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Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

While the allure of a timepiece produced with a precious metal case is very real, most consumers agree that using gold or platinum as a material in a wrist watch is just a means of jacking up prices and creating a loss in value. Let’s talk about why, and some important findings from the FH that should help you understand current market trends and consumer behavior.

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

Swiss wristwatch sales by material, August 2016 compared with August 2015. Source: FH

A recent report released by the Federation of the Swiss Watch Industry (FH) reveals that exports for precious metal-cased watches plummeted during August 2016. It is true that the entire industry is seeing export declines but, interestingly enough, there are some areas of growth or less dramatic declines. The take away message for the people making product decisions in Switzerland is that consumers are fed up with bloated pricing, low value propositions, and products that depreciate faster than an aftermarket-customized G-Wagon. In other words, steel, titanium, and other high-quality, lower-priced timepieces are the rule right now.

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

FH, as the federation overseeing the watch industry, is understandably bullish about these mostly pessimistic findings that you can view here in the “Swiss Watchmaking in August 2016” report. I won’t talk about all the statistics, so I encourage those interested in the numbers of the watch industry to check it out. What I want to focus on is value, and the statement of “the fall in value was explained almost entirely by watches made of precious metals,” as found in the report. The overall industry (Swiss watches sent out of Switzerland) was down 8.8% in August 2016, compared with August 2015.

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

Wristwatch sales by price segments, comparing August 2016 with August 2015. Source: FH

Precious metal watches which are gold and, to an extent, platinum and some other metals, were overall down over 25%, in a market that isn’t exactly growing to begin with. Moreover, the FH reports that the major declines were in watches costing over 3,000 Swiss francs. Actually, Swiss watches priced from 200 – 3,000 Swiss francs have seen some growth, depending on price point, with a high of 11.7% increase in sales of watches with prices at around 500 Swiss francs. The numbers are pretty clear on a few things. First, smartwatches are not right now destroying the entry-level luxury watch market (as I predicted), and that consumers still want watches but don’t want to spend a lot on them.

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

This actually runs contrary to the logic the luxury Swiss watch industry has been applying for years, that the high-end of the market is the most stable because rich people more or less stay rich. Many brands applied the notion that the ultra-rich are less price-sensitive as well as less sensitive to market fluctuations. What they did as a result of this logic was to more or less abandon lower-priced (under $10,000) luxury watches and shoot for the sky with extremely expensive timepieces, aimed at what they hoped was a class of wealthy consumers that would be less likely to restrict purchases during a market downturn. In my opinion, this flawed logic backfired, as it is a strategy only sustainable by a select assortment of very well-positioned high-end brands who invest both in product and marketing equally.

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

With that said, the appeal of a gold watch as a luxury status symbol hasn’t gone away. The visceral feeling of wearing a gold timepiece is no less real, and the ability to feel “one’s worth” by wearing a precious metal-cased timepiece as opposed to one produced in a more common metal continues to appeal to luxury consumers. So why, then, are gold watch sales so incredibly down?

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

Demand For Gold & Platinum Swiss Watches Plummets, Consumers Predictably Focus On Value And Here Is Why Watch Industry News

One reason is likely do to with over-saturation of inventory in the market. In other words, the watch industry has produced so many gold watches over the last few years that it can’t sell them. That means the demand for new ones to be produced and exported from Switzerland to other countries is going to be predictably less. Hong Kong, a traditional place to buy a gold watch, has reduced Swiss watch imports by almost 30%. Thus, with so many unsold or available pre-owned gold watches on the market, it is predictable that consumer demand for them is going to be lessened.



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  • TechUser2011

    In the “Wristwatches by price categories” barchart, the segment of “3000 and +” Swiss francs is just too broad. I would guess that if you made it more fine-grained, then the 5000-10000 CHF segment would have a reasonably positive year-over-year growth; that segment, after all, is where most Rolex / Omega / etc. watches are priced.

    • Marcos Caetano

      further i would like to see a brand by brand breakdown, as brands like tag have been growing with their new range of caliber 1 and connected watches.

      • PleaseSpellRoman4AsIV

        That would be lovely, but it will never happen. It’ simply not how the Swiss watch industry works.

    • ??????

      Agree, 3 – 10k market looks actually vivid: take Rolex, Omega, Panerai, Breitling, Grand Seiko and some more brands being most discussed, generating heaviest forum’s content – hard to believe it is going down. 10k – 100k segment is other story.

  • IanE

    An interesting set of data would be for Lange & Sohne. I think they only make watches in precious metals (except perhaps a few specials), so their fortunes would be of particular relevance here. I’d be very sorry if they suffer too badly, but, what one sows, one reaps!

    • PleaseSpellRoman4AsIV

      I personally wouldn’t mind if they introduced some of their watches in steel. 😉

      • IanE

        Yes, that would be an interesting move – something that the even newer company, Moritz Grossmann, has been doing (whilst also hiking their prices substantially – which looks a bit desperate and probably the wrong approach for a struggling (?) company).

        • PleaseSpellRoman4AsIV

          Well, it’s really up to the CEOs and boards of each companies to decide on the strategy they want to go for. ALS may decide not to go for steel watches, because they may feel that it would cause a deflation on their average watch prices and may hurt them in the longer term when the sales of precious watches go up again. But it’s really a bit of crystal ball glazing and trying to predict how customer tasted and spending habits will change in the next 3-5-10 years.

          • IanE

            Quite agree – que sera …

    • Marcos Caetano

      it would be hard to tell from this data, as they are a german manufacture and are not part of the swiss watch manufacture guild.

      • IanE

        True, but presumably they are having the same tough time.

