Business Economic Notes

IThese notes are issued to Inspectors of Taxes to assist them in examining accounts. They are intended to provide a general background to the trade, with some explanation of its most important features. Business Economic Notes are not intended to provide an exhaustive or definitive picture of any particular trade or profession.

Contents

1. General

2. The trade structure

• Manufacturing jewellers
• Wholesalers
• Retailers

3. The raw materials

• Metals
  • Gold
  • Silver
  • Platinum
• Gemstones
  • Diamonds
  • Rubies and sapphires
  • Emeralds and other beryls
  • Other coloured stones
  • Quartz-gemstones
• Organic gems
  • Pearls
  • Amber
  • Coral
  • Jet

4. The manufacturing process

• Designing
• Methods
• Handmade jewellery
• Machine production
• Casting
• Processing losses

5. Hallmarking

• False marking
• Unmarked wares
• International agreements

6. Profit margins

• Manufacturing jewellers
• Retailers
• Rings and jewellery
• Cutlery, clocks, watches,
• china and glassware
• Valuation
• Sale of second-hand jewellery
• Average gross profit rates

7. Watches and clocks

8. Gold coins

Appendix 1 - Source and route of raw materials

Appendix 2 - Exemptions from hallmarking

1 General

Jewellery crafting and retailing must surely be one of the oldest known professions but, in the last 30 to 40 years, the structure of the trade has altered considerably.

Whilst at one time, the jeweller was a craftsman who also undertook manufacturing and retailing, nowadays he is normally only a retailer of manufactured goods. the large jewellery chain stores who also used to be involved substantially in both manufacture and retailing, now mainly concentrate on retailing.

The few independent craftsmen jewellers with their own workshop, will be doing primarily repair and renovation, rather than undertaking any creative work.

In recent years, there has been a major change in the High Street, with multiples (chain stores) dominating and taking an ever increasing market share, at the expense of the independents.

In order to survive, many independents have moved up-market, leaving the middle and lower ranges of merchandise substantially to the multiples. To increase competitiveness, many independents have also formed buying groups, in order to obtain better terms from manufacturers.

A very important feature of the trade in general is the increasing volume of imported goods sold. The sources of imported goods are chiefly Italy, Germany, Spain and the Far East.

Although the retailers of today need not be craftsman, they require a high degree of product knowledge including both materials and merchandise. They must also be familiar with current legislation as it affects hallmarking and description of goods. A good working knowledge of all aspects of gemstones, precious metals, jewellery design, manufacturing processes, and horology is required, combined with the ability to appreciate both the beauty and value of merchandise. The retailer will also need to possess some basic knowledge of antique gold and silver merchandise.

Most jewellers, both sales people and shopkeepers, will be members of the National Association of Goldsmiths and have undertaken their diploma course and examination for retail jewellers. Other specialists or craftsman may alternatively have taken the diploma examination of the Gemmological Association, covering all aspects of gem materials and fashioning of gemstones or either the retailing or technical diploma courses of the British Horological Institute.

Jewellery itself has also been subjected to changes with the introduction of purchase tax in the 1950's, shortage of gem material, and increasing costs of precious metals. These factors together with new processing and manufacturing techniques, have all combined to move jewellery away from the old style lavish jewellery and to create a new style of jewellery biased more towards artistic content rather than intrinsic value

Jewellery design has become more sculptured, with more use being made of semi-precious and artificial gem materials. The use of diamond milling (cutting the surface of gold into brightly polished facets) has also resulted in the growth of artistic, yet relatively inexpensive, jewellery being made available to a wider market.

These notes are concerned primarily with the retailer and the retail manufacturing jeweller, who will be involved with straightforward retailing, trading in metals and gem stones, designing, manufacturing and repairs. Retailing also covers a wide range of goods, such as, silver and plated ware, luxury leather goods, china, clocks, watches and antique goods.

2 The trade structure

Manufacturing jewellers

Manufacturing jewellers vary in size from the one-man business to those employing a large number of people.

They will buy the necessary materials direct from the refiner and may also send any scrap gold obtained from manufacturing waste or old jewellery for refining and fabrication into new materials.

The process of manufacturing jewellery will be entrusted to either in-house craftsmen or independent jobbers.

The manufacturing jewellers will sell goods either direct to the retailer and/or the wholesaler.

