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Timeline of History, Price, and

Economics of U.S. Gold

Introduction

Gold has been used as a universal standard of value and the common medium of exchange in the world of commerce.  It still is the “noblest of metals” and most praised commodity in the world for many people.  The saga of gold has touched many nations; here in California the Gold Rush was the basis of much of our local history and heritage.

This documentation about gold is a compilation (1579 – 2008) of events in a timeline starting from the beginning of the formation of the United States economy. 

More Gold Mining Techniques Information | Gold in Tuolumne County | Gold in California

1579

Sir Francis Drake, famous English pirate, reported gold “occurring in abundance,” when he landed on the coast of California.

1717

Sir Isaac Newton, master of the British Mint, established a fixed price for gold equivalent to about $20 per ounce (Troy.)

1776

American Revolution began; ended 1783.  U.S. won its freedom from England and established its own government and economic systems.

1792

Alexander Hamilton, first U.S. Secretary of Treasury under President George Washington, priced the American dollar at 24 ¾ grains of gold (not quite 1/20 of an ounce, making its price $19.39.)  This set the “gold standard.”  The price of gold remained approximately $20 per ounce until February 1934, a period of 142 years.

1814-15

Other reports of gold during the governorship of Jose Argello during the Spanish regime were down played as a result of local Indian hostility in California.

1783

Between the end of the American Revolution War and 1823, the U.S. purchased gold at $15 per ounce and accumulated $20 million in gold.  Much of the gold went to England after the end of the War of 1812.

1824

Gold was being used by Spanish soldiers for barter in California. 

1837

U.S. raised its buying price for gold to $16 to again accumulate gold for coinage, which reached a reserve value of $250 million.

1842 The earliest beginning of the rush to gold was in Southern California after Francisco Lopez, majordomo of San Fernando Rancho, stopped to rest in San Feliciano Canyon and dug up wild onions to eat.  He found particles of gold in the roots, and found alluvial gold deposits nearby.  Locals from the area, within 35 miles, from the Pueblo of Los Angeles initially came in search of gold.  Within the year, men experienced in gold mining came from Sonora, Mexico.  The miners used “dry washing” to extract the gold which was inefficient and hard work.
1843 Don Abel Stearns, a miner from Los Angeles, sent 18 ounces of placer gold dust to the U.S. Mint in Philadelphia by messenger.  The mint paid $19 per ounce and recorded the first discovery of placer gold from California.  Very little excitement was generated because of the small amounts of gold that was recorded
1846

In an official communication in March, Thomas Larkin, Vice-Counsel at Monterey, notified Secretary of State James Buchanan of the fact that gold was found.  There was still very little publicity of the gold.  Mexican authorities were not inclined to increase immigration into California.  At the time, California was still under the control of Mexico.

1846-48

The Mexican-American War started over the control of Texas and California.  By 1848 the U.S. had won the war, taking over both states.  This happened about the same time gold was discovered in Coloma, California.

1848

January 24th, James Marshall party discovered gold on the South Fork of the American River at the sawmill (Coloma) constructed for John Sutter.  Marshall and Sutter attempted to keep the gold discovery a secret, but by March 15, 1848, the San Francisco newspaper The Californian, published an article.  The discovery of gold became known worldwide, starting the beginning of the major Gold Rush in California.

1848 During the summer, gold was found at Woods Creek in what is now Jamestown by Benjamin Woods and James Savage party.  This discovery was the beginning of the Southern Mines and what is now Tuolumne County
1848 In December, President James K. Polk reported to Congress the samples of gold dust from California indicate a rich discovery of gold in the far west reaches of the continent.  This official report created a major migration of the 49ers to California.  The number of people engaged in mining skyrocketed from 4,000 in 1848 to about 100,000 by 1852, staying at that level until the late 1850s
1850 California became the 31st state of the U.S. in September.  Because of California’s potential wealth, rapid population growth, law and order issues, and financial institutions earned its statehood.  This process skipped the usual process of first becoming a territory.
1852 The Gold Rush made up of mostly placer gold mining, reached a peak.  The price of gold was still $19.39 per ounce.  Mining technology during the placer mining period, 1848-1860, consisted of “dry washing,” panning using Indian “batea” or metal gold pans, rockers or cradles, and “long toms” or sluice boxes of various sizes.  Later came the use of leveraging water to do more work using a method called “booming” or “hushing” for clearing away sediment using dams and employing ground sluicing to recover gold from the gold laden river beds
1853 Hydraulic mining used water under pressure with nozzles termed “giants” to cut down the outcrops on hillsides of alluvial gravel.  The water flowing downhill washed the soil into large long sluices strung along the base.  Hydraulic mining was stopped by farmers in 1884 by legal injunctions concerning its negative environmental effects
1853

