to tell a story about how good the good times feel, but there was a definite anxiety here.
SMITH: For instance, we were coming back from the mines, and we saw an apartment complex being built. Housing is so tight in Elko right now that people are moving in while the apartment complex is still under construction.
Lacey Foster is 20 years old, pregnant with a second kid. She's from another Nevada town, Winnemucca, but her husband got a job here at the mines.
LACEY FOSTER: So we've been living in motels for the past seven months and...
SMITH: Which motels?
FOSTER: The cheap ones that are gross and, you know, but it's so expensive to find a decent place.
CHACE: Lacey just got the newest apartment in town. Her troubles should be over. But she really sounds like she's hedging her bets.
FOSTER: For now, for the next six months, we're just going to live here. And then, hopefully, we're going to be able to buy a place somewhere else in case, you know, the mining goes down. Because that scares me, you know, if the mining stops or if the gold runs out or - because I mean what are we going to do?
SMITH: Why aren't you optimistic? Have you seen this go bad at other places? You're only 20.
FOSTER: Winnemucca, it was a big gold mine town, and people just up and left their stuff. And that's how it always happens. As it gets big - the gold boom gets big and then out of nowhere it just stops.
SMITH: This has crushed Nevada communities before. Heck, there are ghost towns all around here that thought the gold would last forever. So how does Elko avoid the same fate? We went to visit the man in charge.
MAYOR CHRIS JOHNSON: Chris Johnson, mayor, City of Elko.
SMITH: Why did you want to be mayor?
JOHNSON: I don't know.
(SOUNDBITE OF LAUGHTER)
CHACE: He's really a plumber. Mayoring is a part-time gig, and it explains a lot about him.
SMITH: Yeah. He was running his own plumbing business during the last recession, and he told us a story. When the dotcom bubble burst 10 years ago, Johnson didn't worry about his plumbing company. He thought, hey, Elko has gold.
JOHNSON: Elko is immune to a recession. I just figured that, you know, hey, I got this figured out. It's a simple formula. Economy goes down, gold price goes up. Elko pushes through it, Elko does okay in between, we don't have an issue. So in this business, it was, you know, go, go, go, hire, hire, hire, buy trucks, borrow money, so on and so forth. Well, guess what?
CHACE: The price of gold didn't shoot up. In fact, it bottomed out.
JOHNSON: And in a matter of a month, we went from a company of 50-plus people to a company of about 10 people. It was a big eye-opener in being careful of what it is.
CHACE: So he's trying to run the town like it could crash at anytime using cash, not much borrowing.
SMITH: He's not the only one being careful. Mayor Johnson says that he can't get private developers to build new housing tracts in Elko. Because face it, what bank wants to lend money to build houses in Nevada, the capital of the housing bust, even if they do have gold.
CHACE: And in some ways, maybe it's nice to have a little sanity during a boom, right? Rather than overbuild, over promise, you're careful. You enjoy having the best economy in the state, but you understand it can't last forever.
SMITH: And in fact, we met a couple of young people who are playing this whole boom bust cycle perfectly.
(SOUNDBITE OF FOOTSTEPS)
SMITH: This is what ambition sounds like, high heel shoes on the floor of the auto shop at Elko High School.
(SOUNDBITE OF MACHINERY)
CHACE: We asked to meet some students who were going into gold mining. And this is what we got.
KAYLEE: I'm wearing my suede booties. They're my favorite high heels.
SMITH: And this is Brandy.
BRANDY: I have my brand new cowgirl belt. Oh, and my blue feather earrings.
(SOUNDBITE OF LAUGHTER)
BRANDY: You're so cute.
CHACE: They are as precious as they sound. They look like Mary Kate and Ashley Olson.
SMITH: And they are the best crackerjack diesel mechanics in their vocational class.
CHACE: And these girls have a plan. Every day out the windows of the high school, they see trucks heading up to the gold mines, all day and all night. And the girls thought, hey, after we graduate, why not open a truck repair shop?
SMITH: I got to ask, have you come up with a name yet?
KAYLEE: We like the Cinderella Girls, because our friend taught us the meaning. And it's like the Cinderella Girls, they're coming from nothing and turning into something. So we started out knowing nothing about cars, and then we actually turned out and we know a lot about it now and - well, we've blossomed.
SMITH: You know, one of the things that's so weirdly moving about your plan is that you do know that in most of America, people think that there's a really sad future out there for the economy.
BRANDY: Yeah. And although we've been really blessed and really lucky to actually have a good economy here so we can actually have our hopes and dreams and actually work towards them, you don't want to have your hopes too low because then you're not actually going to have a future planned out for you.
CHACE: It's not just money that builds up during the boom times. It's momentum.
SMITH: And momentum can carry you through whatever comes next. I'm Robert Smith.
CHACE: I'm Zoe Chace, NPR News. Transcript provided by NPR, Copyright NPR.