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.

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.

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.

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.

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.

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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