It was in May of 1861 that an Australian prospector by the name of Gabriel Read found gold on the banks of the Tuapeka River in New Zealand. He wrote: "At a place where a kind of road crossed on a shallow bar I shovelled away about two and a half feet of gravel, arrived at a beautiful soft slate and saw the gold shining like the stars in Orion on a dark frosty night". There was little reaction at first until John Hardy of the Otago Provincial Council stated that he and Read had prospected country "about 31 miles long by five wide, and in every hole they dug they had found the precious metal." It was at this time that the actual gold rush began.
By December of the same year, over 12,000 prospectors were on the Tuapeka and Waipori fields. The region's population grew by almost 400 per cent between 1861 and 1864, with prospectors swarming from the dwindling Australian goldfields. Then there was another strike in 1862, around the town of Cromwell. Lot of greenhorns and prospectors and miners staked claims from the Shotover River in the west through to Naseby in the north. In November 1862 Thomas Arthur and Harry Redfern looked for gold on the banks of the Shotover River. The two struck gold on a claim that became Arthur's Point. This strike led to the largest rush that occurred in Otago area. Most of the old buildings at Queenstown today such as Eichardt's Hotel, McNeill's Brewery, the Lake Lodge of Ophir, the Queenstown Police Station, and stone Courthouse were all begun as a response to the rapid influx. By the end of 1863, the real gold rush was over, but larger companies continued to mine the alluvial placer gold. In February 1864 there were 18,000 miners in Otago.
Readís discovery of gold sparked the interest of people and a lot of people traveled great distances in the hope of striking it rich. The news of gold at Gabrielís Gully reached the inhabitants of Dunedin and the rest of the world, prospectors immediately left their homes in search of gold. The majority of these perspective prospectors were labourers and tradesmen, in their late teens and twenties. These goldfields all gave rise to mining towns and communities of temporarily shops, hotels and miners huts made from canvas or calico fabric covered timber frames. As the goldfields became more developed, communities became more permanent with buildings constructed in timber and concrete.
The city of Dunedin reaped many of the benefits, briefly becoming New Zealand's largest town even though it had only been founded in 1848. Many of the city's stately buildings date from this period of prosperity. New Zealand's first university, the University of Otago, was founded in 1869 with wealth derived from the goldfields. However, the rapid decline in gold production from the mid-1860s led to a sharp drop in the province's population, and while not unprosperous, the far south of New Zealand never rose to such relative prominence again.