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Value for money: Rolexes snapped up in Singapore.

Tuesday, January 20, 2015

"Rolexes flew off the shelves over the weekend after the Swiss franc's surprise appreciation last Thursday sent Singapore's luxury watch enthusiasts on a buying spree before retailers adjust their price tags."
Source: The Straits Times.

Today, a fellow blogger sent me a message:

"I read today that pple are rushing to buy Rolex and other Swiss watches, from a value point do u think it is worth to buy now?"

To be quite honest, the thought of buying a Rolex or two crossed my mind too after reading the news regarding the Swiss Franc last week.

I thought about it a bit more and decided that although the prices of brand new Swiss made watches are certainly going to be higher in future, I would be silly to lock up money in what is a consumption item that is likely to depreciate in value over time even though I might have a margin of safety buying at the pre-adjusted prices. I am very sure, therefore, that it won't be an investment.

Depreciate in value? Don't believe me? Go to shops that sell pre-owned Rolex and other atas Swiss watches to take a look. Most people have relatively short memories but we might want to be reminded that, during bad times, we might even be spoilt for choice in these shops.

Well, it seems that many people disagree with me, going by the newspaper report today. Mr. Market is always right. So, AK is the silly one.

Anyway, my reply:

"Watches are consumption items. We can buy pre-owned Rolex and other Swiss made watches at a fraction of what they would cost brand new.

"I know some people say that luxury watches are investments. Well, I believe that some luxury watches can be investments. These could be highly sought after limited production pieces from very exclusive brands.

"It is not a subject that I have the time or inclination to learn more about. So, I am quite happy to stick to what I know which is that given a choice, I would rather hoard gold and silver than luxury watches."

Since I am not an expert on the subject, I have "invited" an expert to give us his view:

"The Swiss watch market is especially sensitive to economic depressions, and finds itself always having to aim where new money is. This is because high-end wrist watches for the most part are a poor economic investment. You should buy them because you love them, because they are beautiful, and because you want to wear them. Not because you think they will hold or increase in value.

"As a professional talking head on watches I often get asked about investing in watches for profit. The idea that you’ll buy a watch and wait until it increases in value doesn’t made for good sense. Plus, historically it doesn’t happen often even with extremely rare watches. Of course this is not the universally the case, but if I was your investment adviser, I would say stick with watches for wearing not anticipating." Ariel Adams in Forbes.

Have you bought your Rolex yet?

Related post:
My vintage Rolex.


Derek said...

Hi AK,

See even you the prudent one was tempted. LoL The blogger is me ya or are there more watch enthusiasts out there?

Anyway, once I start to digest the news, having a Rolex suddenly doesn't look tempting anymore. Having a bar of gold or silver seems much more appealing.


AK71 said...

Hi Derek,

I am only human with human weaknesses. LOL.

Of course, the blogger was you but I was not sure if you would appreciate being named. Good that you have taken matters into your own hands. ;p

Go get some gold and silver. I think we should all have some as insurance against the inherent flaws of fiat currencies. :)

Siew Mun said...

Buy from pawnshops or pawnshop auctions for pre-owned pieces if you are not superstitous.

victorlsl1 said...

its better for collectors to comment on this. otherwise this post has no value add

Ray said...

Is gold and silver really so precious? They are just metals you know. ๐Ÿ˜

AK71 said...

Hi Victor,

I am just a blogger who likes talking to himself. Haha... ;p

I am not sure if this blog post adds any value or not for anyone but I guess that is for readers to decide. Thanks for sharing your thoughts. :)

AK71 said...

Hi Ray,

The case for holding some precious metals in our portfolio is quite compelling. I am referring to the flaws found in fiat currencies, of course.

In this instance, I am saying that if given just two choices to either hoard luxury watches or bars of gold and silver, I would choose gold and silver. :)


Hi AK,

Interesting sharing on gold and silver. As with purchasing such commodities, I've some thoughts.

1. Where would gold be purchased from? Maybe from a bank dealing in gold?

2. Isn't there a spread between buy and sell price for gold? Especially jewelry? I heard of some 10 - 15% smelting costs?

3. Would buying ETF related to gold be a suitable candidate instead of buying physical gold? Removes the hassle of buying, transporting and storing it in a secured facility.

This post has definitely Valued Added ;)

AK71 said...

Hi Solidcore,

I buy physical gold and store them at home. ;p

1. Buy from UOB. They have a counter buying a selling gold. You can check the daily prices: here.

2. Since they removed the 7% GST for buying of investment grade gold, the spread has become more reasonable. I would buy 1 oz gold bullion. Best value for money. ;p

3. I would like to hold physical gold rather than ETFs although ETFs are more convenient. ETFs are good if you want to trade gold but if you have developed a crisis mentality, then, you want physical gold. ;)

You might find the following blog post value adding too:
Buying gold and silver as insurance. :)

E H said...

I hope you wear your Rollie as often as you can. A good watch in a box is as good as none .

MaoMao said...

Hi AK,

I hope you can blog your views about the MediShield Life in your next article.

usurper said...

For me personally I would like to hold silver.

AK71 said...

Hi E H,

I have a watch that runs on solar energy that I wear daily. That is my workhorse watch.

I wear the vintage Rolex or the Tag Heuer only when I have to attend social events. ;p

AK71 said...

Hi MaoMao,

There is a very good page on the Medishield Life:

Medishield Life (MOH).

Good stuff. :)

AK71 said...

Hi usurper,

Physical silver is good to hold too. However, they are somewhat less portable compared to physical gold to get the same value. :)

chewyc said...

Hi AK,

I didn't know you are a bit of a gold bug.

It makes more sense to buy physical gold or platinum than watches. Also, it is better to buy 100g pamp or perth mint bars than silver or bullion coins or jewelry. 1 kg cast bars has the tightest spread.

With silver, we need more space to store the metal. it creates logistical issues. 1kg of gold is around $55k. $55k can buy you around 71kg of silver.

In regards to smelting cost, it is based on the quantity and purity of metal that are delivered to the refinery. The refinery will assay the metal, cast it into 400oz bars. The refinery charges a small percentage 0.7 - 1% to the mining companies.

AK71 said...

Hi chew,

Gold and silver were something I blogged about in the early days of my blog when they were not as pricey. I remember getting into gold at $800 an ounce and silver at $17 an ounce.

Of course, there were people who said that these were not investments etc. They were right, of course. We could trade precious metals for gains but they are mostly a form of insurance.

Just like how I worry about silver being somewhat less portable as compared to gold, I worry about the divisibility of big bars of gold.

You are right about 1kg bars having the least buy/sell spread but I wouldn't want to part with a 1kg bar to get safe passage, for example. I would try with a 1oz bullion first. AK is a giam siap fellow. ;p

AK71 said...

THE fear that the prices of Swiss luxury watches would shoot up in Singapore with the rise in the Swiss franc has turned out to be unfounded.

Prices are instead falling in the wake of the release of the latest Swiss watch export figures, which indicate that demand dipped in Singapore last year.

Swiss timepieces, led by Rolex, flew off shop shelves here in mid-January, when the Swiss franc surged 16 per cent against the euro on the back of the Swiss central bank's surprise removal of a three-year cap on the exchange rate between the Swiss franc and the European currency.


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