        • proudAmerican702

          I’d love to have a Lange someday….but I know that it’ll be a Glashutte Original instead.

  • PleaseSpellRoman4AsIV

    I would also add the slowly changing and evolving consumer tastes. At least in Europe with the new millennial generation entering the watch market the demand for showing off with blingy yellow gold watches is slowly fading away.

  • laup nomis

    Its obvious but I’m gonna say it. Two grands worth of precious metals (tops) and the watch jumps $30,000++. Its insane, they’ve price inflated so much they’ve got no where to go. And the value from the extra cost of machining isn’t that large either.

    What’s the diamond encrusted Breguet? Is it a one hander,?

    • On the Breguet double tourbillon, the entire dial spins. Note that one end of a tourbillon bridge is actually the hour hand pointer. Impressive watch. I took wrist photos that particular watch along with the non-diamond versions at BaselWorld 2016. It’s a big boy though. But then it’s a showcase/statement piece, not a subtle watch to slip under a shirt cuff, ha ha. Oh yeah, it’s over $800K USD.

      Quick gold calculation:
      Typical steel sports watch with a steel bracelet: 200 grams
      Density of stainless steel: 7.60 grams/cc
      Density of gold: 19.32 grams/cc
      Same watch in gold would weigh: 508 grams
      Current gold price: $43/gram
      Gold watch and bracelet’s gold value (24K): $21,844 USD
      Gold watch and bracelet gold value (18K): $16,383 USD

      Gold, like all parts of a watch is subject to mark up. A steel part might be marked up 4 times by the time it gets to retail. If that happened to our theoretical watch, its price increase would be over $65K. I can’t say anyone should be happy with paying twice what gold is worth, but the mark up may actually be less than other parts in the watch.

      So I agree with Ariel’s contention that if they want to sell more precious metal watches, they have to abandon the usual material/parts mark-up model and keep the price of the case and bracelet more in line with market value of the metal.

      Another note – I hear that gold watches are easier to get a discount on. This directly impacts the resale price. So when a watch retailer is less concerned with mark-up as a percentage and instead sees a watch sale which still nets them a 5 figure profit (heck, at the end of the day, its still one watch sold), they are more willing to deal down from list price.

      Since that is wide spread, the value out the door on a new gold watch is less than list. And that is what seems to be reflected in the secondary market. With the current overstock/dumping situation only making deals better on paper. But longer term value is unknown, so buyers have a right to be cautious right now.

      • DR

        Two quick points:

        It is not just that the gold itself is more expensive than steel, but the manufacturing process is rather more time-consuming. When milling something out of steel, you can discard the waste as it is not very valuable. With gold, manufacturers tend to collect the “floor sweepings”, which makes the whole process more time-consuming, and therefore expensive.

        Yes, in my experience, discounts are widely available on gold watches. My favourite ADs will never discount a steel Rolex (used to be only “sports” models, but now includes Datejusts and OPs), but there is always negotiation on gold and platinum (less so on two-tone models). Frankly, I’m astonished how many gold GMTs and Daytonas gather dust in windows and display cabinets, given the demand for the steel models.

        • Kuroji

          Collecting material from the lubricant filters is not difficult. You could forge or cast the gold parts to minimize machining time/waste.

      • You make some very good points Mark. While your calculations are valid, I would argue that the wholesale manufacturing price to acquire 18K gold is substantially less than what the spot market price for the material as an “investment” would lead us to believe. To wit, the last time I took an 18K gold ladies watch I could never sell to a “we pay the highest prices for your scrap gold” dealer, the melt price offered was (at best) half of the spot market value.

        It should also be pointed out that the typical Swiss retail price multiple is a “bit” more than four times the cost to get the watch into a box and out the door. So if you do factor in whatever the wholesale purchase price for the manufacturer is for the precious metal components, the price is going to jump up substantially from a steel watch.

        But he more interesting side of this discussion is the growth of the aftermarket and the huge volume of comparative price data that is available to the consumer. If you are part of the small percentage of people that can actually afford a $40K and up watch, the chances are pretty good that you have looked at the aftermarket prices for any watch you are contemplating buying. Armed with this knowledge, it is highly unlikely that you will pay $40K for a watch that you already know has a resale value of $16K (at best).

      • MEddie90

        Using the Rolex GMT master II as used in the article the price boost to gold ($38,250) from steel ($9,895) is $28,355.

        A steel one weights about 153 grams, assume 85% of the weight is the case and bracelet (take away movement, crystal, dial etc) that gives 129 grams
        The same case and bracelet in 18k gold would weigh 280grams (density of steel = 7.60 g/cc, density of 18k gold = 16.5g/cc) 210 grams of which is gold
        Using $43 per gram of gold that means the total cost of materials is $9030.

        Thats still a pretty high markup from steel (approx 3 times) (not considering the cost of the steel in the regular version), even when you factor in additional labor its pretty steep.

        I agree about the problem with overstock, most gold Rolex I see in the windows lay dormant for a long period while the steel versions fly of the shelves, its been a problem for a while which is why you can often get such insane discounts from dealers which in turn effects the secondary value.

        • Thanks – your number are no doubt more real world than mine.

        • egznyc

          Thanks for this analysis. But where are you getting the data to support the proposition that 85 of the weight is in the case and bracelet? I am pretty sure you’re right or even conservative, but I am not certain what the movement and crystal and dial etc. would come to as a percentage of the weight of the piece.

      • Raymond Wilkie

        What he said 🙂

  • MEddie90

    A well though out analysis. The fact is that gold and precious metals often feel a lot less important to many collectors than they once did, gold is not exactly in trend at the moment, people like the more sporty feel of a steel timepiece and the more affordable nature offers large appeal to younger consumers particularly.

