-- Posted Friday, 10 February 2006 | Digg This Article
By Dr. Steve Sjuggerud, DailyWealth.com
“Black flies, red dust, and white heat…”
That’s how future President Herbert Hoover described the outback town of Kalgoorlie, Australia in 1897.
In the early 1890s, gold was discovered near Kalgoorlie, in Coolgardie, Western Australia. One of history’s largest gold rushes was on, and at age 22, Herbert Hoover lied about his age to get a mine manager’s job there (the age requirement was 35).
Hoover spent the next 18 months in Kalgoorlie, exploring the bush by camel. He came across the Sons of Gwalia mine (which is a long camel ride from Kalgoorlie in the heat), and brokered a deal to buy it. He developed the mine, and became, according to the San Francisco Chronicle, “the richest man of his age in the world.”
I spent most of last week “retracing” Herbert Hoover’s footsteps in Western Australia. I visited all kinds of mining operations, from the gigantic Super Pit to tiny one-man outfits. I went deep underground and drilled for ore.
While there’s an immense amount of precious metal wealth in this neck of the woods, Kalgoorlie may be cursed… not even Herbert Hoover escaped it. As I’ll explain, there’s a lot going on here right now… and a lot has gone on in the past…
Kalgoorlie is straight out of an old Western movie... saloons with swinging doors, superwide roads (so the camel trains carrying supplies at the turn of the century could make a U-turn), and the obligatory brothels. (Prostitutes are illegal in the state of Western Australia, but somehow the authorities look the other way in Kalgoorlie.)
I find it amazing… due to the bull market in precious metals, the old mines at Gwalia and Coolgardie are coming back. I actually met with CEOs of small companies who are involved in each of these. As I stood outside of an abandoned mine being recommissioned, the CEO told me:
“There’s gold all around you, Steve. And with new technology, I’m able to see things without even putting a shovel in the ground that people even ten years ago simply couldn’t see. The problem is money. It takes money to get it out.”
Getting rich in “Kal” should be a piece of cake at today’s prices. Take some money, throw it in the earth, and get gold out. But we’re not the first ones to think of this… It seems that something always happens on the way to the bank…
The three men to first discover gold in Kalgoorlie – Paddy Hannan, Tom Flanagan and Daniel Shea – stumbled on it by pure chance (their horse lost a shoe there).
On June 17, 1893 Paddy Hannan registered his claim and, within three days, an estimated 700 men were prospecting in the area. Unfortunately, Hannan’s claim was in the wrong spot.
Everything in town is named after him, but Paddy Hannan didn’t make any money. Neither did his two cohorts. Luck hasn’t been great for many men in this neck of the desert…
For example, a wealthy Australian named Alan Bond had the brilliant idea in the 1980s to create The Super Pit in Kalgoorlie, by buying up all the tiny mine leases and opening the whole thing up into a 2+ mile long open pit gold mine. But in a few years he declared bankruptcy and went to jail for hiding money.
But the craziest story I heard was the story of one C.Y. O’Connor...
The legend I was told was that O’Connor killed himself over Kalgoorlie. C.Y. O’Connor was the man in charge of bringing water to Kalgoorlie. So he built a pipeline all the way from Perth - the longest in the world at 330 miles - with public money.
The pipeline cost a fortune, and O’Connor was under serious public scrutiny. I was told that, once the pipeline was completed, O’Connor stood in Kalgoorlie waiting for the water to come. By the fourth day, when there was still no water from the pipeline, O’Connor took his own life.
That was the story I was told… but it didn’t ring true, so I looked it up on Wikpedia.com. The truth really is stranger than fiction…
According to Wikipedia, Mr. O’Connor took his own life on March 10, 1902 “by riding his horse into the surf south of Fremantle and shooting himself.”
Less than a year later, the pipeline was completed.
Even though Herbert Hoover survived Kalgoorlie, he wasn’t so lucky later on… having to lead the U.S. through the worst economic crisis in its entire history.
Is there a Curse of Kalgoorlie? It sure seems like it. Is there a lot of gold here?
Absolutely.
But beware… If past is prologue, be careful how much money you throw at the gold rush down here… A lot of very rich men have lost their wealth (or their mind) after buying into it…
Good investing,
Steve
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-- Posted Friday, 10 February 2006 | Digg This Article
