Striking Gold in the Eastern Sierra Nevada

Mariela Colindres

Figure 1: Normal faulting as a result of the tension produced by a divergent plate boundary. Taken from the USGS website.

Throughout the history of many civilizations around the world, gold has been cherished for its remarkable aesthetic qualities, the luxurious objects that can be made of this precious metal, and its durability. Since it often occurs in its native state and not in combination with other minerals, it has also been one of the more minable metals. Though gold is scarce, economic geologists have established that the deposition of gold occurs as a result of specific natural geologic processes. Because they examine key factors in the origin and concentration of mineral deposits, geologists are able to determine conditions that likely result in gold ore. There is a direct relationship between volcanic activity of the Eastern Sierra Nevada and the fascinating gold rushes of California. Hydrothermal activity associated with volcanism in the Long Valley Caldera created gold ore that made Bodie an economically viable mining camp from 1877 until the beginning of its decline in 1881.

The Eastern side of the Sierra Nevada mountain range is characterized by a unique set of landforms that have formed as a result of important volcanic activity in the area. It offers a multitude of examples of geological processes that have shaped the area and even today continue to have an impact. The Sierra Nevada makes up the Western edge of the Basin and Range Physiographic Province, which is named after the series of alternating mountain ranges and depressions that make up the region. The Basin and Range is a result of plate tectonic movement underneath the Earth’s surface, specifically the interaction between the North American plate and the Pacific plate. The boundary where the two plates interact is known as a divergent boundary because tensional stress between the two causes the plates to pull away from each other. This movement is what makes the area surrounding the plate boundary vulnerable to earthquakes and volcanic activity. Another side effect of this type of divergent movement is that it produces hundreds of NNE faults. As the Earth’s crust stretches and thins from the pulling-apart motion, the extreme tension produces fractures in the crust known as normal faults. These specific types of faults are what form the distinct boundaries between the valleys and the elevated mountains because the fractures allow for vertical movement of the crust. As one section rises, another drops down.

The illustration above depicts the vertical moments of the Earth’s crust at a normal fault line. The horst is the section that lifts upward and the graben section drops below. This is the geologic process that forms the series of basins and ranges extending across parts of eight Western U.S. states and even México. Notice that the arrows on each side of the diagram indicate the tensional stress of a divergent plate boundary. This is important because not all plate tectonic boundaries interact in the same way; each type is caused by a different stress and in turn creates different types of faults. Compression forms a convergent boundary, meaning that the neighboring plates collide, and reverse faults are observed in surrounding areas. When there is sheering stress or side-to-side movement of plates, it is known as a transform boundary and strike-slip faults form as a result. Unlike normal or reverse faults, which move vertically, strike-slip faults move horizontally and can be either right-lateral or left-lateral. Understanding the different types of plate tectonic boundaries and the landforms associated with them is instrumental in appreciating the special conditions that make mining opportunities possible.

To the east of the Sierra Nevada and west of Glass Mountain lies the Long Valley area. Scientists estimate that approximately 760,000 years ago there was a massive volcanic eruption that released an extraordinary amount of debris or tephra composed of rocks, pumice and ash that covered the existing topography and created the volcanic tableland. This gigantic eruption deposited pyroclastic flow as well as pyroclastic ash fall across an area of over 600 cubic kilometers. In addition to these thick layers of volcanic deposits, the eruption was such that it caused the underground magma chamber to collapse on itself and form a depression that is now known as the Long Valley caldera. This oval shaped caldera covers an area of about 15 x 30 km long and continues to be considerably active since the initial eruption, creating new landforms associated with the underlying and very active magma chamber. For example, the Resurgent Dome is a complex of physical deformations that uplifted into mounds as a result of continued activity within the magma chamber. These mounds or domes, which are often timbered, also composed of added volcanic deposits that serve to further uplift them. There are also new volcanic domes that formed when magma rose through cracks in the crust and essentially created new but smaller volcanoes. This network of volcanic domes includes Glass Creek Dome and Obsidian Dome, which were created by subsequent explosive eruptions. Though the word ‘dome’ is used for both types of landforms, separate types of processes form them. Another type of volcanic eruption that shaped the landscape in the area is a phreatic eruption, which created the Inyo Crater chain. This volcanic chain became active when magma rose up through cracks in Deer Mountain, came into contact with groundwater and exploded, leaving a series of open craters. Because phreatic eruptions are not magmatic eruptions, no new pyroclastic material is deposited in the surrounding area. Instead, fragments of the country rock are expelled into the air and then settle around the crater.

