Boom Town : Planet Money We visit a town riding high on the gold boom in the midst of Nevada's economic disaster.
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Boom Town

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Boom Town

Boom Town

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Here's my question.



CHACE: Are you feeling lucky?

SMITH: I'm feeling lucky. I am feeling really lucky.

CHACE: So bet it all.

SMITH: No, I'm not going to bet it all.


THE ROLLING STONES: (Singing) Women think I'm tasty, but they're always trying to waste me, make me burn the candle right down. But baby...

SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith.

CHACE: I'm Zoe Chace. Today is Friday, November 11. And that was us you heard at the top betting at the craps tables in Elko, Nev.

SMITH: Eight. Come on. I'm walking down. I'm walking down. Ten, nine, eight...

I don't even know what that means. Today on the podcast, we take you to northern Nevada, where they've risked their future on another kind of gamble - on the price of gold.

SMITH: This is good.

CHACE: You can't be stopped. You're so good.

SMITH: See, this is what I love about...

CHACE: The gold mines in Elko are booming - tons of money, low unemployment. So why are people nervous? We'll tell you after the Indicator. Hit it, Goldstein.

JACOB GOLDSTEIN, BYLINE: Today's PLANET MONEY Indicator, 180 billion. U.S. exports were over $180 billion for the month of September.

CHACE: Here's the thing about a number like that. Like, I have no idea what that means. Is that awesome - that's a lot of exports? Or that's really bad - we had none?

GOLDSTEIN: It's really good. In fact, it's actually a new record high for U.S. exports. And if you go back a couple of years - if you go back to the financial crisis, you know, exports, like everything else, basically fell through the floor at that time. But over the last couple of years, there has been this really strong recovery in exports. They've just basically gone up and up and up, unlike almost everything else in the economy.

And, you know, exports are still a relatively small part of our economy. But this export growth that we're seeing, this new record high for exports - that's really a good thing because when we sell more stuff to other countries, that's a way that we can have economic growth without relying on consumers to spend more, which is particularly helpful right now, you know, when everyone is still trying to pay down their debts.

CHACE: So there's no problem?

GOLDSTEIN: Well, I mean, it's good for now. Of course...

CHACE: OK. We're just going to stop you right - thank you, Jacob. That was great. Thank you.


CHACE: Onto the podcast, we're going to take you to the gold mining town of Elko, Nev. It's in the high desert between Salt Lake City and Reno. You go past the salt flats, up against the Ruby Mountains...

SMITH: And what you see there is a little town that is booming. I don't need to tell you that the world has been in the dumps for years now. So maybe we've all forgotten exactly what a boom town feels like. There's this almost giddy feeling there that everything is going up, up, up, up.

CHACE: So we're going to remind you.


SMITH: That is the sound of ambition, high heel shoes on the floor of the auto shop at Elko High School.

CHACE: We asked to meet some students who were going into gold mining, and this is what we got.

SMITH: Kaylee.

KAYLEE: I'm wearing my suede booties. They're my favorite high heels.

SMITH: And this is Brandi.

BRANDI: I have my brand-new cowgirl belt - oh, and my blue feather earrings.

KAYLEE: (Laughter) They're so cute.

CHACE: They are as precious as they sound. They look like Mary-Kate and Ashley Olsen.

SMITH: Yeah, but they are seriously the best diesel mechanics in the entire vocational school.

CHACE: And these girls have a plan. Every day out the windows of the high school, you can see a town rolling in money. There are trucks headed up to the gold mines all day and all night. And the girls thought, hey, why not open a truck repair shop when we graduate?

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 - it's 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 it's like we blossomed.

BRANDI: It's just something we wanted to do. So we're going to do it.


BRANDI: We're going to get it done.

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 don't have this much hope about jumping out of high school and starting a business, you know, much less, you know, an auto mechanic business or something like that. People are depressed. People think that there's a really sad future out there for the economy. You guys don't seem to have a depressed bone in your body?

KAYLEE: In Elko, 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 with how it's going in Elko.

CHACE: The only difference between the Cinderella Girls and the rest of the country is that they live close to this.

SMITH: We drive outside of Elko to see one of the gold mines.

CHACE: It's like the Grand Canyon - if the Grand Canyon were black and dusty and filled with explosives.

SMITH: As we looked down, we see these trucks. And they crawl around the canyon. These trucks are the size of a two-story house. There's a ladder that you have to climb just to get up to drive the thing. And they're hauling these big, black boulders up out of the pit.

The mining company is Barrick. It's one of the biggest gold companies in the world. And the environmental manager, Joe Giraudo, showed us around. The mine is called Goldstrike, but nothing is shiny. You can't see any gold anywhere. The boulders are actually filled with microscopic gold.