    If you look at any watch article featuring a precious metal only watch there will inevitably be a chorus of people asking for an affordable version in steel and in all honesty I cannot blame them. Gold suffers from much larger post sale depreciation and in some cases such as the Rolex GMT mentioned is insanely more expensive in-spite of the fact that the increase in material value and machining costs is minuscule by comparison. I think the best thing the industry can do is stop the insane markups for gold watches and as a result they will be offered at more appealing prices and will depreciate less after sale.

  • AleksB

    Great article, I hope the CEO’s listen to this voice of reason. I have been thinking about buying something in the 5-7k range for a couple of years now and ended up with a Cartier Solo XL in steel/steel because a shop gave me 20% discount. That made this a good value proposition and I bought it. I was thinking about a basic Rolex, Bulgari Octo Solotempo and maybe even a Reverso but I just can’t bring myself to fork out that sort of money for these. Yes, it is a great brand but it is a basic watch, so why should I be paying so much? I can afford it but it just doesn’t make sense value wise. In the end the situation is this: if the prices were 30-40% less, I would probably be buying one such watch a year. Now, I am not buying anything. And by the way, I never liked gold as watch material, nor platinum, I think most models look their best in steel anyway. So, there you go: there is a lot of potential in the market for a lot of good profit but not for greedy producers chasing the elusive zillionaires who are not there anymore anyway. So, the industry should really get real, otherwise the one-way ticket to insignificance is assured… (By the way, I dearly, dearly hope they get it! Watches ARE great stuff…)

    • Kuroji

      Still waiting for a good explanation of why anyone should pay $20k for a SS Nautilus.

  • Bozzor

    I have noted that a lot of dealers are willing to talk hard and big discounts on precious metal watches, so indeed there does seem to be an inventory buildup (and I can personally state that am seeing a lot of execs and high end field workers in the oil and gas sector getting rid of their precious metal watches – much as you’d expected these days, given the state of the sector). One thing to note is that to “increase production efficiency” should never mean lower quality: it does mean carefully examining your supply chain and manufacturing and eliminating any wastage of time, material, money etc…but not making a product with looser tolerances, finish etc. It’s just trying to remove unnecessary costs.

  • SwissMatic

    “Here is an example. A stainless steel Rolex GMT Master II with a two-tone ceramic bezel (the reference 116710BLNR) has a retail price of $9,895. In solid 18k white gold, also with a two-tone ceramic bezel, the price of that watch (the reference 116719BLRO) is $38,250.”


    There’s probably a grand’s worth of metal in the white gold version. Even if I could afford the precious metal version I wouldn’t buy one as it would make me feel like a sucker.

    • Considering the white gold GMT weighs about 220 grams, I think there’s a little more than a $1000 worth of gold in the case and bracelet. But not $38K worth.

  • wallydog2

    The watch industry is going to have to wait for the current generation of high-end watch buyers to die off and make way for the next wave of conspicuous-consumption consumers with money and their peculiar motivations. I daresay, the current population of watch big-spenders has probably reached its saturation point. In the meantime, a watch is a tool first, status symbol bling far down the list.
    I wonder if the watch industry is its own worst enemy, flooding the market with products that are over-refined, over-engineered, over-glittered and over-priced. [I might “sell the ranch” and buy a gold Rolex; or I might buy a steel Rolex and keep the ranch. ]

    • Boogur T. Wang

      Or you might “sell the ranch”, invest the money wisely, make a substantial return, buy a new “ranch” and a nice watch.
      It just depends on timing and temperament. As does most things.
      I do agree with your view on market saturation. I think that point was reached approximately 1.5 or so yrs. ago and thus the surplus selling has begun.

  • JCRV

    Apart from the price increase, I actually prefer steel over gold.
    – I don’t like the yellow/rose color, probably from being to flashy for my taste. Although I must admit a person willing to spend $40.000+ on a watch is probably going to have a different personality.
    – Gold ways a lot more than steel and titanium. With a solid gold bracelet, you’re going to have a lot of weight on your wrist.
    – Gold is a soft metal. I expect a gold watch to be less scratch resistent than a steel one. Titanium was a disappointment in that regard.

    • Radoe

      I’m sorry, but someone spending 40K on a watch is going to have a different _personality_?
      You mean like that kind of personality that makes more money, and knows how to correctly spell “weighs”?
      Sheesh. Way to be judgemental.

      • JCRV

        Against my better judgement I’m going to reply…
        First, not everybody in this world is born with English as their first language and my spellchecker didn’t flag it.
        Second, I meant that I don’t feel comfortable drawing to much attention to myself. Someone making that kind of money is probably far more accustomed to that and okay with it.
        Maybe I was unclear in my statement, but I have the feeling I’m not the one being judgemental.

        • Radoe

          English isn’t my maternal language either, and yes, judging people by their spelling is judgemental. Just like judging them by their clothes, their cars, or their watches.

          However, your comment was about spending power, not metal colour, with the inference that the ability and the inclination to purchase a 40K watch goes to personality somehow.
          I took exception to that, especially since there’s no relationship between the metal colour and price – people walk around with gold-plated Casios all the damn time these days, and don’t forget that while gold and platinum are but subtly different in appearance to steel.

          I see your point, but I think you’ll agree it was not expressed terribly well.

          Also, my white gold Calatrava cost a lot less than 40K, and 99% of the people on the street don’t give it a second look 🙂

        • Raymond Wilkie

          I knew what you meant. Don’t feel like you have to justify anything you say and being pulled up for a spelling mistake is just plain petty.

