Pearls grow in pearl-producing mollusks. Natural pearls occur when a mollusk's mantle tissue becomes damaged either by parasitic intrusion or damage to the shell. The mantle contains epithelial cells, which are responsible for the nacre deposition on the inside of the shell. If these cells become dislodged when the mantle is damaged, they may continue to deposit nacre within the body of the mollusk, creating a pearl.
A grain of sand neverproduces a pearl. This is a myth.
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Generally oysters, but some freshwater clams and mussels can also produce them - those are not held in such high value.
Not sure how to tell the difference between the pearls.
Clams produce nacreous pearls. These pearls are made of nacre, which is the same material that lines the interior of the clam shell. Mother-of-pearl is made from the nacre of the shell.