A ship sunk by a Nazi torpedo during WWII may yield $240 million in silver bars and coins, the biggest take ever from beneath the sea. Odyssey Marine Exploration, the U.S. company that will attempt the salvage of the S.S. Gairsoppa , says the wreck is just one of many whose recovery has been made possible by new technology, and made profitable by rising precious metal prices.
Gold and silver prices, hit hard last week, remain near historic highs. On Friday, gold suffered its biggest one-day loss in five years, dropping 5.8 percent to $1,637.50 an ounce. Silver fell 15 percent, posting its biggest one-day decline since 1987. It traded today around $31. These reduced values are still far above the levels needed to make salvage profitable.
"My guess is, we're not going to see much more degradation of precious metals prices, going forward," says Odyssey president Mark Gordon. He expects gold and silver prices to remain high, buoyed by investors' worries about the world economy.
Odyssey, working in partnership with the British government—owners of the torpedoed ship—hopes to salvage perhaps 240 tons of silver this spring. The New York Times reported details of the salvage operation.
The Gairsoppa, a merchant vessel steaming in from Calcutta to Liverpool, became separated in the North Atlantic from its protective convoy. As it tried to reach landfall in western Ireland, it was torpedoed and sunk by a German submarine in 1941.
Gordon says a variety of developments, both technical and financial, have made hunting for such wrecks an attractive business proposition.
It starts with search tools like side-scanning sonar, he explains. "In the past six years, we've been able to double our search speed. We can tow the sonar faster and still get very high-quality images. Better software helps us analyze the images to judge the target's length and size and shape."
Odyssey then can compare that data against the original plans for the ship, to see how closely they match. Once they know they've found their target, they can recover its cargo using a new generation of unmanned vehicles able to operate at depths of up to 20,000 feet. The Gairsoppa is 2.9 miles down—"deeper than the Titanic,"says Gordon.
Rising gold and silver prices have made even the most sophisticated and difficult salvage operations potentially profitable.
A salvage job, Gordon explains, can entail "a lot of risk and expense." For that reason, Odyssey is interested only in jobs that give the company a 10-fold return on investment. "When we first started planning for this," he says, referring to the Gairsoppa salvage, "silver was trading at $11 an ounce. The job looked good to us at that price—very feasible economically."
It looked even better by early 2010, when the company reached an agreement with the British government that any monies recovered would be split 80/20 in the company's favor. Silver then was trading for $17 an ounce. And today? "At $30 or $40 an ounce," says Gordon, "we're really, REALLY happy." That $240 million would make Gairsoppa the largest recovery ever of precious metal from the sea.
How much more gold and silver might be sitting in other wrecks?
The world's oceans, by one estimate, harbor some three million wrecks. Odyssey has developed a proprietary data base of 6,300 targets. At least 100 of those, says Gordon, have a retail sales value of $50 million—Odyssey's threshold for profitability. The top 10 represent, potentially, "hundreds of millions if not billions of dollars each."
Example: The HMS Sussex, a British navy ship lost in 1694 off Gibraltar, is believed to have been carrying 10 tons of gold. Odyssey's recovery of the wreck is on hold, pending resolution of a diplomatic dispute with the Spanish government.
Gordon says that copper, even tin can make a salvage job worthwhile—so long as there's enough of it. "It all depends on commodity prices," he says.
Odyssey also has salvaged wrecks for the historic value of their artifacts. "We have an amphora in our conservation lab right now," says Gordon, "that dates to the time of Christ." Such finds are not sold but instead are displayed in the company's museum or released on loan to accredited museums.
Salvage hunter Bill Warren seeks a different kind of treasure: The body of Osama bin Laden. Warren told ABC News in June that he was seeking bin Laden's remains in the north Arabian Sea. He described his quest as "the most exciting and maybe the most dangerous" salvage operation he had ever undertaken in 67 years.
The Southern California entrepreneur and treasure seeker says he has discovered 150 wrecks over 30 years, and that he has recovered salvage valued in the millions of dollars.
The United States killed bin Laden in raid on his compound by Navy Seals in May, and then disposed of bin Laden's body by burying it at sea in a weighted bag.
Says Warren, "If we are successful and find him with sonar and recover him with a remote-control vehicle, we'll recover the body in the bag and take photographs, video and a DNA test—maybe of his hair or his beard."
The object, he says, would be to collect a reward from the U.S. government: "There is still a $25 million reward that no one has collected, and the reward says dead or alive. Well, if—in fact—he is dead, then I could collect the $25 million reward. Why not?"
Because the reward is no longer being offered. That's why not.