After the Gold Rush
Americans love investing in gold. There are many reasons for this great love. It seems only natural that Americans would love investing in gold since the United States has been producing gold since it was first settled. In fact, the United States is currently the world’s third largest producer of gold.
But the main reason for investing in gold is the fact that gold is a terrific investment. It is safe. Gold offers great returns. It’s a great hedge against inflation.
In addition to all of these advantages, gold is fun and easy to invest in. Some of the fun of investing in gold stems from knowing about the amazing history of gold mining, especially in the United States where it played a key role in history.
Before we go back to talking about investing in gold, let’s take a look at some of the history of gold mining in America.
Finding Gold in the United States
The first gold in America was found in North Carolina in 1799. The first commercially viable gold production began in 1802.
There had been sporadic reports of gold in California for years. In fact, the Spaniards found gold in the Colorado River in 1775. In 1780, large deposits of gold were discovered in Yuma. This discovery was followed by discoveries in San Ysidro County and Los Angeles County.
But the real history of gold in America began several years later in Coloma California.
James Marshall was the first to discover gold at Sutter’s Mill in Coloma, California in 1848. He was working near a stream and picked up a nugget weighing about 1/3 of an ounce. He gave the nugget to a lady friend, who wore it on a necklace.
By 1849, many people from all over the world had heard about the gold. They began making their way to California to seek their fortunes. The population of San Francisco increased by several thousands due to the influx of immigrants and settlers looking for their share of the gold. California’s population increased by 86,000 people in only two years.
Getting to the gold mines was a difficult trek. People came from all over the world, as well as from other parts of the country. People walked or rode in wagons from the East Coast, spending nearly nine months to reach the land of their golden dreams. Nearly three quarters of the male population of San Francisco left home to make their fortunes in the gold mines.
Some of the early arrivals found gold nuggets just sitting in streambeds ready to be picked up and assayed. Those were the lucky few. For most people, gold mining was hard and dangerous work. Historians estimated that one out of every five miners died within six months. The average miner working with a pick and shovel managed to find a few ounces of gold at most.
Sadly, neither James Marshall nor John Sutter, who owned the mill, benefited very much from the gold. Squatters overran Sutter’s land and ruined the land for farming. They also stole his livestock for food. He never profited from the gold found on his land. He ended up near bankruptcy.
Many of the people who did make their fortunes from the gold rush were not miners. They were the people who set up businesses to supply the miners with the tools, equipment, food and clothing they needed to mine for gold. Some of those companies, including Levi Strauss, the jeans maker, survive to this day.
Gold production in California reached a peak in 1852. At that point, mines produced nearly 3.9 million troy ounces of gold. However, the easy mining days were over. The easy to mine gold deposits were exhausted.
Over the next several years the mining industry brought in new, more efficient methods of mining. They tried heat bleaching to remove gold from low-grade deposits but production never again approached the level of the early years. By 1865, gold production was down to less than 875,000 ounces per year.
Gold production continued to sink until 1929. Gold prices nearly doubled between 1929 and 1941, which fueled the growth in production. In 1942, the U.S. government closed all the gold mines to divert resources the WWll war effort.
The largest gold deposit in the United States is the Mother Lode near Sierra Nevada. It measures 4 miles wide by 20 miles long. It was found in the 18502. It also yielded many valuable minerals besides gold. During its active phase, the Mother Lode produced 13.3 million troy ounces of gold.
Don’t worry about the decrease in California gold production, though. Gold is found in many states, including Colorado, Alaska, Arizona. Even Florida, Utah and Virginia get in on the gold jackpot. In fact, it would be easier to list the states that don’t include viable gold deposits than those that do have them.
The California Gold Rush was one of the more significant events in American history. Its end did not mean the end for gold mining in the United States, however. In fact, shortly after the California Gold Rush ended, the New Mexico Gold Rush began. The whole cycle started again.
You Too Can Own a Piece of the Gold Rush - or at least, a Piece of Gold
While it’s interesting to learn about the history of gold and the “gold fever” that gripped the nation at the time, people who want to own gold don’t have to venture into the wilderness with a pick to find and own gold.
You can buy gold coins or gold bullion from a dealer. You can buy shares of an ETF and own certificates that represent gold deposits. If you really want to mine your own gold, you can buy shares of a gold mining company.
Whichever way you choose to invest in gold, rest assured that gold is a great investment. It is secure and safe. It usually outpaces inflation. As you admire your gold coins or collectibles from the comfort of your home, you can remember the 49ers who went into the wilderness to seek gold.