Manufacturers selling direct to retailers will normally have "travellers" and/or a showroom at their premises, to display samples of the goods produced. some of these are on the lines of a cash and carry warehouse.

A feature of the trade is sale "on approval", as it is accepted that a retailer may not be able to afford payment until the item has been sold.

Wholesalers

Wholesalers are the middle-men in the trade, and will supply all the goods a retailer will require.

They may also be metal traders and be a useful outlet for scrap metal acquired by the retailer.

Retailers

Retailer's basic function are to display and sell jewellery and undertake minor repairs. They will retail no only precious and artificial jewellery (costume jewellery) but also a range of other goods such as watches, clocks, cutlery, plated ware, luxury china and glassware.

The retailer may also undertake

• valuation of jewellery for probate and insurance purposes
• purchase/sale of second-hand watches and jewellery
• purchase/sale of scrap silver and gold.

3 The raw materials

Metals

Gold

Gold has always been and continues to be the most precious of metals. It is amongst the most malleable of metals and, together with its weight, richness of colour and relative indestructibility, it has justifiably earned the title of being the noblest of all metals.

Gold does not tarnish or rust and the only liquid capable of dissolving gold is aqua regia - (royal water) - a mixture of hydrochloric and nitric acids.

Gold has been mined in most countries at one time or another, including North Wales, but today the main sources of gold production are South Africa, USSR, Canada, USA and Australia.

The gold refiner is responsible for producing the metals of correct grade, malleability and colour for use by the jeweller craftsman.

In order to achieve the desired results, the refiner will use a range of metals for alloying with gold, of which copper and silver are most common, followed by nickel, zinc, cadmium, iron, aluminium and palladium. The various alloy metals are used to achieve the varying degrees of malleability and colour.

The refiner must ensure that the alloyed metals conform with the assay office requirements for carat gold, of which there are four legal standards.

• 22 carat - 22 parts gold to 2 parts alloy (91.67 per cent pure)
• 18 carat - 18 parts gold to 6 parts alloy (75 per cent pure)
• 14 carat - 14 parts gold to 10 parts alloy (58.3 per cent pure)
• 9 carat - 9 parts gold to 13 parts alloy (37.5 per cent pure)

Within the constraints of the alloy standards the refiner will alloy gold to achieve the various colours as follows

• red and yellow gold - by alloying varying proportions of silver and copper
• white gold - by alloying with either silver or palladium
• blue gold - by alloying with iron
• purple gold - by alloying with aluminium
• lilac gold - by alloying with zinc
• green gold - by alloying with silver and cadmium.

After the gold is alloyed to produce the various carat grades, colour and malleability, the refiner then processes the gold to produce the material needed by the jeweller. The gold is turned into

• sheets of various gauges
• plain of fancy wires
• tubes, solders
• finding (snaps and catches, settings, earrings and so on, ready to take the jewels).

Rolled gold, used for watch straps, bracelets, and so on, is made by rolling together, under heat, a bare of base metal with a bar of gold, on one or both sides. Under the process, no matter how thin a sheet is produced, the proportion of base metal to precious metal, measured in thickness remains the same.

Gold plated goods have a surface of gold deposited either chemically or electrolytically. There are no standards for plating quality and there can be wide variations in the thickness of gold plating, which may not always be reflected in the value.

Silver

Silver in its pure form is a soft metal and is normally alloyed with copper, although sometimes other base metals may be used. The normal standards for alloy silver are

• Sterling or standard silver 92.5 per cent pure
• Brittania silver 95.84 per cent pure
• 800 silver 80 per cent pure.

Brittania silver is rarely used nowadays and 800 silver can only be used in the UK, for goods not described as silver.

Rolled silver and silver plate are produced in a similar manner to gold products. Plated silver produced electrolytically is called EPNS (electro-plated nickel silver).

Platinum

Platinum is a difficult metal to refine and is also a very heavy metal. It is, however, as malleable and ductile as gold, does not oxidise and makes an ideal mount for jewellery.

Platinum is normally alloyed with palladium, iridium or copper to improve its working qualities. It has become a more popular metal as a result of trade promotion and also its comparatively small increase in cost compared with the present cost of eighteen carat gold.

Gemstones

Gemstones are an integral part of most jewellery designs, the most widely used being diamonds, emeralds, rubies and sapphires.