          • Radoe

            Actually, if you read what I said carefully, you’ll see that I had far less of an issue with the mistake than with the implication that someone with 40K to spend on a watch must have a different sort of personality.

        • Shinytoys

          your original post was 100% spot on..and dialed in.

  • I wonder if the rising number of watches produced in the “other” category of materials has more to do with the waning of gold watch sales than anything. Watches are produced in a wide array of case materials – more so than they ever have been before. 10 years ago, your choices were steel, gold, or some combination of gold and steel. With popularity gaining in case materials like carbon fiber, ceramic, titanium, bronze, and even sapphire, luxury watch buyers have a greater range of choices than “gold” or “a slightly different type of gold”.

    Wearing a gold watch in the late 1980’s meant you were a mover and a shaker, as that was the epitome of conspicuous consumption; I remember being 13/14 years old and drooling over two-tone Datejusts (In fact, one of my very first watches was a Canal Street knockoff of one – I believe they call them “Kickstarter watches” now). Flash forward 30 years and I wouldn’t look twice at said Datejust – not because they’re not appealing in their own right, but because there are just so many diverse alternatives at that price point.

    • CryptoReporter

      What does wearing a gold watch mean in 2016?

      • Depends on the gold, I think. Rose gold Glashutte Senator 60’s with matching hands and a black alligator strap? Or Hublot Big Bang in solid 18k with a 3 pound-bracelet? The former says you’re a sartorial wizard. The latter, a poseur. I know it sounds stereotypical, but a person who knows and appreciates watches is very different than someone whose purchase decisions come down to price and level of ostentation.

    • TrevorXM

      I think the “other” category has a LOT to do with the reduction of gold watches. How many higher end watches do we see here on this blog that fit into the “other” rather than gold or platinum? From Richard Mille all the way down — they aren’t doing gold and platinum watches.

    • Kuroji

      Ah, the Texas Timex. Don’t see too much of that anymore.

  • SuperStrapper

    This is a predictable result for the current times I think, but I do find it most interesting that the ultra-cheap segment is seeing a decline while the next 2 steps beyond as seeing an increase. That truly does describe a greater interest in ‘value’ from the watch-buying public.

    With such a sharp decline in the want for precious metals, it would be interesting to see brands start doing more with steel other than milling and finishing. Rolex developed 904l what… a thousand years ago? And Sinn has their tegementing process and I’m sure there are some similar examples, but when is someone going to attempt a ‘new’ material by creating an interesting steel alloy, or alloy of another ‘pedestrian’ material. That would essentially create a new space in the value stain, where your watch is more special that just plain ole stainless steel, but without the need to increase rices by 100’s of percentage point due to precious metals.

    I know there has been a slight push toward experimenting with non-metal materials for watch cases, but they do little to add value because A) they usually look like shit (most forged carbon, NTPT, etc watches in the >$3,000 category ) and if not they are B) astronomical in price, taking them out of any value conversation and putting them into the exotics/novelty categories.

    • laup nomis

      Yup, I agree it would interesting to have different metals/aloys. But I suspect that its a whole bucket of difficulty creating a new steel alloy.
      Also as you say, novel case materials usually end up looking like a crock of sh*t.

      • Kuroji

        Watches are not a particularly demanding application from a metallurgical standpoint. Shit, if 18K gold is sufficient, pretty much any modern SS will be fantastic.

    • Adam Young

      As long as we don’t see what happens in the Knife industry where there’s hundreds of different grades of steel, and companies and forum dwellers argue over which is the “best”, and there’s limited editions of the exact same product, but in ZDP-189 rather than 13CMoV with a big price premium.

      • SuperStrapper

        I’m not a knife nerd, but I do have a lot of them due to my hobbies, and I can agree with you on how convoluted it can be. From what I can tell, many of the different steels out there are quite similar, but are named differently based on where they are produced. For instance, I have a basic carry folding blade that is made of aus-6 steel. I had no idea what that meant, but it is the Japanese manufacturer’s name for what is essentially 440a, and 400-series steels would be more familiar to me over here. mY custom chef’s knives are made of vg-10, an excellent steel with great bite, again a naming convention of the Japanese forge that produces it.

        That is really an aside from the intent of my original comment though. I was referring to true net-new alloys, not just different ratios in existing steel alloys.

        You make a valid point regardless.

        • Pat Mercer

          essentially the same as when a watch manufacturer tries to make an ETA movement their own by giving it a new name.

        • Kuroji

          VG10 is fantastic. I bet those were expensive.
          I think the problem with the new materials is that the market is pretty conservative. Chanel J-12 in titanium-ceramic has been around for a while, and nobody seems to care. It looks and wears a hell of a lot better than any of the carbon shit.

    • Kuroji

      That filthy value stain.

  • Stephen Cox

    So in other words rich people’s problems…

    • Jeffrey Chang

      IMHO – its really just this. Its the ultra rich no longer buying precious metal watches.

      Retail price to where they will buy it and ignore the secondary market that has nothing to do with your profit margins.

      Value propositions are for those of us who are more $ conscious and retailers are already giving use headaches with steel offerings near $10,000 which is way above the watches over $3,000 that the article references.

  • Mark

    I have to wonder, though, if this isn’t just an obvious market correction.

    It has been discussed multiple times on multiple forums that watch prices have been on a major upswing.

    How much would you have spent ten years ago for that stainless steel Rolex GMT Master II with a two-tone bezel that currently retails for $9,895? Half as much? Sure there have been improvements, but I assure you the current model is not “twice as good” as that one.
    Prices got ahead of the market and now they are high enough that people are not willing to pay. Ariel is correct that the only place to go from here is to lower prices back to where the buyers are getting their “money’s worth”. My fear is that, as large corporations, many might not be able or willing to go as low as they probably should.

