The purity of a precious metal is expressed in terms of its fineness, which is measured in parts per thousand. Since most jewelry is made from a mixture of precious and base metals, it is important that the metal’s fineness is accurately marked for quality control purposes.
Since ancient times, both merchants and kings have endeavored to guarantee the fineness of precious metal objects, coins, and jewelry. Over 5,000 years ago in ancient Egypt, the Pharaoh Menes certified the purity of small gold ingots by stamping them with his seal.
Precious metals were stamped with official marks in the Roman Empire, and by the 14th century, this practice had spread throughout Europe. England has one of the longest continuous traditions for assaying precious metals and marking them as a guarantee of their purity—a process called hallmarking . King Edward I enacted England’s first hallmarking law in 1300.
In most countries today, governments have passed laws regulating the manufacture and sale of precious metal objects. Most of these laws and regulations have developed independently over the course of several hundreds of years. Each country has its own traditions, which is often reflected in their statutes and regulations for precious metal jewelry. Local systems, which were developed to promote fair trade and protect the consumer in individual countries, can potentially inhibit the global trade of precious metal products. An international, universal hallmarking system has yet to be developed.
Standards of Fineness
The standards of fineness are not uniform. In 1999, at least fourteen different levels of gold fineness were recognized by fifteen countries in the European Community.
Although some countries are now attempting to coordinate their standards, greater strides must be taken to facilitate free trade, to promote fair market practices, and to eliminate confusion for consumers.
Negative tolerance refers to the permissible difference in the fineness marked on an object and the actual fineness of the object. For example, the U.S. allows a difference of three parts per thousand for unsoldered gold items and seven parts per thousand for soldered items. This means that a soldered 18K (750) gold ring can have fineness as low as 743 and still be marked 18K.
Some countries do not permit negative tolerances (e.g., Denmark, Finland, Hungary, Italy, Switzerland, Turkey, and the U.K.) while others do (e.g., Germany, U.S.). Some countries permit negative tolerances for specific items such as filigree, findings, and solder.
It is difficult to verify the fineness of an item via visual inspection so purity must be assessed through a variety of assays or tests. However, different countries employ different testing protocols, which have different levels of accuracy. The statistical sampling techniques of many countries also differ, which means that they do not have the same means for selecting items for testing.
Many countries developed marking systems independently, and do not recognize or accept the marks of another country. The plethora of marks can be overwhelming to the consumer because of their variety and because they have changed over time. Some countries do not include a marker’s or identity mark, which means that it will be difficult to trace an item to its manufacturer. As pictured, the British standard mark for sterling silver (92.5 percent silver) is a lion passant, or a lion with a raised forepaw.
Hallmarking versus Quality Marking
There is a distinction between “quality marks” and “hallmarks;” they imply different levels of guarantee for consumers. Hallmarks are applied by an independent, 3rd party (typically an assay office) after an item has been tested and its fineness determined. Assay Offices usually guarantee their hallmarks, so consumers with complaints have legal redress in cases where problems arise.
Quality marks, on the other hand, are applied by the manufacturers or importers themselves. In many cases, a manufacturer’s mark, also called a responsibility mark or an identity mark, is required to accompany the quality mark. This way, if there is any question of fraud, an item can be traced to its manufacturer.
Some countries require the compulsory hallmarking of all precious metal items by an independent body, while others have voluntary hallmarking systems, and still others require marking by the manufacturer only.
The practice of hallmarking is a well-established tradition in the U.K. Examples of other countries with compulsory independent (or government) hallmarking systems include: Austria, Bahrain, Cyprus, Czech Republic, Dubai, Egypt, Finland, France, Ireland, Malaysia, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and Uzbekistan.
In the large jewelry centers of Germany, the U.S., and Italy, the marking of jewelry is the responsibility of the manufacturer or importer. Marking usually consists of a fineness or quality mark and, in many cases, includes a manufacturer’s identification or responsibility mark. This kind of regulation eliminates the requirement for all precious metal objects to be assayed and hallmarked by an independent third party. There is general agreement that it is easy and convenient for the manufacturer to mark objects during production. Although countries with this type of marking system have government agencies responsible for oversight of the jewelry manufacture and marketing sectors, to detractors, this oversight is insufficient to eliminate the potential for fraud.
In the U.S., for example, the Federal Trade Commission (FTC) is responsible for interpreting and administering federal laws (e.g., the National Stamping Act) governing the precious metals industry. The FTC periodically issues guidelines for industry practices. These guidelines serve to protect the consumer and establish a uniform set of practices for the manufacture and marketing of precious metal jewelry and decorative objects. In the U.S., karat gold objects are usually marked with a fineness stamp although FTC regulations don’t require it. The FTC does require that manufacturers who opt to use a karat stamp also include their trademark stamp on the gold item. The FTC requires trademarks on silver and platinum items. All trademarks are registered with the U.S. Patent and Trademarks Office so that their point of origin can be traced if charges of underkarating arise.
Examples of countries with a voluntary hallmarking system include Denmark, India, and Singapore. Under this type of system, hallmarking is not obligatory, but optional. Manufacturers sometimes desire these optional endorsements because they promote trade with other countries and give the consumer an additional guarantee of product quality. As pictured, a Britannia silver mark indicates that an object is made of 95.8 percent silver.
International Organizations and Conventions
Despite the fact that many countries have different standards and regulations, there is increasing international cooperation with regard to precious metal jewelry. The process of harmonizing standards, testing protocols, and types of marks has been guided and promoted by a number of international organizations and conventions. A few of the best known are listed here, but additional information about precious metal trade groups and associations is provided elsewhere.
The International Organization of Standardization (ISO) and the European Committee for Standardization (CEN) have enabled multinational agreements on a wide range of matters including standards of fineness and methods of assay.
The ISO is the world’s leading developer of international standards for the purpose of increasing the size of markets for a variety of products and services. It is a non-governmental organization, which is a federation of technical bodies from 157 countries around the world. ISO standards are voluntary, and ISO has no legal authority to enforce their implementation.
CEN was founded in 1961 and is now contributing to the objectives of the European Union and the European Economic Area with voluntary technical standards that promote free trade and consumer safety among other objectives.
The Convention on the Control and Marking of Articles of Precious Metals (also called the Vienna Convention or Hallmarking Convention) is an international treaty between member States regulating trade in precious metal articles. It was signed in Vienna in 1972 and went into effect in 1975. The Convention provides a common set of technical requirements for the independent third party verification (hallmarking) and promotes its own mark, the Common Control Mark (CCM), to indicate fineness. Member countries agree to allow goods with this mark to be imported without further testing and marking.
The CCM is the first and only international hallmark and it has the same legal status as a national hallmark. The CCM is applied by national Assay Offices designated under the terms of the convention. Marking with the CCM is voluntary, but articles bearing the CCM – together with the national Assay Office mark, the responsibility mark (i.e., the manufacturer or sponsor’s mark) and the fineness mark indicating its purity – do not have to be re-hallmarked in the Contracting States. Although many countries follow the work of the Convention, 17 countries are now parties to the treaty and an estimated 25 million precious metal objects are marked with Convention marks each year.
Now that we have established an overview of the progress towards standards and regulations, we will next explore specific Gold Standards and Regulations | Gold Manufacture and Sale.