While there are several theories for the origin of nuggets, the evidence points conclusively to them coming from the gold-bearing quartz reefs. Many big alluvial nuggets contain lumps of quartz, or show imprints of quartz crystals enclosed by the gold as it crystallised in cavities in the reefs. Why large masses should suddenly crystallise is not completely understood. However, it has something to do with conditions in the surrounding rocks changing the solubility of gold in the warm water that had dissolved it in huge amounts and carried it up from deep in the crust.

In some goldmines, large slugs of gold were found where quartz reefs cut particular layers in the surrounding sedimentary strata. These layers became known as ‘indicators’ and were actively sought out by the early miners. Over millions of years of erosion, the landscape was worn down, exposing the quartz reefs and the enclosed gold. Gradually, weathering caused the reefs to disintegrate, freeing the lumps of gold. These moved into the soil, then down slope into the nearest stream.