Gold nuggets, a popular form of Gold with collectors, are formed when erosion causes a large piece of Gold to separate from its mother rock, and then gets carried into a stream or river. The flowing water tumbles the Gold, giving it its distinct rounded shape. The Gold eventually settles at the bottom of the water, and due to its heaviness remains there. Other nuggets also get caught in the same area, forming a placer deposit. As such, placer gold is gold that has weathered from the host rock where it was formed and been "placed" either on hillside (eluvial placer), stream bed or alluvial fan by the action of water, glaciers or other geological forces.

Gold nuggets are quite rare as they are only found above ground, not in mines, which is where most gold these days is extracted from. So most nuggets are usually only those found by prospectors in streams and outlying areas

Generally speaking, ores were not formed at the time that the surrounding rock was but were introduced later by molten rock which hardened or crystallized to form the different grades of igneous rocks such as granite, pegmatite, gabbro, and other similar rocks. The ores themselves may be carried from the molten rock by escaping steam and fluids through cracks and crevices into surrounding rock. The molten rock masses usually contain large quantities of water and steam. These may soak out into solid rock next to the cooling melted rock and will then change the nature of the solide. Sometimes the water and steam are barren of valuable ores while at other times the hot waters, soaking in, bring ores of gold, silver, copper, tungsten, or other metals.