Colorado Gold Rush

Sean Brodrick

I was in Colorado recently, and all around me were reminders that I was in a state with a rich history of minerals — natural gas, silver, and especially gold. And it holds lessons for today’s investors. In particular, five lessons that still apply today.

The Colorado Gold Rush, better known as the “Pikes Peak Gold Rush,” is America’s most profitable afterthought. Miners who had rushed across the continent in the 1849 California Gold Rush backtracked a decade later to Colorado, to chase down elusive rumors of gold.

Visible from 130 miles away, Pikes Peak served as a beacon for fortune-seeking gold prospectors.

This is a tale of greed and discovery, luck good and bad — a tale populated by a collection of misfits and wild men as any American odyssey.

This gold bonanza came AFTER the big California Rush of 1849. Miners who arrived too late for California backtracked across the continent to track down elusive rumors of a “lost gold mine” in Colorado.

No “lost mine” was found. Also, there was no gold at Pikes Peak — the 14,110-foot-high mountain named after a U.S. Army captain who declared it “impossible” to climb. A few years later, groups of adventurers, including a woman, proved him wrong.

But since Pikes Peak is visible from 130 miles away, in the heyday of the gold rush, fortune-seekers used the mountain as a beacon to find their way to the gold fields.

And man, those ol’ timey prospectors found gold!

In 1858, George A. Jackson discovered placer gold at the present site of Idaho Springs — the first substantial gold discovery in Colorado. Jackson tried to keep a lid on his secret, but when he paid for some supplies with gold dust, the secret was out.

Miners, Saints, Sinners and Winners

And in 1859 John Gregory, a wiry, red-haired cracker from Georgia made a much richer strike at Clear Creek. By that spring, over 100,000 people were headed into the hills, with “Pikes Peak or Bust” painted on many of their wagons.

In 1859, more than 100,000 people headed for the hills with Pikes Peak or Bust painted on their wagons.

This gold rush drew stout farmers and hardy adventurers … and thieves and chiselers. There were enough misfits among them to move the editor of the Nebraska City News to label the whole emigration as “a shiftless, lazy, lousy, scurvy, profane, insane and idiotic herd of rapscallions, nincompoops and ninnies.”

And man, was it rich! Just one part of Colorado, the Cripple Creek and Victor Mining District, produced over 500 mines and 21 million ounces in gold — more than the production of the California and Alaska Gold Rushes combined.

Gregory’s find became known as Gregory Gulch. He staked out the first mineable lode discovered in Colorado. A few months later, 5,000 people were working the area. The town that sprung up around that mine was Central City, “the richest square mile on Earth.”

Cripple Creek Bonanza

One really interesting thing about the Colorado Gold/Silver Rush was how long it lasted. Remember, the original discovery was in 1859. Over 30 years later, in 1890, cowboy and prospector Bob Womack discovered the rich gold ore that touched off the legendary Cripple Creek Gold Rush.

Womack was one of mining’s sad tales. He sold his claim for $300. Eventually, over $5 million in gold was taken from the mine.

Located a few miles southwest of Pike’s Peak, the towns of Cripple Creek and Victor boomed for well over a decade. 1900 was a pivotal year for the Cripple Creek Mining District. Gold worth more than $18 million was mined that year in nearly 500 mines. Eight thousand miners worked there, and the district produced 30 millionaires.

Just after the turn of the century, the District’s gold production began declining. Eventually, this precious metals boom turned to a bust, like so many before it. But there are still great lessons you can take away from Colorado’s gold bonanza …

Lesson #1: Don’t expect every prospect to turn into a winner.

Do your due-diligence. No whims, tips, fantasies, or wheeling and dealing. Just good, solid research, and discipline. Otherwise, the consequences can be unpleasant to say the least.

Lesson #2: Don’t be discouraged if your investment doesn’t pay off right away.

One Colorado prospector, Winfield Scott Stratton, took 15 years of digging to strike paydirt. He finally found gold on the Fourth of July in 1901. He called that claim the Independence, and he eventually sold it for $11 million.

Hopefully, we won’t have to wait THAT long.

Lesson #3: You don’t have to be a miner to make a fortune in metals.

Horace Tabor wasn’t a miner. In fact, his Colorado claim was jumped! So, he opened a general store and made a heck of a lot of money that way. He staked two prospectors, who, after years of work, found an enormous deposit. Tabor sold his interest for $1 million.

Tabor’s biggest wealth came from putting his money to work. Today, you can build your wealth quite nicely by buying the right stocks.

Lesson #4: Don’t sell too soon.

Time and again, many investors sold too early and missed out on the biggest gains. For example, John Gregory, who sparked the gold stampede, sold his claim for a modest sum. He spent it all, then disappeared from history.

Lesson #5: However, there will be a time to sell.

How do you know when? You don’t. But when you see all your friends rushing in to buy what you bought a long time ago, that’s a pretty good warning sign. And when your broker is pounding on your doorstep to get you to buy what you already own, that’s another sign.

Colorado mines made successes of hundreds of gold seekers and entrepreneurs turned millionaires. And some of the biggest successes were among those who didn’t come to mine gold … they came to mine the miners themselves for wealth.

Yours for trading profits,

Sean

About the Contributor

Supercycles aren't daily occurrences. They happen in stages and can last for years. Sean Brodrick identifies them early and mines for the most financially sound stocks within them. And he taps into the powerful Weiss Ratings, along with our proprietary AI Performance Booster, to help him do it!

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