The interaction of water and geological processes in the Eastern Sierra Nevada creates a special set of mineral deposits, energy resources and hot springs because of the active volcanic processes. In this area and all others in proximity to volcanic activity, the geothermal gradient is very high, meaning that the Earth’s temperature increases rapidly with depth, relative to surface temperature. When groundwater comes into contact with extremely hot rocks near magma, it can reach temperatures around 430°F/ 220°C (USGS) but does not actually boil due to the high pressure. Since the extra hot water is still less dense than cooler water, it rises towards the surface through cracks or weak spots in the rock. In the Long Valley Caldera, evidence of this is seen at hot springs such as the Hot Creek Gorge. This type of geothermal activity provides an energy resource as well since the hot underground water can be used to power turbines and generate electricity. As long as the water budget below the ground is not depleted or cooled over time, geothermal activity can be considered a renewable energy source.

Geothermal systems also produce concentrations of mineral deposits in relatively compact areas, as is the case with gold in the Eastern Sierra Nevada. When hot waters from different sources come into contact with magma intrusions, minerals that are soluble in the high temperature waters form a hydrothermal solution that is carried closer to the surface. At this point, as the water rises through fractures, two important things happen: the hydrothermal solution containing these minerals starts to cool and it faced with less pressure than it was before. Because of these two factors, minerals that were soluble only at extremely high temperatures and under high pressure, such as gold, precipitate out of the solution and are deposited among the underground fractures. This process of hydrothermal alteration is what creates such prime conditions for mining exploration and exploitation. This concentration of precious metals in veins along the fractures forms what is known as an ore, meaning that the concentration of minerals has economic or commercial value and is ideal for mining. Epithermal deposits are those that contain economic concentrations of gold or precious metals in veins inside subsurface rock. Other non-precious minerals are also precipitated in the process and collect among the gold and silver, but they are considered waste rock or gangue.

Figure 2: How a hydrothermal system works. Taken from Gold, The California Story (page 151)

The illustration above depicts the stages and dimensions of hydrothermal system that produce geysers, hot springs and mineral deposits from the interaction of water and a heat source. The particular type of ore deposits that form in veins along fractures in the rock are known as lode or primary deposits. Gold in the Eastern Sierra Nevada is typically found in this type of lode deposits, though some is concentrated in what are referred to as placer or secondary deposits. Placer deposits are derived from lode deposits that have been weathered by “erosion, disintegration or decomposition of the enclosing rock, and subsequent concentration by gravity” (USGS Gold 15). In this setting, gold is usually carried downstream since it is extremely resistant to weathering and can be found in the form of nuggets, flakes or dust. In some cases, miners were able to gather gold by panning along a river, but in other cases where placer deposits exist where the original streams are no longer there, gold may be buried under new sediment. The first step in the decision to proceed with mining operations is to conduct a cost-benefit economic analysis of the project since mining exploration can be very expensive and time consuming. Prospectors typically estimate the content or tenor of gold per ton of rock, as well as the size of the deposit, through the fire assay method. On the other hand, placer deposit size and concentration is traditionally determined by the free gold assay method. Taking the price of gold into consideration, the results of these assays are then used to determine the economic or commercial value of the ore deposit. Though there may be deposits or resources of precious metals located throughout an area, a concentration of these minerals does not become an ore or a reserve until it passes a technical and economic threshold. This is because resources needed to finance mining and other endeavors are scarce, and so in order to maximize utility, the project with the lowest cost and highest revenue should be pursued. This principle also touches on the idea of opportunity costs, which is the second best option or second best use of resources that is foregone in order to pursue a project. These are all things to consider while conducting a cost-benefit analysis of a prospective mine. Some of the costs involved in these types of projects include extraction costs which depend on the amount of waste rock, labor costs, transportation costs, the cost of building infrastructure if the ore is located in a remote area, research and development also require capital, equipment and machinery, as well as the corresponding maintenance, and disposal costs for waste rock.

