Inside the metal detector's loop (sometimes called a search head, coil, antenna, etc.) is a coil of wire called the transmit coil. Electronic current is driven through the coil to create an electromagnetic field. The direction of the current flow is reversed several thousand times every second; the transmit frequency "operating frequency" refers to the number of times per second that the current flow goes from clockwise to counter clockwise and back to clockwise again.

When the current flows in a given direction, a magnetic field is produced whose polarity (like the north and south poles of a magnet) points into the ground; when the current flow is reversed, the field's polarity points out of the ground. Any metallic (or other electrically conductive) object which happens to be nearby will have a flow of current induced inside of it by the influence of the changing magnetic field, in much the same way that an electric generator produces electricity by moving a coil of wire inside a fixed magnetic field. This current flow inside a metal object in turn produces its own magnetic field, with a polarity that tends to be pointed opposite to the transmit field.
Receiver

A second coil of wire inside the loop, the receive coil, is arranged (by a variety of methods) so that nearly all of the current that would ordinarily flow in it due to the influence of the transmitted field is cancelled out. Therefore, the field produced by the currents flowing in the nearby metal object will cause currents to flow in the receive coil which may be amplified and processed by the metal detector's electronics without being swamped by currents resulting from the much stronger transmitted field.

The resulting received signal will usually appear delayed when compared to the transmitted signal. This delay is due to the tendency of conductors to impede the flow of current (resistance) and to impede changes in the flow of current (inductance). We call this apparent delay "phase shift". The largest phase shift will occur for metal objects which are primarily inductive; large, thick objects made from excellent conductors like gold, silver, and copper. Smaller phase shifts are typical for objects which are primarily resistive; smaller, thinner objects, or those composed of less conductive materials.

Some materials which conduct poorly or not at all can also cause a strong signal to be picked up by the receiver. We call these materials "ferromagnetic". Ferromagnetic substances tend to become magnetized when placed in a field like a paper clip which becomes temporarily magnetized when picked up with a bar magnet. The received signal shows little if any phase shift. Most soils and sands contain small grains of iron-bearing minerals which causes them to appear largely ferromagnetic to the metal detector. Cast iron (square nails) and steel objects (bottle caps) exhibit both electrical and ferromagnetic properties.

It should be pointed out that this discussion describes an "Induction Balance" metal detector, sometimes referred to as "VLF" Very Low Frequency (below 30kHz). This is the most popular technology at the present time, and includes the "LF" Low Frequency (30 to 300kHz) instruments made for prospecting.