Today’s gold price hovers around $3,300.
A year ago, it was around $2,300 roughly a 40 per cent increase.

One can only imagine the pain in the backside it is for watchmakers to source their gold and how to appropriately price their gold pieces.
Rolex had increased the price of their gold watches 3 times in the past year, with the most recent price increase in January of about 8 per cent.

Another price increase is highly likely given the surge in the gold price since Trump’s “Liberation Day” tariffs sparking global investor uncertainty. 

Rose gold watches saw especially large price increases at 23.5 per cent, according to Digital Luxury Group. Jawdropping stuff. 

With the price of gold going up, this means their raw materials costs are going up and as a result, is being passed onto the consumer.
However, the value of gold has been increasing drastically in the past few months, so the difference between display and point of sale can be substantial, making it quite a headache. What are watchmakers doing in response? 

Well, some of the smaller houses have just been taking these watches off the market deeming it not worth the hassle, since they cannot compete with the economies of scale of the bigger brands. Some have cancelled their orders for gold as the watches are just too expensive to make. For the larger houses, they just have to keep bumping up their prices as the gold price increases. 

However, watch retailers have said that, despite the rise in the gold price, demand for gold watches have remained inelastic. Inelastic is just the economist’s word for strong demand in the face of price changes. In places like the UAE, collectors continue to purchase gold watches as “clients looking to acquire a gold watch will always purchase a gold watch” regardless of other precious metal alternatives. 

Now, you’re probably wondering: Is a gold watch the same as investing in gold coins or bars? 

I hate to disappoint, but, no. 

The secondary market for gold watches is not a good tracker of the gold price for the simple reason that the gold content in the watch is not substantial enough. While gold has gone up 40 per cent, a gold watch may have increased 10-15 per cent. Relative to a Rolex’s overall market value, the gold part is just a small part of it. 

Don’t get me wrong, if my employers decided to give me a gold AP as part of a signing bonus, I certainly wouldn’t say no. But if I was investing my own money, capital gains tax free gold coins please! 

Written by Brandon,

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