Hi Jon,
Since nobody has jumped in to try to answer your question, I will try.
First, I have tried a PI with no ground balance in several areas having reddish clay soil. Yes, you will get get a ground response from the red clay. You will get a ground response from other colored clays also.
If you bob the coil up and down over such red clay type ground, most likely you will get a strong response. However, I have found a couple of areas where the red clay really didn't produce the strong response I expected either. Now, the intensity of the ground response depends upon the sensitivity of the detector, the delay, and other factors, so there will be differences between PI's.
I have done a lot of controlled testing with a PI at my home, and similar test while I was hunting in areas having the "bad ground". While in the areas having the adverse ground, I did spend a lot of time testing and trying different things. In fact, initially, since I was trying to determine what seemed to work best, I really spent more time testing than I did actually hunting while in the gold producing areas. Unfortunately, my in the field time has been limited simply due to the time I can allot and the distance I have to travel. Since I have limited time, I prefer to test a lot both at home and in the field so I know what to expect in the field.
Now, does this fact that because the red clay ground will produce signals mean a PI can't be used effectively in such areas? Nope, it just means you have to be more careful in your search techniques and use the autotune feature if the detector has one.
This autotune thing has generated a lot of discussion recently so I might as well throw my two cents in about it now. Yesterday, I buried a 5 grain nugget somewhere between 2" and 3" deep in "bad ground" and tried several things. What surprised me was increasing the autotune speed made it easier to obtain a more consistent response from the nugget. Air testing showed the increase in the autotune speed would decrease the depth capabilities, but in ground tests displayed the opposite. In mentioned this because I think it is important that people try similar testing to better know their detector.
If you search slowly and are careful to try to maintain a constant coil height, you can easily minimize the "bad ground" signals. Yes, you will some false signals when the coil snags on a bush or bumps a rock and the coil is suddenly raised or lowered, but overall, the detector will work quite well.
I have found it is best in the areas having the worst ground conditions to just raise the coil a little. This reduces the ground signal dramatically. This raising of the coil has the greatest negative effect on the detection of real small nuggets. Larger nuggets, even deep will still give a nice strong signal.
Remember, that most PI's that do not have a ground balance are about 1/3 the price and probably 1/3 the weight of those that do have ground balance. So, there are tradeoffs when considering just which one to buy.
About the only way a person will really know if such a PI will work for them is to simply try one. Unfortunately, that is difficult since there are so few in the field used for gold hunting at this time. Hopefully, others who are using PI's for nugget hunting will jump in and post their opinions.
Reg