Escalating prices of these jewels over the last decade has led to more use of semi-precious stones and more economical use of the precious stones. Additionally, very small and previously unusable material is now reduced to powder and pressed into disc shaped blocks, for example, lapis lazuli, turquoise.

Some of the stones can be altered, for example, heat treatment can change the colour of a gem stone.

Some stones can be artificially manufactured and are then termed "synthetic". In this state they are usually cheaper than natural stones.

Diamonds

Diamond formed from crystallised carbon is the hardest of all natural substances and its optical qualities are enhanced when it is faceted and polished, making it a highly prized article of adornment. It's hardness also makes it valuable to industry, as a cutting and grinding medium. It is true to say that at least four times as many carat weight of diamonds are used in industry than are used in the jewellery trade.

The diamond cutter is responsible for creating the jewel and the various cutting shapes used have been designed basically to exploit the highly refractive and reflective qualities of the diamond crystal. One of the most popular cuts is the brilliant cut and, here, the jewel is given 32 facets above the girdle and 25 below. These facets are so angled and light entering the top of the stone is refracted on to the pavilion facets at such an angle so as to reflect a high proportion of light back through the table. Light passing through the stone is also broken up into its constituent colours to give the inner `fire', a characteristic for which diamonds are famous.

Diamonds are sold by weight (1 metric carat = 0.2 grams).

Generally, the value of a diamond increases with size, but value is not necessarily related to size. It can be affected by other factors such as clarity, colour and cut. At the top end of the range (about one metric carat), the rise in value is substantially greater than for a small increase in size. Some natural stones such as zircon, rock crystal and clear topaz were at one time used as effective diamond simulants.

Nowadays synthetics simulants are almost exclusively used. The most common synthetic material used being cubic zirconia (CZ). Whilst they could deceive the layman, to the expert the differences are fundamental, one of the prime differences being that diamonds are the only stones that are singly refractive. That is to say, a ray of light entering the stone is refracted or deflected but remains intact and not split in two (double refraction). Apart from this fundamental difference, the simulants, of course, lack the characteristic hardness of diamonds and can be crushed easily.

Over 80% of the world's rough (uncut) diamonds and industrial diamonds are marketed by the Central Selling Organisations, (CSO) Hatton Garden, a subsidiary of the De Beers group.

The diamond brokers are only concerned with rough diamonds.

Stones are sold at regular "sightings" each year, to buyers who are known as "sight holders". Sight holders are usually persons of suitable standing and integrity who will not deal with rough stones but will cut and polish them on a proper basis before selling them. Once they have been acquired and processed by the sight holder, the cut gems will be divided in parcels and be bought and sold by diamond dealers.

Rubies and sapphires

Ruby and sapphire are both corundum gemstones and formed by crystallised aluminium oxide. The difference in their colouration is caused by trace elements of other metals oxides within the stone.

The red ruby is created by the presence of chromic oxides and the amount of this trace element creates either the rich crimson or pale red colour.

The presence of titanium and iron creates the blue in sapphires, again the shade of blue varying according of these trace elements present within the stone. The most valuable sapphires are the cornflower blue and french blue.

In addition to synthetically manufactured stones, there are other natural stones which may also be used as ruby and sapphire simulants. Red spinel and almandine garnet both closely resemble rubies. Blue spinels, blue tourmalines and deep blue aquamarine are all very alike in appearance to blue sapphire.

Emeralds and other beryls

Emeralds are beryls, which are silicate of aluminium and beryllium. They are rich velvety green stones, the colour being created by traces of chromic oxides within the stone, varying between a deep green to a pale watery green. It is extremely rare to find a flawless emerald and most contain many flaws.

Other beryls are aquamarine, a sea-blue or sea-green beryl, pink morganite and yellow, green and brown beryls. These beryls are set aside from emeralds as their colouration is not as a result of the presence of chromic oxides.

Other coloured stones

Apart from rubies, sapphires and emeralds, other coloured stones are confusingly referred to as semi-precious stones. In reality some of them can be of equal rarity and some, if flawless, may be worth many times more than other precious stones.

Topaz, garnet, opal, zircon and jade are among the common "semi-precious" stones and others include chrysoberyl, feldspar, lapis-lazuli, malachite and marcasite.

