Because of the insolubility of Co in Ag, it will readily start to segregate after its introduction through ion implantation, eventually forming magnetic clusters in a diamagnetic matrix. Taking advantage of the high sensitivity of Mossbauer emission spectroscopy on implanted Co-57 probes, we have followed this precipitation process from the initial stages at a very low concentration of 0.05 at. %. At the lowest concentration, essentially all Co is initially present in a substitutional and dimer form. The Co atoms exhibit a strong reactivity, both with other Co and with O atoms, and we observe that the trace amount of oxygen that is still present in commercial Ag foils strongly interacts with the precipitating Co atoms, leading to molecular Co oxide and extended Co ferrite (CoxFe1-xO4) structures, which we identify through their hype;fine parameters. The oxygen impurity is also involved in the segregating nanoprecipitates, thereby inhibiting them from reaching a fully ripened stage. Even though the oxygen contaminant hinders the clustering process and induces the formation of additional segregated oxide compounds, the magnetic precipitates still reach a large relative spectral intensity of 10% and 20% in the samples with a quite low Co concentration of, respectively, 0.05 and 0.15 at. %.