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Nacre

When a mollusc or an oyster experiences an  intrusion from a foreign body such as a piece of  shell or a grain of sand, it covers itself in a layer  of nacre. As more and more layers are added, a  Pearl begins to form. Because the nacre is built  up in layers, as light hits the surface of a Pearl,  wonderful flashes of a multitude of colours can  be seen. This iridescence occurs as the different  wavelengths  within  light  strike  the  layers  at  differing angles (see also iridescence). The inner part of a shell, the Mother of Pearl, is  also a form of nacre. The better the quality of the  nacre, the better its iridescence (also referred to  as pearlescence). 

In addition to Oysters, many  other molluscs (a shell fish that has a hinge) have  the ability to create nacre and therefore are able  to produce Pearls.

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Who would think this Pearl formed from

a grain of sand?!