Introduction
There are many different types of opal that can be found all around the world, but the most common distinction can be made between common opal and precious opal
What makes common opal different from precious opal?
Both common opal and precious opal are extremely similar in chemical make-up, being composed of hydrated silica. The differences start in the arrangement of the silica.
Common opal
In the case of common opal (often referred to by miners and cutters as "potch"), the molecules come together in a disorganised fashion, and this means that light is reflected in the same manner as any normal surface such as a table or chair. No one looks at wonderment at a table surface- because the colours are typically very plain.

Precious opal
For precious opal, the organisation of materials is very different. Given the correct environmental conditions and sufficient time, the silica precipitates in spheres. Given more good luck, the spheres settle in bands according to size. If this settling process happens just right, the spheres reflect light in the same way a CD, a puddle of oil on water or the feathers on the neck of a male pigeon reflect light. The effect is magical, as if there is colour deep within the opal (or pigeon- but there is not that big a market for cut pigeon). This effect is known as "play of colour".

Extracting marketable colours
Not all colours are equal. As a general rule, blues are the most common of the colours. The rarity of the colour increases across the spectrum until you get to red which is the rarest of the colours. Very often, the reds are only found in very small patches with lots of inclusions that either make cutting the opal difficult or degrade the material to a point where cutting a gem opal is not possible at all. The colour is usually in a band that is only millimetres deep, and there will almost always be a crack, some sand or something else in there that needs to be removed, while at the same time creating an attractive dome. Cut too deep and the colour disappears, not deep enough and inclusions substantially reduce the value of the stone. When acquiring rough from suppliers I very often get stones in which a cutter has made a mistake and hotly thrown the unfinished opal into an outgoing package. I call these "Hospital rubs".

Material required for quality opals
Of all the material an opal cutter will buy, only about 10% of it can be successfully converted into an opal, and of these, only 1% will be opals of any substantial worth. This is the major reason why opal in gem form is so expensive.
References:
Gaillou, Eloise- 2015/04/18, An overview on Gem opals: from the geology to the color to the microstructure