  • Raymond Wilkie

    Power to the people. We have spoken !

    • laup nomis

      Yay! The big corporations have been beaten, the 0.001% and the big banks are working for the people in a warm and glowing feeling of comradeship and humanity. Errrr…..wait, hold on…

    • laup nomis

      Yes. But the essential question is what will happen to the prices.
      They won’t lower model prices. So will they bring out new models and ranges that offer much better value.
      Then its truely power to the people.

      • Raymond Wilkie

        Unfortunately one one listens to us small people.

  • DebugOutput

    As someone who is relatively new to horology and watch collecting (my interest started in earnest 2-3yrs ago) I have to say that I am very focussed on the value proposition. I want to know how the movement, quality, craftsmanship and materials compare to other watches – and I undertake quite a bit of research to understand it. Now, it isn’t entirely objective, clearly the aesthetics of the watch are important too, but overall it is this type of approach that pushes me towards brands like Nomos, Sinn, Tudor, Damasko, Seiko etc. rather than Rolex or Omega. My last two watch purchases were a Marathon GSAR and a Seiko SARB033 which says it all really.

  • Matt Smith-Johnson

    Make way for the rise of the microbrands!

    • Chaz

      Yeah, nothing like shitty little crowd funded, unoriginally designed, INSPIRED by xxx, CHEAP pieces of crap with no after sales support.

      • Matt Smith-Johnson

        Nothing like an angry commenter taking a shit on people trying to follow their dreams. Enjoy being pissed.

        • Pat Mercer

          yeah but he’s still right.

        • Kuroji

          He’s a rageaholic. He just can’t live without rageahol.

        • Chaz

          I do enjoy being pissed once in a while, with the preferred method a tasty IPA from Oregon. If that isn’t available, I do like me some solid Deutsche hefe weizen.


      • Boogur T. Wang

        Now be fair, your example only applies to about 90-95% of the “micro-brand” offerings.
        There is a solid 5-10(?) % that actually offer good value, design, technology and manufacture.

  • TrevorXM

    So — the Swiss mechanical watch industry is down on sales over the past few years and you think that it’s because of “smart” “watches”? Don’t the growing mechanical watch industries of Germany and England exist in your world?

    • TrevorXM

      And Valannin below puts his finger on the real, obvious reason gold and platinum watch sales are down.

  • David Williams

    The photos accompanying Ariel’s thought-provoking article suggest that maybe there are two factors at play here.

    Firstly, high-end watches in precious materials from the likes of Tiffany, Van Cleef and Arpels, Graff, Bvlgari and the upper echelons of Cartier gain value from their artistic and aesthetic appeal. They are items of fine jewelry that happen to tell the time and may be judged by the same considerations – of value and desirability – that apply to other luxury jewelry.

    Secondly, I can’t help thinking that replicating utilitarian steel watches in gold or platinum seems problematic if there is no added value in the form of some appealing tweaks to the design and appropriately elevated workmanship. The markups are clearly out of step with the actual value of the metal, so maybe a plain treatment is no longer enough. Maybe the intellectual enjoyment could be ramped up by introducing decorative or heritage-related elements, whereby the customer would be buying a watch and a story. As I’ve heard said in the watch-buying hot-spot of Hong Kong, “Err, where got meaning, ah?”.

  • FrankD51

    This article is pretty much spot on….precious metal watches are a horrendous proposition at retail for many brands. Some are not bad (JLC for example) but many are insanely priced for the gold or platinum models. My last two watches (bought pre-owned) were a WG Vacheron Constantin and a platinum JLC, and I paid about 40% of MSRP for each watch. The prices paid were in line with what other pre-owned pieces are going for so I feel that a liquidation down the line won’t be totally destructive to my wallet. But if I had bought at retail, even with the usual token discount at an AD) I would have been out thousands of dollars. The industry is a mess price wise, the prices are out of line and there is too much stock. I was just in Las Vegas and the shops are jammed with watches, you know many will never be sold except at steep discounts. The problem is luxury products can’t be drastically discounted without hurting the image.

    • egznyc

      Might I ask where you found your deals on VC and JLC? Those are both fantastic brands so I’m quite envious heh heh. I’m assuming you went with dressier models from those brands? (Though I know some folks like their sportier watches in precious metals, that’s not really something I’ve seriously considered.)

  • Shinytoys

    Extremely well researched and we’ll written article. Thanks Ariel.

  • Blart

    I wana see what Archie Luxury has to say about this

    • Chaz

      I do base many purchases and opinions on what he says 🙂

      • proudAmerican702

        I have yet to acquire an obligatory “Oh-mee-gah Speedmaster Man on the F#$%’ing Mooooooooooooooooon.” 😉

  • A much likelier reason: Chinese President Xi Jinping’s campaign against corruption has put a huge damper on the Chinese luxury market, including bling watches often offered as bribes.

    • SuperStrapper

      You think that is enough to make a 25% impact globally? That’s a lot of bribes…

      • Hong Kong plus China represent 20% of Swiss watch sales from FH’s own statistics:

      • laup nomis

        Apparently it’s quite a chunk of it. Its why its such a problem. Everything but everything in China is done by graft ( according to the in-laws who worked there).

        • Kuroji

          Graft, kickbacks and bribes.

          • egznyc

            Graft, kickbacks and bribes, oh my!

      • Kuroji

        Indeed, there are a lot of bribes.

  • Larry Holmack

    Hummm…so many interesting comments and opinions.

    Just my opinion…could the decrease in sales be due to the fact that…well…here in the US…the economy isn’t growing much at all. GDP Growth for 1st Q. 2016 was only 1.1%.

