The story
In use by 1910s (see Citations). Originally a playful term for geologists employed in the early days of the oil industry - other similar names included "sand smeller", "oil witch", "wrinkle chaser", "pebble pup". The intended parallel being the likeness of a geologist sniffing out - like a hound - something of value among the rocks. Term popularized perhaps by a 1921 story published in Cosmopolitan titled The Rockhound.
Etymology from Wiktionary, CC BY-SA 4.0.