Opal is found in Brazil, Honduras, Indonesia, Mexico and western parts of the USA, but it is the vast deserts of central Australia, which produce 95 percent of the world's supply of precious opal.

During Cretaceous period, these desert areas were an inland sea, which gradually receded leaving sands rich in silica behind. Climatic changes during the mid-Tertiary period caused quantities of soluble silica to be released from the sediment. This gel-like solution filtered along cracks and faults in the ground, filling them, and eventually hardening to form opal. Opal forms within spaces in sedimentary rocks, such as sandstone; and in volcanic rocks that have hardened from molten lava with air bubbles trapped inside. Where the rock cavities once contained plant or animal remains, opalised fossils are formed.

Although the ingredients for the formation of opal known, the conditions required for development are not fully understood. Some theorize that this Australian opal developed over thousands of years, at high temperatures and under great pressure; others that opal formed relatively quickly, at about 20 degrees Celsius. It seems that at least some opal formed when bacteria took silica from the surrounding clay or stone, then deposited it in spaces in the rock, where the silica became opal.

Opal consists of tiny almost identical transparent spheres of silica arranged together in a uniform three-dimensional grid. Silica in solution is held in the spaces between these solid silica particles. Light passes through the spheres but is deflected by the silica solution. The diffracted light can show a handful of dominant colors or all the colors of the spectrum depending on the size of the spheres,. Smaller spheres, for example, display blue colors while larger spheres show orange and red.

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