Quartz - gemstones

The most common of quartz-gemstones are rock-crystal or ice-crystal, not often cut as gemstones, but used more to fashion attractive beads. The Chinese are noted for rock crystal carving, making items such as decorative boxes, small dishes and figurines from the crystal.

Citrine crystal is favoured by jewellers. Natural citrine is, however, not very easily obtainable and most of the so call citrine quartz used by jewellers is in fact amethyst. This, although naturally purple in colour, can be changed to resemble citrine quartz by heat treatment.

Amethyst in its own right is also a fairly popular stone used by jewellers.

Quartz crystals do, of course, have a practical function, in that they are used as an accurate timing control mechanism in clocks.

Organic gems

Pearls

Natural pearls are found in oysters and other molluscs such as mussels and clams. they come in a variety of colours, shapes and sizes, depending on the region and type of mollusc.

Pearls can also be artificially induced to grow within an oyster. Cultured pearls, as they are know, are reproduced in most countries, although Japan is perhaps the biggest producer.

Amber

Amber is fossilized resin which was exuded by a species of pre-historic pine trees, which once covered most of northern Europe.

Coral

Coral grows on the sea-bed and is a calcium-carbonate secretion by the coral-polyps to form its dwelling. Coral grows off the coast of Italy, Japan and Australia and is pink or white in colour. Some black coral is also found off the coast of Hawaii.

The jeweller buys coral in slabs which is then cut down and shaped as required. Powdered coral is now pressed into reconstituted slabs and used in the same way as the natural cut slabs, although the new material cost is substantially lower.

Jet

Jet is a fossilized wood. It used to be found in abundance around Whitby in Yorkshire. It was a popular jewellery material during the victorian period and there is evidence of its use as jewellery since at least the bronze age.

(See Appendix 1 for illustration of source and route of raw materials).

4 The manufacturing process

Designing

Every piece of jewellery made begins as a design, either as a rough sketch or a detailed drawing for use by the craftsman. Good design is always important to produce good jewellery, but it is equally a crucial and significant factor when used as a basis for manufacturing mass produced jewellery. Any design mistakes or failure to produce a design which is good enough to market can prove to be a very costly exercise, both in terms of labour and tooling costs.

Most good designers are also craftsmen jewellers, for not only do they understand the materials and their limitations, they can also appreciate and understand the functional problems. For example, necklaces must fall right and be comfortable to wear. Earrings must not be too heavy. Brooches must not tear flesh, and rings must not snag on material and so on.

A good designer must also be keenly aware of fashion trends and be able to predict correctly what will be in vogue, say, eighteen to twenty months ahead (usually the time taken between design concept and production).

Methods

There are three basic methods of making jewellery, it is either hand made, manufactured by die stamping and jib assembly or made by casting, either whole or in components. Once a piece is made up, by whatever method, it is passed to a finisher for smoothing and polishing and then finally to the setter to complete the gem settings.

Depending on what is to be made, jewellers may use one or a combination of all three types of component manufacture, in order to achieve a desired quality within a price range at maximum efficiency.

Hand made jewellery

Skilled jewellers or mounters are responsible for making up the piece of jewellery from the raw materials. In order to become skilled craftsman they would have to undertake a five year apprenticeship.

The mounter will normally use ready formed metals, in the form of sheets, wires, tubes and findings (ready made joints, catches and settings.) Even solder needs to be in either gold, silver or platinum alloy and conform to assay requirements.

Jewellers will use the age old tools of the traditional smith, such as hammers, drills, punches, gravels and files and of course the essential heat source, nowadays a blow torch. With these, they will fashion and assemble the piece of jewellery, which will then be passed on to the finisher and setter in the normal way.

Machine production

The use of mass production toolroom techniques for the manufacture of jewellery, has now been adopted on a large scale and is replacing, more and more, the traditional role of the craftsman. New precision engineering techniques are now capable or producing high-quality jewellery, which can be hard to distinguish from traditionally hand made jewellery.

The basic method of mechanical production is for components to be cut and stamped with the use of individual dies. The dies need to be carefully manufactured for each component of each individual item of jewellery.

Once the individual components have been manufactured, their assembly is, once again, almost wholly done by mechanical methods. Components are fitted on jigs for the final assembly process which can be completed by semi-skilled operatives.

