A code used to indicate the tolerance of a resistor.

20% - No colour (or absence of last band)
10% - Silver
5% - Gold
2% - Red
1% - Brown

Like one of my electronics teachers used to say, "10% here or there won't make a difference."

The makers of resistors are conning us all! It goes like this:

If you have a resistor with a stated tolerance of 10%, and a stated resistance of 100 Ohms, you might imagine that you've bought a part that will have an actual resistance somewhere between 90 and 110 Ohms.

However, the firm also makes resistors with a tolerance of 5%. These will be taken from the same batch as your 10% effort. So you can say with certainty that your resistor is either between 90 and 95 Ohms or 105 and 110 Ohms.

So if you have a part that isn't the highest spec available, you know that the one value it won't have is the stated one.

Actually, it isn't as bad as spiregrain suggests. 10% resistors are not easy to find nowadays, and they actually use a different process for 1% resistors. 5% resistors are usually pretty close, and you will occasionally find one that is as close as 1% in the 5% batch.

It has more to do with the economies of scale than 'the man' sticking it to you yet again. It's cheaper to make resistors using the 5% process, and they are in much higher demand than 1%. But the 1% process is getting sufficiently cheap that eventually the 5% will go the way of the 10%.

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