    “Economic growth in the first quarter was constrained by a strong dollar and sluggish global demand, which crimped exports. Output was also hampered by businesses’ efforts to reduce an inventory overhang, with a further drag coming from lower oil prices, which have sparked deep spending cuts on equipment.

    Economists also believe the model used by the government to strip out seasonal patterns from data is not fully accomplishing its goal. The economy has underperformed in the first quarter in five of the last six years. ” ( Report by CNBC Jun 28, 2016. Figures from US Commerce Dept. )

    All I can do is state what I know from my wife, who is an executive in the oil industry…their profits have been way down since the middle of 2015, and they laid of 70% of the people in her department in October of ’15 and she took a pay cut of over 30% just to keep her job. As most know…I am disabled and have been trying for over 5 years to get approved by the SS system for my SSDI. items are not on our necessity list…and I don’t have any real “need” for another watch. Paying bills and keeping food in pantry seems to be much more important right now. I am sure there are other folks who read this blog in the same boat. Right now…a luxury item is going to the movies & out to dinner at one of the many nice local restaurants here in the Austin Texas area.

  • Chaz

    The savior and scourge of the Swiss watch industry: The giant luxury conglomerates gobbling up brands and having shareholders to answer to.

  • Jeffrey Chang

    Sales down for watches $3,000+.

    That doesn’t narrow it to Precious Metal watches as I’m going to exaggerate slightly to say 90% of watches showcased here in STEEL are above $3,000.

    Someone smarter than me can do this better but if sales are growing for watches under $3000, but overall steel watches dropped 2%, I would guess steel watches over $3000 dropped way more than 2%.

    That means steel watches in units would have dropped more than the 173,952 units implied in the chart. Precious metal watches dropped about 61500 units according to the chart for yoy August comparison. If precious metals lets say are 4 times as expensive, lets say its equivalent of dropping 246000 units of steel

    173952 which is 2% drop which we we have assumed is bottom estimate for drop in steel prices over $3000
    vs the 246000 equivalent in precious metals.

    Seems to me its an issue of just watches over $3000 and just silly retail prices all over.

  • Bill W

    Somewhat unrelated, but did anyone else see that Oris article that popped up for a short time, after this article, and then disappeared?

    • If the publication date value of the post was incorrectly set, it might have been published sooner than planned. Then when caught, it was changed to the correct, future date.

    • laup nomis

      That’s spooky. I saw a fossil article appear about 10? Days ago. Went back and it had gone and an apple smart article was there instead.
      Mark C’s theory sounds likely true though.

  • Gokart Mozart

    I think the industry in the last 15 to 20 years has tried to make as much money and brand awareness as possible by taking advantage of the new technologies and manufacturing processes and the most importantly the resurgence of mechanical watches helped alot by the internet.

    There have been a lot of new types of complication and to make difficult complications a lot more common. The current obsession of everybody now becoming a manufacturure.

    New styles of watch such as Urwerk, MBF, new (or more common) case materials such as forged carbon and ceramics, and loads of new independents and bigger startups.

    Look how many more AD’s there are and how many brands bigger retailers have compared to a few years back, and the secondhand watch retailers.

    You can’t blame watch companies for making as much money as they can, (it’s exactly what all the banks and bankers did), pushing up prices creating limited editions and relying on rich people as Ariel said. Many brands I think priced themselves out of well off but not rich watch enthusiasts, or may be they will just buy 1 or 2 pieces over a few years rather than 4 or 5. Look at how much the prices go up each year.

    I actually think it would be good for ABTW or Hodinkee etc to go back to say 10 years when the recession started and look at the prices increases of say 2 watches (a simple three hander and a complicated piece) from say 12 brands of various qualities and brand awareness eg Omega, rolex, Breitling, JLC, ALS, PP, IWC, Oris, AP and chopard, Vulcain and Glycine. Look at the MRSP for these and see whats happened for all of these and look at the inflation rate. A relatively simple and accurate way to gauge if we are being shafted by the watch companies. Maybe some watch company people may read it and come to their senses.

    Finally speaking of precious metals Gold in particular, (I have mentioned a couple of times in the past) during the recession the price of gold went through the roof and watch companies (and probably jewellers to be fair) if memory serves correct did mid year price increases of gold watches. When the prices of gold came back down did anybody reduce there prices. I can probably quite safely say no.

    The price of gold went from £400 per Oz in late 2007 to over 1000 between mid 2011 to early 2013 peaking at about 1150 in 2012. From the end of 2013 to early 2016 it was most of the time between £730 and 850 approximately. That is a massive fall. Did the companies drop the prices or even have no price rises? Hopefully Ariel will look into my suggestion above and give us the answer. Tag may have but that is about it that i can think of.

    This is why I think Tag are bringing out the cheap tourbillon and frederique constant and montblanc have done the cheap perpetual calenders, and why suddenly steel is so popular. Call me a cynic but maybe partly that is why watches have stopped growing and sometimes coming down in sizes so less gold is used and charge the same price.

    • Boogur T. Wang

      Pretty good analysis of the market timing & pricing.

      • Gokart Mozart

        ou like you used $, but I used £ because i am English and thought I would make it more awkward for all the Americans reading this. I used Goldprice too.

  • beardedman

    I don’t know how much the cost of the precious metal actually influences the retail cost of the watch over a base metal. Maybe it is an excuse to rip us off. But I know a base metal watch (sounds better when you call it “stainless”) is one thing and a precious metal one is a whole ‘nother ballgame. If the movement is what really interests you, then steel is a good option. But steel is steel. Perhaps a steel wedding ring is also on your finger? 🙂 I have steel watches today because I have a modest budget, not because I think precious metal watches are a bad value. I have one watch that combines gold with steel, and that’s as close as I can get today, but I will have a full gold watch at some point, perhaps several. The first will likely have a leather strap rather than gold bracelet but I’ll keep working my way up. That is part of the fun.

