Fire agate is a variety of chalcedony, the microcrystalline form of quartz, in which thin layers of iron oxide, limonite or goethite, were deposited between the silica layers as the stone formed. Light reflecting from these internal films interferes to produce flashes of red, orange, gold and green, a thin-film iridescence of the same optical kind as the colour on a soap bubble or an oil slick, not a body colour. The effect is revealed by careful grinding that follows the contours of the layers, so the cutting is unusually skilled and no two stones are alike. It is found only in a limited region of the south-western United States and northern Mexico and was not described until the twentieth century, so it carries no ancient tradition; its metaphysical associations, generally of vitality and protection, belong entirely to the modern crystal trade.
Fire agate's iridescent layers were not recognised and cut as a distinct gem material until the middle of the twentieth century, and the American lapidaries who developed the grinding technique needed to reveal the internal colour without breaking through it kept much of their method informal rather than published, so specific attribution of the discovery is not well documented. The stone remains genuinely rare in the gem trade because its handful of known deposits, in Arizona, New Mexico and the neighbouring Mexican states of Chihuahua and Sonora, are limited, and the skill of cutting it to show colour without loss is still learned largely hand to hand between cutters rather than from a manual.