In order to be cost-effective, a large quantity of the same item needs to be manufactured.

Casting

The age old process of casting by means of the "lost-wax" process, has now seen a resurgence, as it lends itself easily to mass production, with the additional advantage of substantially lower capital costs.

The "lost wax" process is, briefly, a process of casting jewellery by using wax replicas of an original piece. The replicas are cast in a liquid ceramic mould which, when set, is heated, causing the wax to run out. The mould, which now contains the cavity images of the wax replicas is then filled centrifugally with liquid gold or other required metal. When the metal has set, the mould is broken to reveal the finished cast product.

Sometimes, it may be necessary to solder up from a number of components made by casting, for instance, if making a complicated design or intricate piece of jewellery.

Jewellers normally do not restrict themselves to one particular method of making jewellery and, more often than not, will use all three methods, depending on which method lends itself most efficiently and economically to the manufacture of the required product.

Processing losses

Losses in processing are expensive and a close check will be kept on metal used.

Typically, losses may be as follows

• Polishing three per cent
• Alloying four per cent
• Casting five per cent
• Sundry Losses two per cent

These losses are not, of course, absolute and may be minimised by the various processes used to recover, as near as possible, every minute particle of scrap.

A "skin" is normally hung below the work bench to catch fragments produced by hand processing and even the floor of the processing shop will be carefully swept and dust retained for re-processing.

Scrap and waste metals may then be sent to a refiner, quite often to the refiner from whom the metal was purchased. If the latter, the refiner will add the value of re-processed metal to the trader's metal bank or will issue a credit note.

Alternatively, the scrap may be refined and processed metal returned to the jeweller for re-use.

5 Hallmarking

In order to control a growing problem of fraudulent adulteration of gold and silver, which the Goldsmiths Guild was powerless to control successfully, Henry II introduced the assaying and hallmarking of gold and silver in 1236. The assay was commissioned to six goldsmiths chosen by the Mayor of the City of London and their duty was to examine every article made of gold and silver in 1236. The assay was commissioned to six goldsmiths chosen by the Mayor of the City of London and their duty was to examine every article made of gold and silver, to ensure it conformed with the required minimum alloy standards. A Leopard's head insignia was punched on every article so examined and conforming with the minimum standards. For silver, it was the sterling silver standard of 925 parts pure to 1000 and for gold, the minimum standard was 19.5 carats.

Further legislation and statues in the thirteenth century, provided for local mayors and governors of provincial towns to be responsible for their own assaying and by the fourteenth century, there were numerous assay offices throughout medieval England.

Makers had always been in the habit of marking their work with their own name or personal symbol or the name or coat of arms of the person by whom the work had been commissioned. In the seventeenth century legislation was enabled, requiring all articles to be marked with the maker's or sponsor's initials and the same practise is followed to the current day.

In addition to the maker's mark and the assay office mark, which differed from office to office, two other marks also began to be commonly used. The first was the practise of punching a letter of the alphabet to show the year of assay. The letters running in sequence to calendar years in much the same way as the car registration letter sequence. The practice began in 1478 and was adopted by all assay offices. However, there was no uniformity in the alpha - date systems adopted by the various offices and it is therefore necessary to know the system adopted by a particular office in order to correctly interpret the mark. This situation, in fact, continued until as late as 1975, when date markings were rationalised on a national basis. From 1975 beginning with `A', assay offices change the letter mark annually on 1 January.

The second mark is a fineness or standard mark. This first made its appearance in 1544 and is still used to day.

The diagram below shows the markings, in addition to the maker or sponsors mark, in present day usage, since rationalisation took place in 1975.

As can be seen in the illustration above, all imported ware is also subject to the same hallmarking requirements as British made articles. The quality marks placed on foreign wares consist of figures only, to denote the various standards of gold, silver and platinum.

False marking

Over the centuries the use of false markings has been a persistent problem.

Although at one time, as in the seventeenth century, such markings were used to evade duty on gold and silverware, nowadays they are mainly used to

• pass off lower quality merchandise as standard quality

or

• to create false attributions on fake imitations of antique ware or on genuine antique ware without markings, which would be worth much less without authentic assay markings/

Fake markings can be produced by

• using a set of fake punches
• copy casting of genuine markings or by a process known as electrotyping

or

• by transferring a genuine mark from a damaged piece or piece of lower value.