    • Ariel Adams

      What I am hoping for is a future pricing culture in the industry where buying a gold watch doesn’t make consumers feel like they are getting ripped off, but rather rewarded for having a bit extra to spend.

      • Raymond Wilkie

        When you have the finances to not really care about being ripped off and more about ” mines better than yours ” nothings going to change,………..I believe nothing is going to change,………..for now.

      • Boogur T. Wang

        Well, I think that line of thought – reward for spending extra – was the originsl intent of gold watches.

  • Bill W

    What about women’s watches :). I’m only half-joking. It’s a small piece of the market but women’s watches are more often than not in precious metals. So if there is a flocking away from precious metals, that would really dent the women’s watches numbers and put a little more of a dent in the industry’s numbers as a whole.

  • Marco Sampuel

    Precious metal watches, what other functions do they have besides the “bling-bling” thing and giving the hour? Nothing, but if you’re willing to spend thousands in a gold watch is because you’re wealth enough not to hurt your wallet. I don’t see a real problem to costumers at all, but to the brands that can´t get rid of their overstocked shelves.

  • Marius

    In my opinion wallydog2 is absolutely spot-on. The overall decline of the watch market, and the dwindling sales of precious metal watches have a rather simple explanation. As wallydog2 argued, most of the punters interested in buying an expensive watch acquired one and aren’t looking to buy another watch too soon. The reality is that most buyers of expensive watches are not experts/enthusiasts. Nor are they collectors. These persons will buy one, maybe, maybe two good watches and then get on with their lives.

    Watch brands have the very bizarre impression that wealthy buyers will keep buying a new watch every year, but that is simply not happening. Many buyers of Pateks, APs, etc. just want a statement watch — a timepiece to impress their peers. Once they bought these watches, that’s that. These people are not reading about watches all the time, so they don’t really care about the latest reference, which, let’s be honest, looks almost identical to the previous one. If you are not a watch nerd, and you already have, say a Rolex and a Patek, would you be adding a new watch to your collection every year? The answer, in over 90% of the cases will probably be a big NO.

    • Ariel Adams

      Extensive experience on my behalf with buyers of gold and other precious material watches does confirm that are much more interested in enduring value that I think many people would give them credit for. No one stays wealthy by squandering money or not appreciating value.

      • Kuroji

        This may be an old money/new money dichotomy.

      • Garrett Hu

        I will have to agree here with Ariel, it’s easy to have the impression of very wealthy people spending irresponsibly and simply buying whatever it is that is the most expensive but that is simply not the case. They are wealthy because they spend wisely and effectively and care very much about value. What you see today is mostly new money and that is why you always hear about this rapper is actually broke and that actor died with only a Prius to his name…most of these new money folks will be broke by the time they die.

  • Lawrence

    Who wants a Platinum or white gold watch? It looks like stainless steel but it costs 4 or 8 times more.

    • Kuroji

      Because it’s super heavy? And if it’s family/other people’s money, why not go for it?

    • laup nomis

      Stealth wealth

  • otaking241

    I’ve always felt like watch companies price their precious metal watches so high as a way to subsidize the rest of their lineup. The idea being that people shopping for a solid gold Rolex don’t really care if it’s 50% more expensive than the SS version or 400%. So they sell these people expensive watches with huge profit margins and are able to get away with selling the SS versions with much smaller margins to reach a broader audience. It keeps the precious metal (and other “special” material) watches in “aspirational” territory for the majority and allows those with deep pockets to stand out from the throng, something they care much more about than eventual depreciation on their purchase.

    The drop in sales that figures in this article I think is much more attributable to market correction due to poor economies (and possibly market saturation) in places where the bulk of these watches were being sold than it is to a “better educated” watch-buying public. 1) I don’t think they are being educated (ABTW and other sites’ best efforts to the contrary) and 2) I don’t think education plays into the buying decisions of the target market for precious metal watches.

    • Ariel Adams

      Even if consumers out there aren’t as savvy about watches as the typical aBlogtoWatch audience member is, the internet empowers them to check prices and re-sale prices. Consumers are always looking for value now and in the future when it comes to luxury items, that is something where expertise is far more widespread as oppose to mere watch savantism.

  • Garrett Hu

    Interesting article, nice to have a breakdown of price points and their respective demand. I don’t see gold or platinum watches as overpriced at all compared to steel. The cost for 316 steel is about $3.50 a kg versus $43000 per kg for gold. Sure they use 18K so multiply that by .75 and that is still $32500. So being the watch is 4 times more than SS….is kinda of okay in my book. Now I would rather not buy 18K gold if there was a choice between SS but that’s not really the point.

    • Joe

      If you looked at that another way, out of 1kg of steel, perhaps you could make (have enough material for) around 5 watches (assuming – rightly or wrongly that you could melt the metal and reuse it, rather than mill/forge and discard the shavings). Out of 1kg of gold or platinum, you might only have enough material to make (just guessing…) 2 watches? So not only is the metal more expensive, you need to pay more to get enough material to make each precious metal watch…

      • Svetoslav Popov

        Oh, come on, half a kilo gold watch, don’t be ridiculous 🙂

        • Timestandsstill

          Actually using the example Mark Carson shared earlier a gold watch with bracelet could (and probably does) weigh about 500 grams which by my calculation is one half kilo (1000 grams) …this could be a little on the high side but not too far off

      • Garrett Hu

        True and thanks. So when people complain about a gold version of a watch 2 or 3 times the price of steel…it’s actually not out of line at all.

