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Geological Parameters
Nuggets were once thought of as being shed from gold-containing
reefs as these eroded. This view tended to support the
idea that nuggets could form at depth. Although it is
possible for some nuggets to be released from particularly
rich eroding reefs, most nuggets are believed to have
formed otherwise. Now, the generally held belief is that
nuggets formed very near to the surface as gold precipitated
from solutions arising from chemical weathering of deep
and diffused gold deposits. Even nuggets found at depth
are now thought to have originated from their place of
formation near the surface. As such, it must be assumed
that almost all nuggets of a noticeable size, resting
on the surface, would have already been found and that
many just under the surface would have been detected.
Nuggets that still remain
to be found represent a strictly limited and diminishing
resource.
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Human Behaviour
Almost all nuggets found prior to 1990 have been melted
down. In ancient times all gold would have been fashioned
into artifacts. At the time of the gold rushes, nuggets
did not have any intrinsic value other than in respect
of their gold content. Nuggets were melted and assayed
to determine their gold value so that payment could be
obtained for provisions, further investment or simply
to squander. Indeed, at various times and in various countries
private possession of gold, other than as jewelry or official
coinage, has been illegal. The Great Depression and the
gold price hike of 1980 saw surviving nuggets held by
state governments, museums and private collectors being
melted for cash. Only recently has appreciation of geological
rarity, natural uniqueness and nostalgia replaced the
greed and fear that determined the fate of nuggets in
the past.
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Volumes of nuggets found in Australia
By far the most important areas in Australia for nugget
gold are Victoria and Western Australia, with the other
states being insignificant by comparison. While historical
records held by state Mines Departments on large nugget
finds are reasonably good, information on nuggets being
found currently is scant.
The nature of the prospecting community itself causes
problems in researching nugget finds as rumors and legends
still find more currency than fact. The picture of prospector
activity is mixed. Some prospectors sell nuggets secretly
for cash, and some have exported nuggets without going
through Australian dealerships. Despite their dreams,
many prospectors find the full time search for nuggets
too hard and only venture to the bush in between jobs
or on weekends. Many are retirees or pensioners who metal
detect as a hobby and who are likely to hold on to their
hard-won nuggets until necessity dictates.
The Prospectors and Miners Association of Victoria (PMAV)
has surveyed their membership to find out the value of
gold that they have found over the five years to 1998.
Some 133 respondents claimed to have found gold worth
$4,311,493. Assuming this gold to be in nugget form, this
would account for perhaps 1,725 ounces every year. Recently,
a number of Victorian prospectors and dealers have reported
a marked downturn in the amount of nuggets found.
In Western Australia the equivalent body to the PMAV is
the Amalgamated
Prospectors and Leaseholders Association (APLA). It
has not surveyed its membership and has not been able
to offer any figures aside from echoing the major refiners'
estimate that each year several tons of gold are produced
by non-corporate Australian miners. This figure would
include gold from many sources including small high grade
hard rock mining, alluvial dry and wet operations yielding
grains smaller than 0.25 grams, as well as nuggets found
by metal detection and then offered for melt. Unfortunately,
the overall figure gives no indication of the likely nugget
component for Australia, still less for Western Australia.
In the absence of reliable figures from APLA, the situation
in Western Australia can be generously assumed to be similar
to that researched in Victoria where association membership
and nugget finds have been greater.
In common with a number of nugget dealers, APLA has referred
to estimates made several years ago by Minelab,
Australia's own metal detector manufacturer. Apparently,
Minelab once claimed that approximately 14 tons of nuggets
were found in Australia in 1995 through the use of metal
detectors. This figure has now been shown to have resulted
from a confusion with gold in all forms found by non-corporate
miners, and Minelab now recognizes that a figure of one
ton per annum is more likely.
The Perth Mint
purchases nuggets for resale and for melt and it would
see only 1,500 ounces of nuggets each year mainly, but
not exclusively, from prospectors in Western Australia.
Although there are several nugget dealers in Australia,
the Mint is thought to be one of the biggest and does
source nuggets from other traders, as well as directly.
It has recently been confirmed that, as in Victoria, fewer
nuggets have been found in Western Australia recently.
Apparently, technological advances in metal detection
are not reversing this downward trend.
In January 1999, the Perth Mint attempted to increase
its stocks of nuggets by offering a high price of $22/gram
for nuggets between 6 and 12 grams. Officials in APLA
warned that the offer would release enormous quantities
of nuggets and that the Mint would not be able to sustain
its offer and would have to withdraw in embarrassment.
The offer was well publicised through emails and the prospectors
magazine. It took six months to increase the stock holding
by only 225 ounces or about 800 nuggets. This demonstrated
conclusively that prospectors do not have huge stashes
of nuggets waiting on a favourable price and that the
rate at which they can supply is very limited.
From the PMAV survey indicating 1,725 ounces and the Perth
Mint figure of 1,500 ounces it is probable that at least
5,000 ounces of nuggets are found in Australia per annum
with a figure of 10,000 ounces capable of including claims
of direct sales, black market activity and hoarding. Certainly,
there is no evidence to suggest more than 30,000 ounces,
or about one ton, of nuggets are found each year. This
upper figure will be assumed as appropriate for considerations
of relative scarcity.
