I was in Del Whitman's shop last week and he was working on engraving the initials on oval gold piece he had inlet into the stock he was building for a high end English gun. Del inlet and polished the metal BEFORE the engraving, which he was doing himself. I assume this order is established to make sure the fit and finish is perfect and that it is easier to do so by sanding/grinding the metal in the inletting process rather than totally finishing the metal and then trying to inlet it to perfect depth and dimensions.
My understanding is that "German Silver" is an alloy that mimics the color of silver but does not tarnish (as silver will). I would go with sterling silver and rely on lacquer to avoid tarnish. Or go with "white gold".