CHACE: So is that gold?

JOE GIRAUDO: That was gold.

CHACE: Where's the gold going?

GIRAUDO: It's probably going up to the roaster, I would imagine.

CHACE: And that's where we're going.


SMITH: You know, they've been gold mining in Elko for more than a century. But now is their finest hour. I mean, 50 years ago - even 10 years ago - it wouldn't have been worth it to take these big black rocks, grind them up and roast them looking for little flecks of gold. But these days...

CHACE: Do you know what the gold price is today?

STEVE CASHIN: I follow it fairly closely. It's just over $1,700 an ounce, somewhere around 1,730, I think, today.

CHACE: That's Steve Cashin, another miner at Goldstrike. And he says that truckload of rocks is worth $150,000.

SMITH: There's a lot of complicated economics that goes into the pricing of gold and how much they can get on this ground. But it boils down to this - as long as the economy in the rest of the world is bad, people are going to park their money in gold. That's the bet this company is making.

GIRAUDO: Without casting aspersions on our economy, I don't see it getting a lot better very soon. So you know, we don't think the price of gold's going to come down rapidly very quickly.

SMITH: Do you find yourself - I hate to say this - but if things go poorly in the world, gold prices go up. In the back of your head, are you kind of saying, I kind of hope it sucks for a lot longer?

GIRAUDO: I don't know if I'd go that far. You know, I've got a daughter...

SMITH: I'm talking in the back - in the back of your mind.

GIRAUDO: I've got a daughter who's not in the mining industry that's got to look for a job when she gets out of college here pretty quick. So you know, we don't want the economies to collapse.

CHACE: Perhaps Joe's daughter should consider mining...

SMITH: She should.

CHACE: ...'Cause what we're seeing here in the ground is transforming this town. Barrick is trying to hire about a thousand people in the next year. They need truck drivers. They need mechanics. They need engineers. They need the skilled, the unskilled, the degreed, the un-degreed.

SMITH: And that makes Elko unlike any other city in Nevada. It is a happy place. The unemployment rate there is half what it is statewide. And just being in Elko, it feels like a party.

UNIDENTIFIED PEOPLE: (Singing) We will never be here again. So open up, I'm climbing in. So take it easy.

CHACE: After the miners shower off the dust, they head for Matties karaoke bar back in Elko. The buses actually drop them off in the parking lot of the Gold Dust casino across the street. I'm not making this up.

CODY SPRING: Nevada's 24-hour state, especially northern Nevada with all the mining. If you want to look for a party in a bar, you can find it here seven nights a week.

SMITH: Everything you've ever thought about a gold mining town is absolutely true. There are four brothels here - right downtown. And Cody Spring - you just heard him - he told us in excruciating detail all about the brothels (laughter).

CHACE: Fascinating.

SMITH: When he's not singing Pat Benatar songs - he does "Heartbreaker" at karaoke - he is down in the tunnels.

CHACE: I picture underground miners as, like, big, grizzled dudes. And you - you look like a kid.

SPRING: I know I might look like a kid. But it don't really matter what you look like to be able to work underground.

CHACE: Cody is 22 years old. He's from southern Nevada. He graduated high school in 2008 - not a great time to get your start in Nevada's economy. Right?

SPRING: Well, it was quite all right for myself because I had a job lined up 10 days after high school and a sponsorship through college.

CHACE: He was paid to go to college. Now he's making $70,000 a year. Needless to say, he could see doing this his whole life.

SPRING: Being an underground miner? Yes, I do. I'm addicted to it.

SMITH: And I need to apologize to our female listeners to PLANET MONEY. But Cody really wanted us to play this message (laughter).

SPRING: Any single girls in New York...

CHACE: (Laughter).

SPRING: ...You want a young Nevada guy with lots of money, my number is 702-379-2210.

UNIDENTIFIED PERSON: Yeah. And if you want an engineer, my number is 435-459...

CHACE: That guy who just grabbed the mic is not an engineer. Apparently, that's something that dudes in Elko say just to get chicks.

SMITH: And since this is a mining town, let's just say there's not a lot of single women around.

CHACE: But there is plenty of money. We met Justin Alanis (ph), an electrician who makes $4,000 dollars every two weeks.

SMITH: We hung out with a bunch of guys without college degrees who moved to Elko to install truck bed liners. And they are making a fortune.

CHACE: Oh - and there's a boom in archaeologists, actually. The mining companies are breaking so much new ground they're desperate to get archaeologists to check the place for ancient ruins or whatever before they tear it up.

SMITH: So weird. Elko is like going back in a time machine to America before the recession. We went to this great restaurant called the Star. And they don't take reservations. The tables are packed by 6 p.m.

