The price of the precious metal peaked at $5,414 per ounce on Jan. 28, five days before GJXâs opening, and was trading for $5,012 on the day of Robb Reportâs visit. The metalâs dramatic surge in priceâa year ago, gold hovered around $2,800ânot to mention its recent volatility was all anyone could talk about.
âA lot of my colleagues are melting all these types of watches,â Keshmiri said, pointing to an unusual Piaget that he called the âVampire,â a 1977 model with fang-shaped cutouts in its gold bracelet. âI wouldnât do it. It feels like Iâd be killing someone. But itâs been going on for the past two to three months.â
These are just three watches that were recently sold to a dealer who intended to melt them.
SwissWatchExpo
At a time of record gold prices, many timepiecesâ melt value exceeds what they trade for in the marketplace, and as a result, cash-hungry dealers are pouncing. âWeâre seeing more people liquidate gold watches purely for their metal value, particularly with certain brands and older pieces,â Eugene Tutunikov, CEO of SwissWatchExpo, tells Robb Report. âIn some cases, watches are being treated like scrap gold rather than collectible timepieces, which is unfortunateâbut itâs also quietly reducing the supply of vintage gold watches that survive in good condition.â
The phenomenon isnât restricted to dealers. âA lot of people are rediscovering gold theyâve inherited and deciding to sell it, and that often includes vintage watches,â Tutunikov says. âSome of these pieces have real horological and historical value, but theyâre being viewed through the lens of commodity pricing. Over time, that creates scarcityâand scarcity tends to elevate the value of the watches that remain in circulation.â
Demand for gold watches, according to Tutunikov, has remained steady, largely because prices on the secondary market havenât risen in tandem with the metal price. âThat creates a lot more value,â he says. âCustomers see gold is over $5,000 an ounce. Itâs almost subliminal. Theyâre gravitating to gold because they want that heavy, tangible value on their wrist. And for some customers, itâs that extra flex theyâre looking for.â
In recent weeks, however, refineries in the U.S. that accept gold trade-ins have been so overwhelmed with gold that theyâve had to pause payments and stop accepting new trade-ins, says Adam Golden, founder of the Miami-based vintage watch dealer Menta Watches. âSince the price shot up, the major refiners doing $50 million a day in gold have been so backlogged that they had to close down operations for two weeks,â he says. âThey wonât accept any more gold until they can catch up on payments. And because prices are so volatile they will only lock in a price when theyâre ready to send it to you. So yes, watches were getting melted because theyâre worth more as gold than as watches. But now you canât even do that.â
At the time of goldâs peak, Golden says he heard that even Rolex models such as the Sky-Dweller were being scrapped. âTheyâll take out the movement but melt the rest because the market value of the watch at the time was less than the gold price,â he says. More often, however, the most likely candidates for melting tend to be âless popularâ watches like Baume & Mercier.
A Rolex Sky-Dweller, with a bright-green dial.
âMost of the time, the more important or cooler watches arenât getting melted,â Golden says. âYou hear the odd story but generally youâre getting watches melted that nobody really wanted. It doesnât really affect the supply. But when gold goes up, it makes it harder to buy inventory.â
Golden pointed to a 34 mm Rolex date model from the 1960s or â70s as an example. âWe sell them around $7,000,â he says. âItâs a solid-gold Rolex, but itâs not a Datejust, which could be $10,000. I was offered one about three or four weeks ago. I offered $6,500. The guy writes back and says, âThis watch melted is $8,500 now.â I donât know what to say to that. Iâve never sold one for $9,000 or $9,500.â
The bottom line: If youâre looking to buy a precious metal watch, itâs going to cost you more. But keep in mind that rising gold prices havenât changed the calculus of pricing for the most sought-after watchesâsay, an 18-karat yellow-gold Rolex Day-Date ref. 18038 with a factory blue dial. Golden says the model typically sells for $20,000, compared with $15,000 for a Day-Date with the more common champagne dial.
âIâm not going to charge $22,000 for that watch because Iâm still above the cost of gold,â Golden says. âI have noticed more people asking me how much something weighs. But most watches are priced so much higher than the cost of their gold weight that it doesnât really matter. If gold catches up, weâve got bigger problems.â
Authors
Victoria Gomelsky
