Don Kagin holds a 98.6 ounce gold nugget in the Chroniicle studio on Friday January 14, 2011 in San Francisco, Calif. He and his business partner Fred Holabird are auctioning off the nugget in Sacramento on Wednesday March 16, 2011.Mike Kepka/The Chronicle

Turns out the most amazing gold nugget found in decades in the Sierra Nevada was a fake.

Not fake gold, mind you.

Just fake in that it was actually discovered in Australia – not on an amateur gold-hunter’s land in the foothills, as had been claimed.

The 8.2-pound gold chunk dubbed “The Washington Nugget” sold for $460,000 after Jim Sanders said he unearthed it with a metal detector on his land near the historic Gold Rush town of Washington (Nevada County). At the time, it was billed as the biggest existing, smooth gold nugget dug out of Forty-Niner country, and its sale drew notice from gold buffs all over the world.

Among those who perked up was Murray Cox, an Aussie prospector who dug up an 8.2-pound nugget near Melbourne in 1987 that was nicknamed “The Orange Roughie” after a popular fish Down Under. He compared pictures of the two nuggets in June and found they were an exact match.

He got word to coin dealer Don Kagin of Tiburon and mining geologist Fred Holabird, who together auctioned the nugget for Sanders, and they launched an investigation. It didn’t take long to figure out the switcheroo.

“The parties have mutually concluded that the nugget was from Australia,” Holabird announced

A woman who answered the phone at the Sanders property said, “Jim doesn’t want to talk about that.”

Kagin said confidentiality agreements prevented him from elaborating on what actually led to the Aussie nugget winding up in Sanders’ hands, but he said “the whole matter has been concluded to everyone’s satisfaction.”

The nugget’s buyer was reimbursed for his purchase, and the gold chunk was then sold for less money to someone who had been a secondary bidder auction, Kagin said. He said that because of the confidential agreements, nobody has any intention of pressing fraud charges in the case.

Two smaller nuggets said also to be found on the Sanders land, and sold for $24,700, are believed to be genuinely from that property, Kagin said, so no new arrangements had to be made for them.

Kagin and Holabird, however, are no longer representing Sanders in his bid to sell his land as gold-rich property.

Cox said the Orange Roughie was sold for $50,000 to a buyer in Quartzite, Ariz., in 1989 – but how it got to Sanders is a mystery.

by Kevin Fagan is a longtime, award-winning reporter at The San Francisco Chronicle

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