CHACE: And we met a guy, Phillip B. Christiansen, who sells chemicals to the mines.

SMITH: So you're a traveling salesman who lives in Pocatello, Idaho. You drive through all these towns in the West. How is Elko different? I mean, when you go into Elko, can you feel it? Does it feel different than the rest of the West?

PHILLIP CHRISTIANSEN: This place, honestly, it's like a beehive. I mean, you see - it's lit up. The hotels that I stay at, they're asking $20 to $30 more a room. And they can easily get it. They're always full. I mean, I was lucky to get a hotel room here tonight.

CHACE: He said it - lucky. Everyone in this town should feel lucky, like 22-year-old Cody or the Cinderella Girls with their dreams of rebuilding truck engines. Elko is possibly the best place in America right now.

SMITH: And yet, strangely, there's this undercurrent of anxiety. We walked into Elko expecting to tell a story about how good the good times feel. But the more people we talked to, we heard something else. There is a fear in town, almost like if they talked about the good times, they would jinx the good luck if they said it out loud.

CHACE: And we started to sense it when we were coming back from the mines and we saw this apartment complex being built.

SMITH: So many people are moving to Elko from out of town to try their hand at mining, that there's no place to live. People are living in motels. And so we finally found this apartment under construction. And we found people moving in while they're still building it. We met Lacey Foster. She's 20 years old, pregnant with her second kid. And she's from another nearby Nevada town, Winnemucca. Her fiance works at the gold mine outside of Elko.

LACEY FOSTER: He's been working here for about seven months. So we've been living in motels for the past seven months. And...

SMITH: Which motels?

FOSTER: The cheap ones that are gross. But it's so expensive to find a decent place.

SMITH: All the motels along the main strip are filled with mining families now. And it's strange, though. I mean, Lacey is about to move into this brand - sparkly new apartment.

CHACE: And we saw the inside of one of them, and it's nice.

SMITH: But she doesn't sound anything like the Cinderella Girls. She sounds like someone who's hedging her bet.

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 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, is it gets big. The gold boom gets big. And then out of nowhere, it just stops. So it's - it's scary.

CHACE: This is our big revelation. That's it - right there. No one wants to take a chance on gold staying high. You'd think with an industry doing so well, the town would build a lot more housing. They'd upgrade their police force, their fire department, their schools. And they do actually have extra funds. The mining companies pay an extra tax to the area based on the profitability of the metals they mine. And gold is obviously very high. So Elko should be swimming in capital.

SMITH: Yeah, they should be. But we looked around; we didn't see it. So we went find the mayor, thinking he's got to be planning some major upgrades to this town. And we found him where he works at Charles Chester Plumbing, next to the Walmart.

CHRIS JOHNSON: Chris Johnson, mayor, City of Elko.

SMITH: How long you been mayor?

JOHNSON: Oh, just about four months is all. I was a city councilman two terms before that.

SMITH: Why did you want to be mayor?

JOHNSON: I don't know.


CHACE: He's really a plumber. Mayoring (ph) is a part-time gig, and it explains a lot about him.

SMITH: Yeah. He runs the city not like a politician but like a business owner, which he is, a business owner who has learned his lesson during past recessions. When we ask him why he's not building more in the city, he tells us this story. When the dot-com bubble burst a decade ago - Johnson was a plumber then, too - and even as stocks tanked, it looked like Elko was going to be OK. It looked like gold would do well. And Johnson thought back then...

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 OK in between. We don't have an issue. So in this business, it was, you know - go, go, go - higher, higher, higher - 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: You know, we were a company of, you know, 50-plus people. And in a matter of a month, we went from a company of 50-plus people to a company of about 10 people. Plus, I had all of this debt with new equipment and so on and so forth. And so 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 any time - using cash, not much borrowing. And you know what? Elko is running a surplus. Do you know how many towns in the U.S., in rural America, in Nevada can say something like that right now?

SMITH: You know, it's probably why he got elected because we talked to a lot of other people who felt the exact same way. They didn't want to expand their businesses. They didn't want to dream too much because they'd seen the gold price go down 10 years ago. Even the biggest U.S. mining company that we went up there - even they said - hey, don't put all your eggs in one basket. Don't count on this. This is a finite resource. You would be crazy to bet your town on gold.

CHACE: And nervousness is everywhere. Mayor Johnson says he can't even get private developers to build new housing tracts in the town because, I mean, what bank wants to lend money to build houses in Nevada? Even if it is a gold mining town, it's a once bitten, twice shy kind of thing.

SMITH: I've never seen people so cautious about good fortune. And then it occurred to me, you know, they don't have to actually imagine what it looks like when the gold runs out because they see it.