Unmarked wares

Since the introduction of the new hallmarking legislation in 1975, any article below the assay standards can still be retailed by a jeweller, as long as they are not described as being gold, silver or platinum or even described as being partly made of these metals.

Certain other wares and articles are also exempted from the hallmarking requirements (see Appendix 2)

International agreements

In 1972, the former EFTA (European Free Trade Association) countries signed an agreement to recognise a common assay marking system. Countries within the original agreement were UK, Switzerland, Austria, Finland and Sweden. These were subsequently joined by Ireland, Portugal and Norway.

Under the agreement, an article bearing certain specified marks (namely a maker's mark, fineness mark, common control mark and assay office mark of origin country) is accepted in any of the agreement countries without requiring further assay office examination.

Some countries, however, also have silver standards lower than sterling silver and any silverware marked with 830 or 800 fineness cannot be sold as silverware in the UK. Apart from the 1972 convention agreement, there are no other common agreements nor, so far, has any agreement been reached among the EEC countries for the use of a common marking system in 1992.

6 Profit margins

The following information is based on statistics currently available within the trade and from the Department of trade statistics. They represent only average levels of profitability and are meant as a guide only.

Manufacturing jewellers

It is generally accepted that profit margins for manufacturing jewellers are high, reflecting the costs of design and manufacture and normally are in the region of

Gross profit rate

• low quality jewellery 23 to 33 per cent
• medium quality jewellery 33 to 43 per cent
• high quality jewellery 43 per cent plus

(depending on exclusive art work and content).

Wholesalers

Wholesalers usually achieve lower profit margins then either the manufacturers or the retailer. They rely on the volume of trade, in order to maintain a viable business. They mainly buy in bulk at rates lower than can be obtained by the individual retailer, buying direct from the manufacturer, but these margins are often little more than the manufacturer's bulk discount.

The typical gross profit rate of a wholesaler will normally lie between ten and fifteen per cent.

Retailers

In common with most retailers, the precise rate of gross profit depends upon the product mix of goods retailed.

The retailer who sells mainly jewellery will have a better overall rate than the retailer who stocks a wider range of products.

By way of illustration, a typical sales analysis of a retailer selling a range of goods might be as follows

• rings 30 per cent of sales
• other jewellery 25 per cent of sales
• clocks and watches 23 per cent of sales
• silver and silver plate 3 per cent of sales
• crafts and valuations 10 per cent of sales
• repairs 9 per cent of sales

Rings and jewellery

Rings and jewellery will normally average a mark-up of 100 per cent, though trade advertisements show a range of mark-up from 50 to 200 per cent. These margins extend across the range from inexpensive costume jewellery to articles of high value.

Cutlery, clocks, watches, china and glassware

For cutlery, clocks, china and glassware there appears to be less variation in the range of mark-ups and average rates of around 75 per cent are common for these items.

Valuation

The fee charged for a valuation is usually a percentage of the goods value (lying between one and two per cent).

Sale of secondhand jewellery

Secondhand jewellery will commonly be marked up by 100 per cent.

Average gross profit rates

The retail inquiry (superseding the Census of Distribution) produced by the Department of Trade gave the following results of average gross profit for retail jewellers

• 1979 48.8 per cent
• 1980 45.9 per cent
• 1982 41.4 per cent
• 1984 39.4 per cent (last available year)

Jewellers may operate the VAT special scheme C which operates on the basis that all purchases are marked up by 75 per cent, providing a gross profit margin of 42 per cent.

7 Watches and clocks

Since the introduction of the first quartz electro mechanical watches and, then LED and LCD watches, starting in the early 1970's, the jewellers market share in watch retailing, then around 48 per cent, has gradually declined. In recent years, however, there has been a resurgence with the introduction of designer watches and more upmarket quartz and LCD wrist watches.

A lot of the traditional repair facilities has once again become a part of the retailers functions, with repair work to electronic watches being aided with introduction of innovative testing and timing equipment.

The sale and installation of batteries has also benefited the traditional retailer.

Despite the introduction of quartz electro-mechanical and solid state tuning mechanisms, clocks have generally maintained their traditional ornamentation value and jewellers have maintained their share of the clock market successfully over the last two decades.

