The fourth industry of California was mining, and, specifically, mining for gold. When the soldiers of the "Mormon Battalion" were discharged In the second half of 1847, about 100 of them went to work for John Sutter who was building a water-powered sawmill to produce lumber, the first step in erecting a whole town for the settlers that Sutter expected to arrive from the east. The sawmill was located in Coloma on the American River, about 70 kilometers from Sutter's Fort, a location chosen by Sutter's foreman James Marshall, one of the many East Coast immigrants who had arrived in 1845 via Oregon's Willamette Valley and the Siskiyou Trail, and one of the Sutter people who had volunteered for Fremont's California Battalion and returned with the Mormons. In January 1848, when the sawmill was completed, Marshall discovered gold in the river. A few days later the war ended and California was officially part of the USA. The "Gold Rush" started in the sawmill itself: Marshall's men abandoned their duties to search for gold and an almost bankrupt Marshall left Coloma.

In March a San Francisco newspaper, The Californian, published a tiny article that stated: "Gold Mine Found. In the newly made raceway of the Saw Mill recently erected by Captain Sutter, on the American Fork, gold has been found in considerable quantities. One person brought thirty dollars worth to New Helvetia, gathered there in a short time". Few people noticed. Then in May everybody noticed when Sam Brannan, the shopowner at Sutter's Fort who was being paid in gold by the miners, a man until then mostly known in town for drinking, womanizing and fighting, showed up with the gold in San Francisco: sailors abandoned their ships, soldiers deserted the presidio, merchants left their shops, and most of the male population of San Francisco (which was about 1,000 people) rushed to Coloma. Both newspapers, The Californian (that had moved to San Francisco) and Brannan's own California Star, had to shut down because their entire staff left the city. Hundreds of ships were abandoned in the Bay because countless sailors, the moment they arrived, rushed to the gold fields. Some ships became hotels. One was even used as a prison. Brannan got rich overnight because his store was the only store near Sutter's mill.

In the next two months thousands of Californians flocked to the area, which quickly expanded to a larger area of the rugged Sierra Nevada foothills. In June the exodus began also in Hawaii and Hawaiian settlements popped up everywhere. In August, the news reached Oregon and, by the end of the year, two-thirds of the male population in Oregon had moved to California. Most of the gold miners had no experience in digging for gold or for anything else: they were farmers and trappers. Mexicans, Peruvians and Chileans sailed to San Francisco, and many of them had experience in mining. Some of the Mexicans had arrived in 1842, when Francisco Lopez had discovered gold at Rancho San Francisco in the mountains north of Los Angeles. Far from being chaotic, the 1848 gold rush was relatively peaceful and ordered. There was plenty of gold for everybody and many miners knew each other well enough to get along.