CHACE: All around the hillsides of this boom town are these little cautionary tales, ghost towns circling the interstate like vultures, former Elkos that boomed when the gold and silver was there, then got all mined out and shut down.

SMITH: We went to one, Tuscarora - no karaoke bar, no restaurant with a waiting list at 6 p.m. There's no grocery store. All there is is these sort of ruins of buildings and rusted-out trucks. And all you can hear is this.


CHACE: There are still 14 residents. There used to be 5,000. There's only so much gold in the ground. And once the gold is gone, the party's over.

SMITH: Still, it's hard to deny that here and now, in 2011, there is a fortune to be made by somebody. And there's still plenty of folks out there who did not grow up with ghost towns, who didn't suffer through a recession. And they are perfectly happy to take all of this gold off the hands of Elko, Nev.

GUY SIMPSON: What you're looking at here is about $7 million worth of brand-new facility.

SMITH: (Laughter) Hear that accent? That's Guy Simpson - Australian. He's the general manager of a mine close to Elko up in Jerritt Canyon. He has been to gold boom towns all around the world - never felt the recession. And guess what. He has the kind of optimism that Americans used to have.

CHACE: This dude has no problem ramping up this mine's production to keep pace with the gold price. And he thinks it's crazy for anyone to do different.

SIMPSON: So yeah, your town planners need to understand that expansion is a necessary evil.

SMITH: It's funny you would say this. You know, a lot of people almost seem to think it's bad luck to even say that this could be big. Everyone I talk to is like - oh, no it could end tomorrow. I'm so scared.

SIMPSON: I've heard a lot of that. You know, to be perfectly honest. It came as quite a surprise to me, I guess, the social morale of a lot of U.S. citizens as I've traveled around.

SMITH: And you say, come on. Bring the jobs. Bring the homes.


SMITH: Bring it. We'll be here for you.

SIMPSON: Correct. I mean, the gold price, you know, sitting up north of $1,400, $1,500 an ounce - I mean, we've never seen anything like this. This opens up so many deposits which wouldn't have been considered in the past.

CHACE: I have to say, though, it does seem - in this kind of gambling state, in this gambling environment - like a huge bet that you have made. I mean, really, you have put a lot on the table on one thing, which is gold.

SIMPSON: You could say that. You could say that. But if gold was down below $800 an ounce, $700 an ounce, we're still in the money. Anything above that is just cream. It's profit on the top. We talk these big numbers. But at the end of the day, you know, we're moving a big amount of gold through our treatment facility. We're not gamblers. We're investors, and we can base that on reserves that we've got in the ground.

SMITH: Of course, a gamble never feels like a gamble while you're still winning.

All right...

Remember the craps tables?

So let me show you how craps is played, Zoe.

When we were hitting all of our numbers and the money was piling up, there was this feeling that we had, this feeling that nothing could go wrong - that we'd cracked some sort of code in the universe, that the good times would never end.

CHACE: But is that such a bad thing? Like, remember? It was fun.

SMITH: It was fun.

CHACE: The wind is at your back. It's the feeling that you can accomplish anything, even starting an auto shop while wearing high heels.

SMITH: And when you're standing there perhaps the best thing is that nobody knows exactly what the next roll will bring.


SMITH: Winner.

CHACE: Winner?

SMITH: Yeah. All right...

CHACE: See, you're on a streak.

SMITH: OK, I'm on a streak. No, no, no - four.

CHACE: Yeah.

SMITH: Press it.

UNIDENTIFIED CASINO DEALER: You want to press it again?

CHACE: Put it all in.

SMITH: Yeah. Does that make any sense?



SMITH: All right. So how much...


THE ROLLING STONES: (Singing) Baby, I can't stay. You got to roll me and call me the tumbling dice. Always in a hurry. I never...

CHACE: Thanks today to Victor Mercado (ph), who grew up in Elko and sent us a note about the boom happening there.

SMITH: Also thanks to all the folks at Elko High School. The vice principal, Tim Wickersham, was a great resource. And we will be forever in his debt for introducing us to the Cinderella Girls.

CHACE: We love the boom and bust here at PLANET MONEY, so keep the suggestions coming about the strange bubbles in your life. Just email us at

SMITH: And for even more gold fun, we have a new video up in partnership with Slate explaining why gold is so valuable - why gold and no other elements?

CHACE: And we have a new Spotify mix for you. It's the sound of Elko, Nev.

SMITH: Links on our website, I'm Robert Smith.

CHACE: I'm Zoe Chace. Thanks for listening.


THE ROLLING STONES: (Singing) Oh, my, my, my. I'm the lone crap shooter, playing the field every night.

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