Sunlight glints off a nob of opaque rocks jutting above the tawny Sierra Nevada foothills. ``There, see it?'' asks Orville (Andy) Anderson, president of the Canadian-backed Sonora Gold Corporation, which is in the midst of heavy reserves. ``That bull quartz runs along the spine of the mother lode.''
Behind him, a diesel engine groans. A huge steel-toothed maw scraps at the hillside, scooping up mounds of rocks and auburn earth filled with gold flecks too small to see. Nearby, some 500 hard hats scramble over the alloy skeleton of what is to be the largest processing plant in this country.
``We'll be pouring gold by January,'' Mr. Anderson says confidently.
This open-pit operation is projected to turn out 130,000 ounces of yellow metal annually, putting it among the larger producers in the United States.
But Sonora Gold is hardly alone. A dozen major mining operations are reawakening along the 120-mile-long geological fault that sparked the fabled Sutter's Mill rush in 1848. And even this activity is but a microcosm of what's happening worldwide.
From California to the Carolinas, some 45 mines will come on line this year. Gold production in the United States has tripled since 1980.
The estimated 3 million ounces dug up this year will be the highest yield since 1942, when most mines were closed by federal decree during World War II.
New technology, along with rising gold prices and the concurrent drop in other metal prices, has given mining companies a voracious appetite for gold.
``A number of [base metal] mining companies that have never been in gold are shifting into gold,'' says Marc D. Cohen, an analyst at Kidder, Peabody & Co. ``Others, with gold and other metals expertise, are shifting into gold alone.''
With exploration booming worldwide, many outfits are no longer content just to dig in their own backyards. Mining activity is exploding ``all along the Pacific Rim,'' says John Lucas, gold specialist at the US Bureau of Mines.
The big US producer, Homestake Mining, is angling for joint ventures in these locations.
``There are an awful lot more people out there looking now,'' a Homestake official says. ``So we're looking for opportunities to participate in these discoveries.''
New finds and old mines are being worked in places like Guadalcanal, Papua New Guinea, the Solomon Islands, the Philippines, and Indonesia.
South Africa remains far and away the top producer, with some 55 percent of the Western world's market share. The Soviet Union is a distant second. But the US, Canada, and Australia are coming on strong, as are Brazil, Colombia, and China.
In 1985, noncommunist world production rose to just over 1,200 metric tons, the highest level in 14 years, according to Consolidated Gold Fields, a London-based company. Net production over the next three years will go up by 200 to 230 metric tons, estimates Mr. Cohen at Kidder, Peabody.
Does that mean a glut is developing?
Hard to tell. The key is not so much the rise in supply but unpredictable demand. ``If demand for gold in electronics, coins, dentistry, and jewelry [accounting for roughly 80 percent of gold sales] stays the same,'' says Cohen, ``and there's no change in government stockpiles, growth in demand will be outstripped by production.''
But there are at least two unpredictable factors, he says: South Africa and speculators.
``The degree of voraciousness of speculative investors is tough to gauge. It's very strong now. The drop in the US dollar against foreign currencies has spurred buying in some countries.'' Over the past year Japan and, to a lesser extent, the US have snapped up gold for new coins.
The other wild card is that ``the outcome of the South Africa political situation is impossible to judge,'' says Cohen. Indeed, some say the recent rise in gold prices is partly due to fears that the sanctions imposed by Western nations make the South African political situation more volatile.
David Hillson, manager of E. F. Hutton's special equity and precious metals mutual funds, points out that in a ``poor economic environment, jewelry sales can fluctuate dramatically. Demand can drop from about 900 metric tons now to as low as 500 metric tons.''
But he thinks such a drop in demand is unlikely to occur anytime soon.
Mr. Hillson's gold mining fund, up 36 percent last quarter, has been one of the beneficiaries of the 25 percent increase in gold prices over the same period. Indeed, gold mining stocks were the top performers the last three months.
But Hillson notes that ``the best gains in gold prices and shares have been seen. The response to the dollar's drop is over. Gold will do OK. With the economy muddling along with slight inflationary bias, I don't think gold will go much below $400 or much above $475 now.''
That sounds fine with the folks at Sonora Gold. Production costs are expected to run slightly under $200 an ounce -- which is a little better than the average for most open pit mines. If gold sells for $285 an ounce, Sonora figures it can service its debt and cover all its capital needs.
Analysts warn, though, that investing in a start-up venture of any kind holds added risks. For instance, Galactic Resources told investors it would have its Summitville, Colo., mine churning out gold and silver in 1985.
It didn't get up and running until May of 1986. At Sonora, delays were caused by the stiff state environmental laws which held up permits. Other US mines have run into enviromental roadblocks.
Over the years there's been enough gold fraud to spawn the well-known mining adage that ``a gold miner is a liar standing next to a hole in the ground,'' notes Hillson at E. F. Hutton. He says he relies heavily on the recommendations of reputable stock analysts.
``Unless you're highly experienced in geology and have the time to do untold due diligence, you have to consider investing in a small mining operation as speculation.''
Charles Ager, chairman of the ABM Mining Group Inc., in Vancouver, British Columbia, says that ``any analyst that sees Sonora recognizes this is a world-class operation.''
Sonora Gold Corporation is the main mine of four at various stages of development by the ABM. The Sonora mine sits on the well-plotted mother lode, and reserves are among the biggest in the US, Mr. Ager says.
``The processing techniques are straightforward. Our greatest risk now, as always,'' he says with a laugh, ``is the price of gold.''