If you have been looking for a gold piece to buy, you would have quickly realized that gold nuggets are worth more than Bullions or gold bars. It does not happen by chance, and some intrinsic characteristics of gold nuggets make them extremely valuable. This might also be the best motivator to start planning your next prospecting trip!
Gold nuggets are worth more than Bullion because they are rarer and unique in their shape. Most of the gold recovered comes from lodes through open-pit and underground operations, which is then melted to form Bullion. The bigger and rarer the gold nugget, the higher its price.
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The Value of Gold Nuggets vs. Bullion
As with any goods in a free market, the price of gold nuggets is dictated by the rule of supply and demand. And as you might have guessed, gold nuggets are rare. In fact, so rare that they only account for 2% of the total amount of gold discovered every year.
Another factor that adds to their rarity is that most nuggets historically have been melted down to form bullion. The desire among collectors and prospectors for natural, rough nuggets is a newfound one, stretching back only a couple of decades. As a result, some of the biggest nuggets ever found, including the welcome stranger nugget, were melted down shortly after discovery! Today, collectors are ready to pay a hefty premium would they happen to stumble across a gold nugget of the right size and shape.
In this article, we will take a brief look at what makes a gold nugget valuable, in addition to the supply side limitation. But before that, let’s look closer at both gold nuggets and bullion!
What Are Gold Nuggets?
Gold nuggets are pieces of gold recovered through several methods of placer prospecting. Gold nuggets make up a percentage as slim as 2% of the total amount of gold in circulation today, which makes them particularly rare.
Additionally, the methods used to recover nuggets and gold flakes can be extremely time- and energy-consuming. Some of these methods include panning, sluicing, dredging, and electronic prospecting.
Gold nuggets derive from lodes, or hard-rocks, that contain veins of gold. Through the action of natural elements such as winds and rains, fractions of these deposits become detached from the lode. From here, they tend to travel towards the side and bottom of the elevation, to ultimately reach a nearby waterway such as a stream, river, or creek.
These are the locations where gold prospectors tend to retrieve them through a method that leverages gravity, water force, and the high specific gravity of gold.
Moreover, each gold nugget is unique and different from any other. Other elements in it, such as quartz and its appearance, are only some of the factors that can increase its value in the eyes of a buyer.
What Are Gold Bars?
Gold bars, or Bullion or ingots, are bricks of refined gold shaped into a specific form. The standard method of producing gold bars is through the blasting of lodes to detach the gold from its host or hard rock. The majority of gold produced on the market today comes from mines and is extracted through open pit or underground operations.
This method of producing gold is the only way to guarantee miners to extract enough of this metal to make the operations worthwhile. There are several locations from which the gold comes across the world, but the most prominent are Australia, South Africa, South America, China, and the United States. Some parts of Europe, Japan, and Canada also produce gold to an extent.
The material extracted from those mines is then treated with chemicals, molted, and poured into a stamp to assume any shape. Learn more in the video below.
The manufacturer will then ensure that all production, labeling, and record-keeping conditions are met. On one side of a gold bar, you are likely to find its weight, purity, and a serial number. This strategy is the best one to recognize your gold bar before proceeding with inspections.
It is essential to notice that such mining operations can seriously harm the surrounding environment. As they take place in remote locations or natural areas, they can disrupt entire ecosystems. They have also been the cause of severe deforestation in specific areas.
Factors That Influence the Value of Gold Nuggets
The main reason for gold nuggets to be worth more than gold bars is their provenance and recovery method. However, each gold nugget is also priced differently. While considering its weight when calculating its market price, the seller can add or remove value depending on several aspects of the nugget.
Generally, the only two factors influencing a gold bar is its weight and the current spot price. Indeed, its purity can range between 99.5% to 99.9%, which in itself only affects the price to a limited extent.
Spot Price
The current spot price of gold can affect the price of gold nuggets. Gold is usually measured in Troy ounces, but many sellers might display the weight of a nugget in grams or ounces. Therefore, it is recommendable to clarify what unit of measure a certain value refers to before purchase.
You can easily calculate the value per gram or Troy ounce by multiplying its weight by the spot price. However, this formula might not give you the exact cost of your nugget, as the other factors below can influence it.
Purity and Specimen
When pricing a gold bar, a seller will take into consideration the purity of the ingot. With gold nuggets, the purity is seldom taken into consideration as long as the gold nugget appears to be of ordinary purity. However, it should be noted that the luster of a gold piece tends to increase with higher purities, which could make a nugget worth more to a potential buyer.
Gold specimens are gold nuggets that still present some sediments of the host rock still attached to it. This could be a rusty metal or other, more appealing elements.
In particular, some gold nuggets still boast pieces of quartz that have not yet been eroded from the specimen, like in the image below.
Depending on what the buyer is looking for, such samples can be worth more than same-size nuggets without other elements.
Size of Nugget
Of course, the size of the nugget will influence its cost. The larger a nugget is, the rarer it will be, the higher will be priced. Indeed, large gold nuggets are among the most precious specimens a prospector could retrieve. Indeed, with enough time, these will be eroded down to smaller pieces of gold flakes if left in nature.
When calculating the size of the nugget, it is essential to understand that the buyer might take close-up pictures of the specimen to make them look much larger than they are. Asking for a photo near a ruler or coin can give you a better indication of its size.
Shape of Nugget
Unlike gold bars, the shape and look of the nugget are among the most influential factors that can cause its price to rise. Indeed, the most interested gold nuggets buyers are collectors that will evaluate the specimen on its unique look, aside from its size.
Gold nuggets that boast an aesthetically appealing crystalline structure will be worth much more than a larger nugget without those features. Below is an image of a gold nugget with a crystalline structure that would command a high price.
On the opposite end of the spectrum, we find round and polished gold nuggets. These are among the most common gold nuggets, and will therefore not command as high a premium. However, they are often still sold above spot price.
Origin
The provenance of the nugget can influence its price to an extent. Each collector or buyer might be interested in nuggets from a specific location due to their quality or historical relevance. Some of the most wanted nuggets come from:
- Australia
- Alaska
- California
Conclusion
Gold nuggets are worth more than gold bars because they are rarer and unique. However, determining the price of a nugget can be tricky, and often the value changes depending on what the gold buyer and seller agree upon.
Since the price calculations take into consideration its appearance, it is easy for the prospector to add a subjective value to a specimen. However, size, provenance, and pieces of the host rock still attached to it can increase its market price.
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