Paul asked ... when colour fades in sunlight, where does it go?

I don't think it has gone anywhere, we just can't see it! Hope this explains it...

Colour is the byproduct of the spectrum of light, as it is reflected or absorbed, as received by the human eye and processed by the human brain. When light hits objects, some of the wavelengths are absorbed and some are reflected, depending on the materials in the object. The reflected wavelengths are what we perceive as the object's colour. Both dyes and pigments appear to be coloured because they absorb some wavelengths of light preferentially.

The sun shines light of various types of energies, including higher energy ultraviolet rays which are primarily responsible for causing the chemical bonds in some coloured molecules to break. This, in turn, alters the shape of these molecules, destroying the parts of the molecule that make it coloured. Some dyes or pigments are changed into another chemical when they absorb the light. If this new chemical cannot absorb any light it will be colorless and you will notice a faded effect.

For the 5th graders out there...

Sunlight looks white, but is made up of all the colours. We see this
when water drops in the air break sunlight into all the colours of a
rainbow.

When light shines on something coloured, like sunlight on a red jacket,
all colours except red are absorbed by the dye. The red coloured light
bounces off and reaches our eyes. We see red.

We know that light, except for the red, is absorbed because the jacket
gets warm. That is from other colours of light that the red jacket
absorbs.

As dyes get older, they lose their strength and they cannot absorb other
colours of light. All the colours bounce off and reach our eyes. The
colour looks whiter. We say the jacket has faded.

This article is about The Declaration of Independence.

http://www.pbs.org/wgbh/nova/charters/fading.html