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Volumes of nuggets found globally
As with Australia, other countries do not have figures
on the type of gold found. The only way of estimating
the global situation is to use Australia as a guide. This
approach is supported by the fact that nuggets form at
the surface and are easier to find than gold contained
in rock. Historically, nuggets found in Australia have
been larger and more numerous than elsewhere, indeed Australia
can boast thirteen nuggets of over 1,000 ounces each,
while the rest of the world can only claim two. Significantly,
all of these huge nuggets were melted long ago. From this
comparison, it would be safe to assume that the proportion
of gold found as nuggets outside Australia would not be
greater than that found within Australia. This would yield
a global annual production of nuggets as being no more
than 8.5 tons.
However if we accept the distribution of large nuggets
as being indicative, then nuggets found outside Australia
may be only a very small fraction of this amount. Indeed
the amount of nugget gold found outside Australia would
be insignificant.
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Comparison with diamond production figures
World annual diamond production exceeds 100 million carats,
or 20 tons and is rising by a few percentage points per
annum. About half of the diamonds mined are gem quality
and half are 'industrial'. Diamonds are increasingly mined
from solidified volcanic pipes where they were held after
having been transported in magma from their place of formation,
about 200 kilometers, or 125 miles, below the earth's
surface. Unlike nuggets, diamonds are not limited in their
occurrence to surface or surface-related deposits. While
nugget patches are becoming exhausted, diamond reserves
are limited only by the ability to mine still deeper.
However one chooses to compare the two, nuggets are more
rare than diamonds. This is even the case if only gem
quality diamonds are considered. When both gem and industrial
diamonds are considered, nuggets are more than twice as
rare. When the relative volumes, rather than the weights,
are considered, the difference is emphasised. Nuggets
have a specific gravity of about 17.5 (90% gold, 9% silver,
1% other), and diamonds have a specific gravity of 3.5.
On a volume-for-volume basis, nuggets are more than 10
times as rare as diamonds.
The above comparisons are on the basis of generous assumptions
about the quantities of nuggets that will continue to
be found both in Australia and globally. Clearly, present
and future production demonstrates the relative scarcity
of nuggets as compared with diamonds.
While almost all diamonds ever found have been carefully
preserved, virtually all nuggets found before 1990 have
been melted down. This factor would seem to establish
conclusively the extreme rarity of natural gold nuggets
in comparison to diamonds.
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Determination of nugget rarity for different
sizes of nuggets
Clearly, large nuggets are very much rarer than small
ones. By charting the weights
of large nuggets recorded by state Mines Departments,
a familiar pattern emerges of numbers increasing with
decreasing size according to a smooth curve. However,
below 100 ounces the curve begins to turn down because
not all nuggets of less significance were recorded.
The same distribution pattern for nuggets, but at a much
lower level, is obtained by a prospector who is lucky
enough today to discover a 'virgin' patch. He may find
one nugget above 16 grams, 2 above 8 grams, 4 above 4
grams and 8 above 2 grams. The distribution follows a
natural mathematical pattern.
However, the prospector does not find 16 above 1 gram,
and 32 above 0.5 grams, and so forth. Nuggets smaller
than 2 grams do become harder to find with a metal detector,
but that is not the real reason. The real reason is that,
nuggets much smaller than 2 grams are more prone to redissolving,
and are simply not around to be found in the geological
environments that support nugget formation. Equally fine
particles that can be panned are frequently absent, and
even the results of soil surveys seldom reveal gold enrichment
very much above background gold levels. This is not accidental,
but an intrinsic part of the nugget formation process
whereby smaller particles are remobilised into larger
ones. Approximately half the gold in the soil on a nugget
patch will be as nuggets above 2 grams in weight.
The natural distribution pattern is one parameter for
determining the increased rarity of nuggets with increasing
size. To this needs to be added the diminishing rate at
which nuggets are being found. Despite technological advances
this has been declining steadily since the mid 1980s by
between 5% and 10% per annum. Prospectors represent a
dwindling and aging population from an already very small
base. Their formal access to land is limited by legislation
affecting native title, environmental protection, and
the mining industry generally. In the past decade they
have been adversely affected by a series of tax and reporting
requirements. For these reasons the decline in gold prospecting
in Australia is likely to continue.
Prior to 1990 almost all nuggets were melted down; only
the very tip of the iceberg survives. Estimates of rarity
include the assumption that almost all nuggets found after
1990 will not be melted.
The result of combining all of the above factors is a
complex algorithm that depends upon the natural distribution,
the declining rate of nugget discoveries, the effective
starting point in 1990 and the eventual demise of the
nugget supply. The algorithm has as its variables the
weight of the nugget and the time when it was found. The
operation of the algorithm
produces two figures. The first figure is an estimate
of the number of larger nuggets that have been found since
1990. The second figure is an estimate of the number of
larger nuggets that are likely to be found between now
and a time a decade or so into the future when the existing
nugget patches or prospectors, or both, have become thoroughly
exhausted.
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