The past century was akin to that fictional space/time
described by Charles Dickens in A Tale of Two Cities. It was the
best of times, it was the worst of times; it was a time of wisdom, it
was a time of foolishness.
Golden times, let’s say, punctuated by troubling
fiscal/monetary decisions.
In 1909, U.S. population was 90.5 million. Now it exceeds 300
million. Nevada’s 1909 population was some 80,000. Now it is
about 2.5 million. The 1909 federal budget was less than $1 billion.
Now it tops $3 trillion.
Congress approved a 1909 resolution calling for the 16th Amendment
to the Constitution and sent it to states for ratification, which came
in 1913. So the amendment authorizing income taxation began gestation
when average annual income was $944.
Consider your annual income and income tax last year and you know
you don’t need my comment on the 2009 state of affairs. Now
consider the national debt. Don’t faint.
In 1909, W.E.B. DuBois and associates formed the National
Association for the Advancement of Colored People. In 2009, such
advancement means a man of color lives in the White House and wields
presidential power.
In 1909, however, the Federal Reserve System didn’t exist.
There had been no world wars, no Great Depression, no dot-com explosion
or dot.con implosion, no Alan Greenspan housing bubble, nor any of the
Ben Bernanke quantitative easing uneasiness.
From 1834-1934, gold officially was valued by the United States at
$20.67 per ounce (lo, what fools these mortals be). This month it
exceeded $1,200.
In 1909, Nevada’s George Wingfield had forsaken Goldfield for
Reno (apparently to please his new wife) and the millionaire power
broker proved prophetic regarding that mining camp town where he got
rich. As his biography reports, he then told a colleague:
“As for what Mr. [Bernard] Baruch said to you about Goldfield
being a place of electricity and opportunity, just remember one thing
Chester—when I pull up my roots, the grass will grow in the
streets.”
Ego aside, this captures the boom/bust nature of mining in Nevada or
anywhere else it is feasible.
On the day this month when gold hit $1,200 an ounce, Nevada Mining
Association president Tim Crowley pronounced the industry pleased. He
added, though, that precious metals people take nothing for granted
because prices fluctuate.
The Silver State, so called for the precious metal mined here, is
mineral rich. Crowley said much mining focused on metals other than
gold helps provide materials for the practical economy and so must
await economic recovery to see flush times.
“We’re hopeful that the construction industry turns
around,” he explained, to cite one example. He talked of
Nevada’s copper for construction, molybdenum for steel, lithium
for batteries, geothermal for energy.
Crowley also touted the industry’s economic and related
underpinnings for Nevada, saying, for example, that $14,000 per
employee goes from mining into state coffers annually.
So what’s the point? Actually a couple: 1) Long term (the next
hundred years), Nevada mining will build on the state’s metals
heritage; and 2) short term, the price of gold will prove a harbinger
of the nation’s economy into the 20-teens.
Nevadans, some of whom don’t like the state’s mining,
should look at metals extraction and related businesses as contributors
rather than as predators in both good and bad economic times.
Meanwhile, gold is the ultimate fear/greed barometer in markets. If
gold zooms significantly higher from here, that would signal central
banker and congressional hubris is about to haunt them—and
us.
Is it still the best and worst of times?