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Gloucester is situated 271kms north of Sydney, in a fertile valley between the mid-north coast and the Hunter region, just below the ranges of the Barrington Tops National Park. It sits at the junction of Avon, Gloucester and Barrington Rivers. It is the ideal base for adventure activities, including trout fishing, canoeing, horse-riding, bushwalking and camping in the World Heritage area. Visitors can also pan for gold at the Mountain Maid goldmine or listen to folk stories from the gold mining era at the old schoolhouse. Tourism has become the boom industry in recent years. In May, the Shakespeare on Avon festival commemorates the writer's work with dramatic performances, and the Mountain Man Trichallenge is held in September involving running, paddling and cycling. The Gloucester National Dancing Competition is held every July and Agricultural Show in March/ April.
The Kattang Aboriginal people are the original owners of the Gloucester land. The first European known to pass through the area was Henry Dangar. It was the chief agent for the Australian Agricultural Company Robert Dawson who settled Gloucester in 1826 and named it after the English countryside it resembled. Despite initial industry centred on sheep farming and wool production, trial and error would prove the land more suitable to cattle farming and dairying; industries which still play a major part in the town's economy.
Notorious bushranger "Captain Thunderbolt" (Fred Ward) hid out at Gloucester Tops in the mid-1860s. When the police discovered his hideout in 1866 he escaped, though his wife, his two children and another woman were taken to Gloucester and on to Maitland where the women were released. The two children were sent to a government institution.
In 1876, just west of the Gloucester township, payable gold deposits were discovered in Copeland. This would bring a significant influx of residents to the town, with Gloucester acting as the primary service centre to the miners and their families of the Copeland goldfields. When the gold rush subsided some years later, the thriving picturesque valley town of Gloucester would retain some of the settlers who would join the area's existing successful industries. The surrounding red cedar forests had timber getting and timber mills established throughout the local district and dairying would also prove an incredibly fruitful industry for the town. The Avon and Barrington Butter Factory which was established in 1906 still operated out of the valley today under the name Australian Co-operative Foods.
Despite the town's substantial coal deposits having had the town surveyed for a coal mine as early as the 1850s, the valley's location between mountain ranges made transportation difficult. With no railway line to transport the coal, the prospective mine was deemed an impractical venture and the mine never eventuated. Yet as time passed and better transportation routes became available to the valley district, the possibility of a Gloucester coal mine was raised again. In 1995 Gloucester Coal began trading out of a mine established in the town of Stratford just south of Gloucester and has enjoyed successes comparative to the area's cattle and dairy industry.