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Old 18 February 2017, 08:08 PM   #1
jfoord27
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Gold premium

Hi guys,

It seems like a number of gold watches are roughly double the SS versions of the same watch. I'm interested to know what the premium to the gold value is or how this can be determined. Has anyone looked at this previously?
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Old 18 February 2017, 08:52 PM   #2
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It has very little to do with the metal value. In fact platinum pieces are usually significantly more expensive than gold even though the metal is not. A steel Rolex Gmt 2 will be around 9k usd, while the gold version is well over 30k usd. Different prices for different target customers I guess.


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Old 19 February 2017, 12:54 AM   #3
mps354
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I believe precious metal watches are also more costly to make...higher density metals cause more wear and tear and take longer to machine
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Old 19 February 2017, 01:04 AM   #4
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If I can buy a gold for double the price of a SS, point me in the right direction
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Old 19 February 2017, 01:06 AM   #5
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Quote:
Originally Posted by brandrea View Post
If I can buy a gold for double the price of a SS, point me in the right direction

I will take two please!
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Old 19 February 2017, 07:52 AM   #6
jon_jon
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I find that for watches with a metal case and a leather strap, the price premium of gold over SS is less than 100%.

However for watches with a metal case and bracelet, the price premium is over 100%.
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Old 20 February 2017, 05:33 AM   #7
capote
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Quote:
Originally Posted by brandrea View Post
If I can buy a gold for double the price of a SS, point me in the right direction
JLC's master line actually have gold watches at less than double SS price.
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Old 20 February 2017, 09:58 AM   #8
kunlun
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Dwarves and dragons crave gold watches. This artificially raises pm watch prices.
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Old 20 February 2017, 10:01 AM   #9
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Well guys, this is around twice the price of the 5711 so I thought I'd snap up the relative bargain.

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Old 21 February 2017, 07:16 PM   #10
jfoord27
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Quote:
Originally Posted by capote View Post
JLC's master line actually have gold watches at less than double SS price.
Yes I noticed that and also is the case with the reverso. Therefore if we assume a SS watch is 'fair value', I wonder what the premium to the additional gold value is embedded in the gold price.

Also interesting that platinum watches sell for substantially more than gold as noted in the thread (at least in the case of rolex) because the gold value is higher than the platinum value!
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Old 21 February 2017, 09:56 PM   #11
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Quote:
Originally Posted by jfoord27 View Post
Yes I noticed that and also is the case with the reverso. Therefore if we assume a SS watch is 'fair value', I wonder what the premium to the additional gold value is embedded in the gold price.

Also interesting that platinum watches sell for substantially more than gold as noted in the thread (at least in the case of rolex) because the gold value is higher than the platinum value!
I think Rolex and AP/PP/JLC are all placing similar premiums on the gold content.

In the case of JLC, their Master Control Date is about $8000 more in pink gold vs. steel. But that model is on a strap. If we assume that the watch contains 50 grams of 18K gold then that's $1500 worth of gold at the current spot rate. Therefore, they're marking the gold up to 5x its market value.

It's telling that they offer the Master Control on a steel bracelet but not a gold bracelet. I'd imagine the reason is that not enough customers are willing to pay 5x market rate for a gold bracelet on a non-complicated JLC.

Rolex: 36mm DD in YG has MSRP of $31,350 (according to Jomashop). A DJ with fluted bezel on jubilee is about $7,950. The difference is $23,400. If a DD has 125 grams of 18K gold, then its melt value is currently $3734. So Rolex is marking up the gold by about 6x.

I don't have time to do the Nautilus/RO but I'd figure the story is similar.
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Old 22 February 2017, 07:42 PM   #12
jfoord27
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Originally Posted by Star Ferry View Post
I think Rolex and AP/PP/JLC are all placing similar premiums on the gold content.

In the case of JLC, their Master Control Date is about $8000 more in pink gold vs. steel. But that model is on a strap. If we assume that the watch contains 50 grams of 18K gold then that's $1500 worth of gold at the current spot rate. Therefore, they're marking the gold up to 5x its market value.

It's telling that they offer the Master Control on a steel bracelet but not a gold bracelet. I'd imagine the reason is that not enough customers are willing to pay 5x market rate for a gold bracelet on a non-complicated JLC.

Rolex: 36mm DD in YG has MSRP of $31,350 (according to Jomashop). A DJ with fluted bezel on jubilee is about $7,950. The difference is $23,400. If a DD has 125 grams of 18K gold, then its melt value is currently $3734. So Rolex is marking up the gold by about 6x.

I don't have time to do the Nautilus/RO but I'd figure the story is similar.
Good analysis Star Ferry. Where did you get the weight figures in your assumptions from? I had been looking on company websites for weight figures with the intention of estimating the implied gold weight and value but couldn't find any.
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Old 22 February 2017, 10:43 PM   #13
TG3N
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As others have stated, the cost price of raw materials, extra machining costs etc. are only a small part of the pricing premium - the rest is emotion, perceived rarity, looks & marketing - this article is excellent on the topic: http://quillandpad.com/2016/12/18/he...recious-metal/
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Old 23 February 2017, 07:50 AM   #14
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If you follow the logic of how much gold is per ounce to arrive at how much is the actual gold cost for a watch then you must compare much is the stainless steel material cost to make the same watch. If you do that I think you will come up with the gold version being a much better value by a huge margin. I would guess one ounce of stainless steel is only a small fraction of the cost of gold. It is like using the cost of cowhide used in a Hermes bag to evaluate the worth of a Kelly bag it just doesn't work that way. Luxury items are priced according to the perceived brand value; sometimes not even really on quality or workmanship.
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