Its definitely the lacquer flaking off and the silver underneath tarnishing. I shoot the stuffing out of my 3rd gen Navy and had the same issue. Once I stripped the parts and dunked the TG and BS in lacquer thinner, then polished away the tarnish with super duper fine steel wool, then resprayed with clear lacquer. The thing looked brand new again. However, with continual use it started flaking the lacquer off again and I just decided to let the thing age naturally from use. I'm certainly NOT recommending this to anyone, just giving you my 2 cents on what I had on my sig series gun. And as for the case colors, I am almost 100% certain on the sig series (as well as the 2nd gens) the colors are done the old way, with heating in carbon/charcoal compounds and not by cyanide process. This is one place where the 2nd and 3rd gen colts differ from other repros.