Hardrock quartz mining was explored in the early placer mining days, with little success.  Tunnel mining, drift and pocket mining was used to drill into the ancient river beds covered by volcanic rock at Table Mountain in Jamestown.  The concept of dredging was tried unsuccessfully, until 1898, when a dredge floated and worked river beds below the surface on the Feather River, near Oroville.  This concept continued in to the late 1960s.

1860 The population of California was 380,000.
1862-65

During the Civil War, most of the $250 million U.S. gold reserve was sold to England for $16 ounce.

1860-1880 Many California miners went to Comstock, Nevada to follow the gold and silver mining strikes.  This depleted the manpower available to California hardrock mining, which still was experimenting with various techniques.  Renewed interest in California deep shaft quartz mining in the 1880s was a result of these new techniques
1870 The population of California was 560,000.
1880

The first 100 years of California’s statehood, the population doubled about every 25 years.  In 1880, the population was 865,000.

1880-1905

The Second Gold Rush in California was realized when many miners returned from the Comstock after learning and developing new techniques necessary for drilling deeper mines and applying electricity, including chemical extractions of gold from poor grade ores.  Environmental law limited the use of chemical (cyanide) in California.

1929

The stock market crashes and investments dwindle; meantime, people are seeking out gold and hording it.

1933

During the Great Depression, President Franklin D. Roosevelt was elected and moved quickly to end the outflow of gold from banks.  With a proclamation, he closed all banks in the U.S. for a three day moratorium.  This stopped citizens from removing and hording gold.  He then required all citizens holding gold return it to the banks under threat of imprisonment and a fine of $10,000.  This stimulated the domestic economy by encouraging people to spend their money instead of holding it in gold bars.  In addition, only those U.S. citizens who dealt with gold for “customary industrial, professional, or artistic” use could own refined gold by obtaining a special license.

1934

Roosevelt signed the Gold Reserve Act, which gave the government authority to demand physical possession of gold, to prevent its export, to reduce the amount of physical gold in coined dollars, to set aside the gold clauses in private and public contracts, and to fix the price of gold.

1934-1960

The U.S. attempted to maintain the price of gold at $35 per ounce by selling to the free market when the price increased, bringing the price back down.

1935

The increased price of gold, combined with lower wages and material costs prevailing during the Depression, caused gold mining to become attractive again.  Old mines reopened and currently operating mines expanded.

1942

The U.S. government closed down the gold mining industry as a non-essential, war-related industry (War Production Board’s Order No. L-208.)  This was an attempt to move the mining labor force into mining metals needed for the war effort.

1944 A “foreign-exchange gold standard” was adapted to regulate international trade.  Currencies of many countries were valued in terms of the U.S. dollar.  At that time, the U.S. was the most powerful nation in the world, both politically and economically, having the most stable currency in the world.  In theory, the U.S. would redeem its paper money for gold on the international market.
1945

At the end of WW2, U.S. gold mining was reinstalled.  Many California gold mines had flooded, caved in and were in a general deteriorated condition, requiring prohibitive capital needs to reopen.

