Development of simple and reliable protocols for the synthesis of phase-pure core–shell metal nanoparticles is an important problem in nanomaterials synthesis; the synthesis of Co-core Au-shell nanoparticles is described in this paper. The formation of these core–shell nanoparticles is driven by a displacement reaction on the surface of cobalt nanoparticles, where the surface of the cobalt nanoparticle is sacrificed sequentially as the reducing agent for the gold metal deposition on its surface. Hysteretic magnetic properties of nanoparticles depend critically on their size and since, in this displacement reaction, the size of the magnetic core decreases as a function of the displacement reaction time, we utilize it in a unique and systematic way to monitor the formation of the Co@Au core–shell morphology. In addition to magnetic measurements, synthesis of Co@Au core–shell nanoparticles was also followed by UV-vis spectroscopy, X-ray diffraction and transmission electron microscopy measurements.