What Is Alluvial Gold? A Buyer's Guide to Placer Gold

What alluvial gold actually is

Every gram of alluvial gold began as hard-rock gold. Somewhere upstream, a primary deposit — a vein or reef locked into quartz and sulphides — was pushed to the surface and then attacked by weather. Over geological time the host rock broke down into clay, silt and sand and washed away.

The gold did not. Gold is chemically inert, so it does not dissolve, oxidise or rot. And it is extraordinarily dense: about 19.3 grams per cubic centimetre, roughly nineteen times the density of water and more than seven times that of the quartz it came out of. When a slurry of rock fragments and gold moves down a river, the gold behaves completely differently from everything around it.

How a river sorts it

Moving water is a sorting machine. Wherever the current slows, it loses the energy to carry heavy particles and drops them first. That happens in predictable places: the inside of a meander, the slack water behind a boulder, the point where a steep gradient flattens out, the base of a waterfall, and — most importantly — on the bedrock beneath the gravel, where gold works its way down through the looser material until it reaches something it cannot pass.

Those concentrations are called pay streaks. Finding them is most of the skill in placer mining, and it is why two operations on the same river a kilometre apart can return completely different grades. The same sorting process acting on a coastline produces beach placers, and older deposits lifted above the modern river by uplift or a change of course become terrace or bench deposits.

This geology explains two commercially important facts. Alluvial deposits are shallow and irregular, so they are cheap to start on and hard to estimate reliably. And the lode that fed them may still be sitting undiscovered in the hills above — historically, alluvial workings are what led prospectors to hard-rock deposits, not the other way round.

How alluvial gold is recovered

Gravity, not chemistry

Because the gold has already been liberated from its host rock by weathering, it needs no crushing, roasting, flotation or cyanide leaching. It is recovered on the same principle that concentrated it in the first place: density.

The equipment scales up from there. A pan at the smallest scale; then sluice boxes and riffle boxes that recreate a river's natural traps; then jigs, shaking tables and centrifugal concentrators for finer material; then suction dredges and bucket-ladder dredges on larger rivers. Capital requirements are low at the bottom of that range, which is why alluvial ground worldwide is worked overwhelmingly by artisanal and small-scale miners rather than by major mining companies.

The mercury problem

Fine gold is difficult to catch by gravity alone, and the traditional artisanal answer is amalgamation: mercury is added to the concentrate, binds the gold, and the amalgam is then heated to drive the mercury off. It works, it requires almost no equipment, and it is the largest single source of mercury emissions on earth.

The Minamata Convention on Mercury obliges signatory states to reduce and where feasible eliminate its use in artisanal gold mining. Any buyer evaluating artisanal material should expect mercury handling to come up in due diligence, and any responsible-sourcing audit will ask about it directly.

What you are actually buying: form and fineness

Alluvial gold reaches a buyer in one of a few physical forms, and the form tells you something about the operation behind it.

The critical point is the fineness column. Alluvial gold is naturally alloyed, overwhelmingly with silver — the natural gold–silver alloy is called electrum — with traces of copper and iron. Fineness varies by river and even between reaches of the same river, which is why a serious seller can tell you the typical assay for their ground and a fraudulent one quotes a round number.

Raw alluvial gold is never 24 carat. Gold reaches 999 fine only after refining, so any offer describing unrefined dust as "24k" or "99.9% pure" is describing something that does not exist.

How a genuine parcel is priced

Alluvial gold is not sold at the London price. It is sold on assayed contained gold, at a discount that covers refining, transport, insurance, financing and the buyer's margin. The mechanics are straightforward:

• The parcel is melted and homogenised, because dust is impossible to sample representatively in its raw state.
• Samples are drawn — usually pin or drill samples from the resulting bar — and assayed by fire assay, the reference method for gold.
• Contained fine gold is calculated as gross weight multiplied by fineness.
• Payment is made on that figure at the LBMA reference price for the agreed pricing date, less the agreed discount.

A worked example makes the discount concrete. A one-kilogram doré bar assaying 850 fine contains 850 grams of gold. At a reference price of, say, USD 2,400 per troy ounce, that is roughly 27.33 troy ounces of contained gold, or about USD 65,600 of metal — before any deduction. A realistic all-in discount for small parcels from a remote origin might be 4–8%, covering refining charges, secure logistics, insurance and margin. What it is not is 20%.