1950s The U.S. spearheaded an ill-fated attempt to change the world’s thinking about gold, weaning it away from gold as a medium of exchange, and setting the worldwide value of gold at $35 per ounce.  This was known as the London Gold Pool, made up of eight major European countries.  The pool agreed to sell off their gold, if the international price rose above $35 per ounce, and continued until the price dropped.  When implemented, the pool lost $991 million of gold reserves.  The U.S. lost $3.2 billion in gold reserves using this concept.
1968 One-fifth of the U.S. gold reserves were gone.  President Lyndon Johnson asked the Bank of England to discontinue the London Gold Pool.
1968 In March, a two-tier market was established by the U.S. government.  One tier required the U.S. Central banks to continue to transact business at the gold standard of $35 per ounce.  The second tier allowed gold to fluctuate at what price supply and demand dictated.
1971 In August, to prevent further leakage of gold, President Richard M. Nixon issued an Executive Order which ended the U.S. redemption of gold at $35 an ounce, and raised the price of gold to $38 per ounce.  In December, the U.S. dollar was devalued
1972 The gold standard price of gold was raised to $42.22 per ounce.  With the announcement by the major U.S. Central banks that they would buy and sell gold at the free market price, the two-tier market perished.  The concept of government regulation of the price of gold ended and was now based on supply and demand.  This marked the end of the 180-year-old gold exchange standard and ushered in the current monetary system of floating exchange rates.  Now, currencies are backed by a nation’s economic net worth rather than by gold.
1974

President Gerald Ford repealed all sanctions against U.S. citizens owning or selling gold to anyone they wished.  Gold essentially became a commodity and was now listed on the New York Commodity Stock Exchange.

1975

The international gold market was dominated by the Union of South Africa, Soviet Union, China, and other foreign countries, including Canada.  The largest and best known gold trading center was the London Gold Market.

1980

The price of gold reached an all time high of $850 per ounce and an average of $615 per ounce.  This again raised interest in some California gold mining districts.  Large corporate interests with major capital and access to newer mining technologies and high volume open pit mining techniques.  Many new mining enterprises sprung into action.

1986-87

The large Sonora Mining Company in Jamestown owned primarily by Canadians, with a small share of California ownership, started high volume open pit gold mining.  It was an operation near the Harvard Mining conglomerate, the Trio.  Gold had risen to $368-$447 per ounce over that period.  The ore was transported to Nevada for gold extraction due to California environmental restrictions.

1988

California’s annual gold production exceeded $320 million; most of the gold came from about 15 large open pit mines.  The most productive California revitalized mines were not in the Sierran gold counties, but in the Coast Ranges of Napa, Lake and Yolo Counties, north of San Francisco.  These areas had been previously mined for mercury, not gold.

1994 After eight years of gold mining, the Sonora Mining Company closed operation because the average price of gold had fallen to $384 per ounce.  The overall cost of doing business, with the new environmental laws, made mining an unattractive investment.  This basically ended major gold mining operations in Tuolumne County and the Southern Mines in California
2006

In May, the average price of gold went up to $603 per ounce with a high of $725 per ounce, the highest price since 1980 when the average price was $615 with a high of $850 per ounce.

2007 The yearly average price of gold was $695, with a high of $833 per ounce.
2008

In March, gold reached its all time high, with average price of $968 and a high of $1,011 per ounce; the yearly average was $871 per ounce.

2008

In December, the U. S. government officially recognized the country was in a technical recession.  Unemployment rate rose beyond 8.5%, the highest in 26 years.

2008 The Dow averages in the stock market went from a strong value of $13,000+, dropping in September to new lows, finishing in December at $8,700 for a loss of about 34% in value.        
2009 In December, gold reached its all time high, with an average price of $1,134 and a high of $1,212 per ounce; the yearly average was $972 per ounce.
2010 Gold reached an all time high price of $1431.  The average Dow was $11,578, an 11% gain over 2009 at the close of the year.

More Gold Mining Techniques Information

References:

Geologic Guidebook, Along Highway 49--Sierran Gold Belt, The Mother Lode Country (Centennial Edition), Olaf P. Jenkins, 1948.

Gold Mines of California, Jack R. Wagner, 1980.

Gold, The California Story, Mary Hill, 1999.

A Golden State, Mining & Economic Development in Gold Rush California, James J. Rawls and Richard J. Orsi, 1999.

Fabulous Gold, Donlu D. Thayer, 1975.

“Historical Gold Prices – 1833 to Present”, National Mining Association, Washington D. C., www.nma.org

Gold Historical London PM Fix – USD”, Kitco Bullion Dealers.

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