Financing a mining project requires a significant amount of capital, which itself comes at a cost as well. The cost of capital depends on the type of capital raised. For example, a loan is debt capital and involves interest charges, and while equity capital does not require implicit interest payments, it still has a cost because it gives investors a right to the profits and depending on the term conditions, even a right to be a control part of the project. After carefully considering the direct and indirect costs, as well as the expected return, a decision to pursue mining of a gold ore is made only if the benefits outweigh the costs.

In the town of Bodie, which is located 20 miles southeast of Bridgeport, CA on the eastern side of the Sierra Nevada, gold was discovered years after the famous 1849 Gold Rush on the western Sierra Nevada. In 1859, William S. Bodey came across this epithermal gold deposit when he encountered a vein underneath what later became known as Bodie Bluff. Though a series of prospectors organized a mining district soon thereafter, Bodie faced competition from other nearby towns and did not reach the height of its potential as a boomtown until late 1877. This period of underproduction also illustrates an economic consideration that external factors play a role in determining a project’s success. Even though Bodie had high potential and contained all the gold that it did in 1877 all along, the extreme competition it faced did not allow mining projects there to gain momentum at the time it was initially discovered.

From 1877 to 1881, Bodie experienced a spectacular boom in business and promises of prosperity attracted a population of 10,000 by 1880 (USGS). By 1877, there were nine stamp mills in business, including the Standard Consolidated Mining Company. Due to the shallow depth and high-grade of the epithermal gold deposits in the mountains of Bodie, gold and silver were easily extracted. The U.S. Geological Survey reports that in 1878 this particular mine shipped gold worth millions of dollars to be traded in the commodities market in a matter of only six weeks, and produced nearly $15 million over the company’s 25 year operation period. At the height of the economic boom, monthly production for about 30 companies exceeded $400,000 and in total amounted to about $100 million.

Up until 1971 when President Nixon deregulated gold, the U.S. government fixed the price of this precious metal. This price stability eliminated a large part of the uncertainty that comes when entering the commodities market. In 1935, for example, the price of gold was raised from $20.67 to $35.00 and as a result, miners increased production to maximize their earnings. This commercial trend continued until the War Production Board closed all non-essential mining after the start of World War II, which is when Bodie officially ended production after a long decline. Upon deregulation, an ounce of gold was still worth $35 but it went through years of adjustment since its price now depended on market forces of supply and demand. Prices increased dramatically to $700- $800 in 1979 and 1980 with the oil crisis, and then returned to a moderate range of $300- $450 per ounce until it slowly started increasing in 2006. The most recent financial crisis meant a surge in world gold prices to a record $1,900 per ounce in September 2011 before dropping down to about $1,600. On June 21 2013, CNBC reported the price of gold at $1,295.30. It is important to note that since the price of gold now depends on market forces, there is an inverse relationship between gold prices and the dollar. When the dollar is strengthened as the economy prospers, the price of gold drops accordingly.

Despite the end of the initial gold rush that formed a large part of California history almost 165 years ago, research conducted by the U.S. Geological Survey indicated that there are 33,000 tons of gold in the U.S. Of these 33,000 tons, 15,000 have been clearly identified while an estimated 18,000 remain undiscovered. Because geologists know that the presence of gold does not occur sporadically but rather as a result of thoroughly studied geologic processes, technological advancements as well as better understanding of mineralization processes are the key to finding those undiscovered gold deposits.

Works Cited

"Bodie State Historic Park." California State Parks (2010): n.pag. Database. 20 Jun 2013.

Farrar, Christopher. U.S.A.. U.S. Geological Survey.Boiling Water at Hot Creek—The Dangerous and Dynamic Thermal Springs in California’s Long Valley Caldera. 2001. Web. website

George, Michael W.. "Mineral Commodity Summaries."U.S. Geological Survey. N.p., n.d. Web. 20 Jun 2013.

Hill, David P. U.S.A.. U.S. Geological Survey. Living With a Restless Caldera—Long Valley, California. 2000. Website

Hill, Mary. Gold: The California Story. 1st ed. Berkley and Los Angeles, California: University of California Press, 1999. Print.

Kirkemo, Harold, William L. Newman, and Roger P. Ashley. U.S.A.. U.S. Geological Survey. Gold. Web. PDF

McDonald, Douglas. Bodie: Boom Town- Gold Town! The Last of California's Old-time Mining Camps. 1st ed. Las Vegas, Nevada: Nevada Publications, 1988. Print.

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