Taking on approximately $15,000 worth of mixed cargo while at her Moss Landing stopover, Captain Boyd soon cleared the port and pointed the bow of the Gipsy toward Monterey. Sighting the buoy off China Point (where Hopkins Marine Station now stands) at 8:00 p.m., Boyd altered his course and made for the shelter of the Monterey harbor. Approximately one mile short of his destination Boyd spotted the fog-shrouded glow of a red light, which he mistakenly took for the marker at the end of the Monterey wharf.

Making for the eerie glow of the light, only a few short minutes passed before a frantic cry from the lookout reported, "Breakers ahead!" Before the reverse thrust of the propeller could take effect, the Gipsy came to a shuddering stop amid the rocks of Macabee Beach. The ship immediately began taking water, and Captain Boyd ordered lanterns tied to her foremast (as a signal of distress) and instructed her whistle to be sounded.

Within minutes the pride of the Pacific Coast Steamship Company listed heavily to starboard, forcing her crew to take to the lifeboats. Fortunately, no lives were lost as the crew made their way to the safety of the beach-only to watch the agony of the Gipsy as she died a slow death amid the rocks and surf.

Unfortunately, the gallant little freighter became a total loss. Additional reports state fishermen, local residents, Presidio soldiers, as well as inhabitants of Monterey's Chinese fishing village, were soon on hand to rescue 400 cases of bottled beer and 100 kegs of steam beer that the ill-fated freighter carried in her hold.