Compliance: the frameworks that actually govern this trade

Where alluvial gold can be sold depends on provenance far more than on quality. Three frameworks matter:

OECD Due Diligence Guidance

The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is the reference standard. It sets out a five-step framework covering management systems, risk identification, risk mitigation, third-party audit and public reporting. Most downstream buyers and every accredited refiner now work to it.

LBMA Responsible Gold Guidance

Refiners on the LBMA Good Delivery List operate under the Responsible Gold Guidance, which implements the OECD framework for gold specifically and is independently audited. A Good Delivery refiner will refuse a parcel it cannot trace back to a licensed operation, regardless of what the assay says. That is the practical gate on the entire trade: if the material cannot enter an accredited refinery, its route to the mainstream market is closed.

Minamata Convention

As above, the mercury question is now a formal treaty obligation for signatory states, not merely an environmental preference. Artisanal supply chains are expected to demonstrate what they are doing about it.

The fraud problem, stated plainly

Alluvial gold is the most common subject of advance-fee fraud in physical commodities, and it is not close. Anyone who has run a commodity desk for more than a month has a folder of these. It is worth setting out the pattern precisely, because it barely varies.

The anatomy of a gold dust offer

• An unsolicited approach offering "AU dust" or "gold dore" at a steep discount to the London price — commonly 15–30% below.
• A stated origin in a jurisdiction with genuine artisanal production and weak documentation: Ghana, Mali, the DRC, Sudan, Guinea, Liberia, Peru.
• A document pack of an LOI, FCO, SGS report and proof of product that looks official and proves nothing — scanned assay certificates with the parcel reference removed, photographs of bars that appear in dozens of unrelated offers, and certificates from bodies that do not exist.
• Improbable quantities: hundreds of kilograms available immediately, from an operation that has never appeared in any production statistic.
• And then the actual purpose: a request for money before anything moves. An export levy. A "refinery fee". A certificate the seller cannot obtain without a payment. An inspector whose flights must be funded. A bribe, described as such, to release a shipment.

The arithmetic that gives it away

Gold is the most liquid physical commodity on earth. It has a published reference price set twice daily, it is recognised everywhere, and it is dense enough that a valuable parcel fits in a briefcase. Anyone holding real gold can sell it locally, today, at close to the reference price.

So ask what a 20% discount implies. It implies a seller who is either unable to reach any buyer in their own country — in a business with licensed exporters and gold buyers in every producing city — or who is choosing to hand a stranger USD 13,000 per kilogram for no reason. Neither is credible. The discount is not a bargain; it is the price of the story, set high enough to keep the offer circulating.

A working checklist

• Does the offer require you to pay anything at all before an independent party has physically seen and assayed the metal? If yes, stop.
• Is the discount to the reference price larger than the cost of refining, freight and insurance could possibly justify? If yes, the metal is not there.
• Can the seller name a licensed export entity, and can that licence be verified with the issuing authority rather than by a document they send you?
• Will the seller agree to inspection and assay by an agency you appoint, at their cost, with payment against that certificate?
• Does the material have a route into an accredited refinery, and can the seller name it?
• Are the documents specific to this parcel — dated, addressed, with references intact — or generic?

How a legitimate transaction actually runs

None of the above means alluvial gold is an illegitimate commodity. Artisanal and small-scale mining supports an estimated tens of millions of livelihoods worldwide and produces a meaningful share of global gold supply. Legitimate material moves constantly. It simply does not move the way the scam offers describe.

A real transaction looks like this: a licensed exporter with verifiable registration; material presented at a secure facility rather than described in an email; melting, sampling and fire assay by an accredited laboratory, witnessed or appointed by the buyer; a price fixed against a stated LBMA reference date with an agreed discount; payment against the assay certificate and export documentation; and secure logistics to a refinery that has already accepted the counterparty through its own responsible-sourcing checks.

Every step of that is verifiable by someone other than the seller. That is the difference, and it is the only difference that matters.

Frequently asked questions