I've heard a lot about this small central Argentinian town. Its claim to fame is its apparent UFO appearances, which are so frequent that local press have given it the rather unimaginative nickname of "the town where everyone has seen a UFO". According to locals, the reason for all the extra-terrestrial activity is an underground UFO base buried deep beneath the mountains surrounding the town, which residents call "ERKS". Unsurprisingly, all this extraterrestrial business attracts tens of thousands of tourists to Capilla Del Monte every year.

The woman trying to sell me healing crystals couldn't be clearer. "You have to go to Capilla Del Monte," she says. "It's the spiritual capital of the country."

Capilla Del Monte is emblematic of the excitement surrounding UFO stories. The morning I get to the town, a local news site is reporting on a complaint filed by a panicked resident whose husband had disappeared for a few days. After returning, her husband claimed to have been abducted by aliens and subjected to "horrible things".

Although many mistake hot-air balloons and a variety of natural phenomena for flying saucers, plenty of credible witnesses have claimed to have spotted UFOs recently, like American fighter pilots, for example, who report having seen strange objects during their missions. A few months ago, Navy officials confirmed that these sightings were in fact unexplainable.

From the Chilean desert to Nazca in Peru, local anecdotes of UFO appearances are hardly a rarity in South America. Last month, in the Brazilian state of Bahia, a hiking guide confided in me that while he feared neither jaguars nor poisonous snakes, he was terrified by the "beings coming and going from the base of the hills at Chapada Diamantina National Park" – a nature reserve in eastern Brazil. According to him, the creatures have "mixed" their DNA with that of the local population, thus explaining their "trippy" behaviour.

The town quickly figured out how to turn a profit from the attention, capitalising on UFO tourism with a yearly Alien Festival , extraterrestrial shops and bookstores, as well as tourist agencies offering UFO tours. An observation centre was also established here 21 years ago, and locals claim that NASA has a base close by, but I wasn't able to verify that.

The town became famous on the 9th of January, 1986, when three locals – including a child – claimed to have seen a huge round ship with windows land next to a local mountain, charring a 12-metre-long and 64-metre-wide mark in the grass. Since then, more and more people say they have seen strange things in the area, like luminous spheres flying in formations, saucers, humanoid beings and light spectres.

He tells me the mystics believe that ERKS, this mysterious subterranean city – or rather, a sort of galactic base – is located hundreds or even thousands of metres under the mountains of Uritorco, Los Terrones and El Pajarillo. There, apparently, reside aliens from another dimension – or even from the future, according to some – on a mission to teach humankind what they know. The mountains above it are said to act as "energy portals", opening the veil between the two worlds and letting through positive vibrations, supposedly attracting mediums, shamans and healers to the area.

"In Capilla Del Monte," explains Claudio, a mountain guide, "you have the skeptics and you have the mystics. The skeptics have to see before they believe, and the mystics have to believe before they see." Claudio seems to fall somewhere between the two camps.

According to Claudio, these sites have been sacred since time immemorial, particularly to the Comechingones Indians, an indigenous group who lived here before the arrival of the conquistadores. "Legend has it that the surviving Comechingones escaped into the mountains and sacrificed themselves, because they disappeared without a trace. But many believe they went to the alien city using secret tunnels," Claudio tells me.

In a shop filled with mystical objects, I zero in on a book by a guy named Ariel Pro, titled The Five Cosmic Exercises of the ERKS. The author describes himself as a "mystical cosmic guide" who received a long esoteric education – energetic, religious and spiritual – in Spain. He was then summoned by the Guides of ERKS, he says, who he describes as "wise beings from ancient earthly civilisations, who possess ancestral knowledge". Their mission? "To herald and prepare an alliance between the universe and humankind."

Ariel doesn't reply to my interview request. Instead, I end up having lunch with Raul, who was also once "summoned" by the beings. Raul is a professional mountain guide – a family man with a peaceful vibe, who doesn't want me to take a picture of him next to the statue of an alien sitting on a bench.

"It’s because of those kinds of images that people don't take us seriously," he explains. Raul believes ERKS is one of the most important epicentres for awakening one's conscience. He even sees the area as a potential Noah's Ark that will serve as a refuge after the cataclysms that will mark the end times.

Ana Maria, a psychology graduate I meet, enlightens me more about the aliens. "The dimension they inhabit is more subtle than the physical world," she explains. "But thanks to their technology, they can change their frequency and make themselves invisible, which explains how their ships appear and disappear in the blink of an eye."