      • They save every single scrap of gold when they make cases and bracelets. Brands even have 2 CNC milling stations – one for steel and the other for gold and platinum for that very reason. So you should only be expected to pay for the gold that shows up in the final watch (marked up like hell of course). Steel shaving are just trash – not to say the aren’t recycled but the are not anal about saving every little bit and keeping it uncontaminated. Cheers.

    • Shane Glynn

      A typical gold watch with a gold bracelet, like a Rolex Day-Date, contains about 100 grams of gold. That’s about $3200 worth of gold. Heck, round it up to $5000 to cover specialty tools and extra hand finishing costs.

      If you assume the cost of goods on a steel GMT is $5000, Rolex makes $4000 profit per steel watch. The equivalent cost of goods for the gold GMT is $10,000, and the profit is almost $30,000.

      This is why watch companies like to sell gold watches.

  • IVA the LT

    It’s funny, as I was reading about this, I was thinking about the GMT Master! I am pretty set on buying a vintage Pepsi, not because I don’t want new (I prefer that when possible), or not liking the current offerings (I do like the black and blue, but I love the red and blue), it’s the disconnect between the price and value that discourages me from buying new

    I value the red and blue bezel, more than the black and blue, so even if that is offered at a “fair” price, I’m being forced to make an artificial compromise. There is absolutely NO reason Rolex could not fit that bezel to a steel model, it just comes off as a lazy (and greedy) way to extract profits. On the flip side, if the white gold model was realistically priced, I would actually consider “aspiring” to own it. In the end, ironically, Rolex actually loses ALL the profit they could have gained from me, as I made the decision to buy a pre-owned version of what I actually want, with the only compromise being I have to find a quality piece myself, as opposed to the peace of mind of new.

    I genuinely don’t see why, with all the data available to them, they couldn’t reconfigure their pricing and production lines to reflect the actual market. They could be more profitable, making fewer watches. Charge more for the watches people want, rather than restrict flow of your most desirable offerings, while trying to convince people to compromise by spending more on the watches they don’t want.

    Sell tens of thousands of steel Daytonas at $20,000 each, instead of giving out hundreds as $10,000 gifts to the people who buy the gold watches no one else wants for you.

    • Ariel Adams

      Funny enough the white gold Pepsi bezel GMT-Master II is one of the watches I would love to have. The ultimate “screw you world” watch 🙂

      • laup nomis

        Totally, and yes.
        Its a thing of beauty, and so desirable. Before I knew anything about watches it was the watch I did know about. Though I didn’t understand the GMT aspect or how the Pepsi bezel worked, I really liked the colours.

  • Kuroji

    I didn’t read the article, just the clickbait headline. Is the answer “people are tired of getting fucked?”

    • Ariel Adams

      Why are you upset about the article headline? We clearly answered the question to the best of our abilities in the article. If you choose not to read the article why get upset with us?

      • Kuroji

        Just a joke, Ariel.

    • Garrett Hu

      How do you get F’d? You liked something, saw the price and you bought it. Demand for gold watches decline for many reasons; economic, fashion cycles or people simply waiting for that right price as the watch industry adjusts.

      The only legit way to feel F’d is when you buy then a month later they drop retails by 10%, now that happened to my friend with his Panerai 312. Not only did it drop, it dropped twice within 3 months….he is no longer a customer to say the least.

  • egznyc

    I don’t think it’s particularly surprising that the supply/demand laws of economics might eventually assert themselves, even in the irrational world of watch prices. Yes, people – even very wealthy ones – do actually try to get a good “value” (this term being rather elastic in meaning). Not sure why it happened at this point – rather than sooner – however.

    How transparent are brands regarding units sold of various models, by case metal variety? Seems to me those who actually manufacture a small number in precious metals might have at least some explanation for the exorbitant pricing of these models, which is the relative scarcity they release. At least this would be true for limited editions, if the collecting community perceives value in such scarcity.

  • Rich Thomas

    Great job Ariel! You simply and concisely explained the current consumer market and consumer emotions reflected in that market.

    Though Kuroji may have exaggerated the point in his response, he is on to something.

    Can anyone justify the dramatic price increases taken by so many luxury brands over the last decade, regardless of materials?

    • Sheez Gagoo

      Yes, I can. That was because there were enough people willing to pay these prices. The demand was bigger than the supply. Nowadays, this is not longer the case and the Swiss watch industry struggles to adapt to new situations.

  • George Yang

    Well stated analysis on what the numbers reported by FH might mean and the motivation from a prospective buyer’s perspective.

  • Veda

    Agreed 100%. When prices of gold watches are offered around 55% msrp and the used ones go for a further 30% of msrp, only the real wealthy without regard to resale are around to buy from ADs. In essence, it makes the stuff sold in ADs true luxury jewelries. I myself have resorted to buying precious metal watches with some additional artistic handmade values (dial material, finishing, etc) to psychologically justify the msrp admission.

  • Sergi A.

    I beg to disagree with your argument on the gold watches having poor value compared to steel ones -I think is the opposite. Considering the price of the movement, bezel and dial the same and fixed, a kilogram of 904L stainless steel costs around 6€ while a kilo of 18k gold costs arround 27000€. Now, what is the overpriced watch here? For me it’s the stainless steel with that cheap material. The reason for the depreciation on gold watches is purely and strictly demand. There is less people that can afford a 30k watch, and also there is a bunch of them who do not like to get attention (and solid gold watches drive a lot of it).
    Let’s imagine a mad max scenario and what a stainless watch would be valued compared to a solid gold one in a trade, almost nothing.

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