8 Gold coins

From a point of view of jewellery, gold coins are used in charm bracelets, rings and cuff links, with the one-tenth and one-twentieth size coins being in most popular use. Recently there has been a renewed interest in gold coins for jewellery with the introduction of the gold American Eagle coin and the Brittania.

Gold coins normally carry a premium above metal value and this could be eight to ten per cent above the value of metal content.

Appendix 1

Appendix 2

Exemptions from hallmarking

This Appendix lists the articles exempted from compulsory hallmarking under Part II of Schedule 1 of the Hallmarking Act 1973, as amended by the Hallmarking (Small Silver Articles)(Exemption) Order 1975, and the Hallmarking (Exempted Articles)(Amendment) Order 1975.

The legislation introduced in 1973 and 1975 sought to standardise and make clear the status of articles which, although not being hallmarked, can nonetheless be sold legally, as long as they are not described as being made either wholly or in part from gold, silver or platinum.

Exempted articles

The following articles are exempt.

• An article which is intended for despatch to a destination outside the United Kingdom
• An article which is outside the United Kingdom, or which is in course of consignment from outside the United Kingdom to an assay office in the United Kingdom
• Any coin which is or, was formerly at any time, current coin of the United Kingdom or any other territory
• Any article which has been used, or is intended to be used, for medical, dental, veterinary, scientific or industrial purposes
• Any battered article fit only to be remanufactured
• Any article of gold or silver thread
• Any raw material (including any bar, plate, sheet, foil, rod, wire, strip or tube) or bullion
• Any article which is wholly or mainly of platinum, and which was manufactured before 1 January 1975.

Articles exempt if of minimum fineness

The following articles are exempt if of minimum fineness. Any article which

• is wholly or mainly of gold or of silver or of gold and silver assaying in all its gold parts not less than 375 parts per thousand and in all its silver parts not less than 800 parts per thousand

and

• was manufactured before the year 1900 and has not since the beginning of the year 1900 been the subject of any alteration which would be an improper alteration if the article had previously borne approved hallmarks
• is wholly of one or more precious metals of minimum fineness and which is so small or thin that it cannot be hallmarked
• is of minimum fineness and which is imported temporarily (whether as a trade sample, or as intended for exhibition or otherwise) and for the time being remains under the control of the Commissioners of Customs and Excise.

Any musical instrument, where the mouthpiece is described as being of minimum fineness.

Where any of the following articles contain material other than precious metals, these shall not fall within the category of articles exempt of minimum fineness unless they comply with Part III of Schedule 2 to this Act.

· Any article containing only one precious metal, being a metal of minimum fineness and of a weight less than that specified in the following table.

• Gold 1 gram
• Silver 7.78 grams
• Platinum 0.5 gram
• Any article of any precious metal of minimum fineness, and which either
• contains gold and platinum but not silver, and the weight of the gold parts of which exceeds 50 per cent of the total weight of the precious metals in the article, that total weight being less than one gram

or

• contain silver and either gold of platinum or both gold and platinum, and the weight of the silver parts of which exceeds 50 per cent of the total weight of the precious metals in the article, that total weight begin less than 7.78 grams.

Note

"Minimum fineness" means for gold the standard of 375 parts per thousand, for silver the standard of 800 parts per thousand and for platinum the standard of 950 parts per thousand. Normally these would, with the exception of "800" silver, require hallmarking, but for the fact that they are included in one of the existing or new exceptions relating to articles of minimum fineness.

Existing Exemption

Articles of gold or silver that were manufactured before 1 January 1975 are exempt, provided either that

• they were specifically exempt from hallmarking immediately before the passing of the 1975 Act

or

• they are jeweller's works, that is, the actual setting only in which stones or other jewels are set, and jointed sleeper earrings

or

• they are within the following description of gold and silver articles of minimum fineness

• Gold
  • rings, except wedding rings, pencil cases, lockets, watch chains and thimbles
  • articles consisting entirely of filigree work
  • articles so heavily engraved or set with stones that it is impossible to mark them without damage

• Silver
  • lockets, watch chains and stamped medals
  • mounts, the weight of which are less than 15.55 grams
  • articles consisting entirely of filigree work
  • silver articles the weight of which is less than 7.78 grams

Produced by the Inland Revenue

2001

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