Inventories

Inventories at March 31, 2012 and December 31, 2011 were comprised of:



(in thousands)	March 31,			December 31,
	2012			2011
Finished products	$	19,841		$	20,280
In - process	8,660			8,354
Raw materials	18,458			17,304
Fine and fabricated precious metal in various stages of completion	13,550			8,658
	60,509			54,596
LIFO reserve	(5,631		)	(4,211		)
	$	54,878		$	50,385

In order to produce certain of its products, H&H purchases, maintains and utilizes precious metal inventory. H&H records its precious metal inventory at last-in, first-out (“LIFO”) cost, subject to lower of cost or market with any adjustments recorded through cost of goods sold. The market value of the precious metal inventory exceeded LIFO cost by $5.6 million as of March 31, 2012 and $4.2 million as of December 31, 2011.

Certain customers and suppliers of H&H choose to do business on a “toll” basis, and furnish precious metal to H&H for return in fabricated form (“customer metal”) or for purchase from or return to the supplier. When the customer metal is returned in fabricated form, the customer is charged a fabrication charge. The value of this customer metal is not included in the Company’s balance sheet. To the extent H&H is able to utilize customer precious metal in its production processes, such customer metal replaces the need for H&H to purchase its own inventory. As of March 31, 2012, H&H’s customer metal consisted of 226,363 ounces of silver, 543 ounces of gold, and 1,396 ounces of palladium.



Supplemental inventory information:	March 31,		December 31,
	2012		2011
	(in thousands, except per ounce)
Precious metals stated at LIFO cost	$	7,919	$	4,447
Market value per ounce:
Silver	$	32.50	$	27.95
Gold	$	1,670.35	$	1,565.80
Palladium	$	653.10	$	655.40