Month: June 2017

You Keep Paying for Luxury Watches

watch parts So, you’ve saved up your money to buy that Rolex you’ve always wanted.  Or perhaps it’s an Oris or a Tissot.  It doesn’t matter.  You’ve wanted it for years and it costs thousands and you’ve saved the money.

You buy it, and fork over that hard-earned cash.  Now you have it.  It’s paid for.  You’ve spent a fortune, but aside from perhaps a bit of additional insurance on it you don’t have any other ongoing expenses with it, right?

Wrong.  If you’ve purchased a high end luxury mechanical watch, you will be spending money on it regularly for the rest of your life.  Not only that, but the money you spend on that watch could work out to hundreds of dollars per year, depending on the brand.

“How is that?,” you ask.  Mechanical watches are mechanical devices.  Parts move.  Parts break.  Parts wear out.  Parts get dust and dirt and grime in them and on them, and those things can prevent the watch from keeping accurate time, or from being able to keep time at all.

Most luxury watchmakers recommend that you have your mechanical watches serviced at regular intervals.  “Serviced” means that you’re going to put the watch in a box, mail it back to the manufacturer so that they can work on it at their factory, and wait for them to send you a bill.

That bill could easily be $500 or more, and you might need to do that as often as every two years, depending on the model.

Why so expensive?  There are a number of reasons.  When you send a luxury watch in for service, a trained technician will disassemble it and carefully examine the movement to see if there are any worn or damaged parts.  If so, they will need to be replaced.

Those parts may or may not be on hand, depending on the make and model of the watch.  If they aren’t available, the company may have to fabricate new ones.  Regardless, there’s going to be a bill for the new parts.  After that, the movement will need to be thoroughly cleaned and adjusted for accuracy.  Finally, after the watch has been put back together, it will need to be cleaned and polished on the outside.

When you get it back, it will likely work and look like new.  Those are good things.  But you’ll have to repeat the process again in a couple of years.

Friction is the enemy, and mechanical watches have moving parts.  Some of them move millions of times in a year.  Jewels in the movement are intended to reduce friction, but physics is physics, and everything has friction.

A few companies are introducing new movements with composite parts that are intended to reduce friction.  But a watch that will never require regular service is just a dream.  If you want to own a mechanical watch, you’re going to have to accept that it will require regular maintenance.

On the plus side, a well-maintained high end watch will work well for decades.  On the downside, it comes with a recurring bill that you’re just going to have to pay as part of the price of owning an amazing piece of technology.

Getting the Most for Your Luxury Watch

sell your watchYou’ll find lots of articles online about buying luxury watches, and that makes sense – lots of people buy luxury watches all the time.  But sometimes, you want to sell a luxury watch.

The reasons can vary – perhaps you just don’t want the watch anymore.  Perhaps you want to use the money to buy something else.  Perhaps you simply need the money.  Whatever the reason, you’re going to have to address various issues when you want to sell a luxury watch.  After all, it’s a lot easier to buy a luxury watch than it is to sell one, especially if you’re trying to get top dollar.

Here are a few ways that you can sell a luxury watch.  Each has their pros and cons:

  • Private sale.  If you know someone personally who wants to buy your watch, obviously, that’s the way to go.  There is no middleman, you can quickly come to a price, and you can accept whatever payment terms you like.
  • Auction house.  This works best for ultra-rare items.  You can consign your watch through auction houses such as Christies, Phillips, or Sotheby’s. This isn’t for a run-of-the-mill Omega Speedmaster, but if you have an unusual Audemars Piguet or Patek Philippe or an original Rolex Paul Newman Daytona, you might find that they’re interested.  They’ll add a fee on top of the sales price for the buyer to pay.
  • Auction it yourself.  You can sell it on eBay, for instance, for either a fixed price or an auction price.  Upside – you’ll get as much as the market is willing to bear.  Downsides – you’d best have a lot of provenance.  EBay will take a fee for the listing and a portion of the final value price.  There’s a lot of competition, even at the high end, so your watch may get lost in the shuffle unless it’s something really unusual.
  • Pawn shop.  Great for getting a quick sale.  The downside is that you’re not going to get top dollar.  Pawn shops aren’t the best places to buy high end watches, so pawnbrokers aren’t likely to pay top dollar to get yours, as it might end up sitting on their shelf for a long time before they can sell it.
  • Consignment.  Some jewelers and watch dealers will sell the item on consignment.  They will usually take a percentage of the sales price as a commission.  Downside – It might take a long time to sell, depending on the watch and the clientele of the seller.

selling a watchThere are also a few dealers of watches online who buy high end watches for resale.  You won’t get full retail price, but you might get a fair wholesale price for the watch.  Some of these retailers pay quickly, sometimes overnight and a few even offer to pay the shipping to get the watch to them.  A Web search will turn up a number of companies that regularly buy and sell second hand watches.

With anything collectible, it can be difficult to sell quickly while also getting a good return on your purchase price.  There is usually a tradeoff between getting a quick sale and getting the most money.

Still, if you have a worthwhile watch to sell, it shouldn’t be too difficult to find a buyer for it.

Two-Tone Watches are Back!

New two-tone Audemars Piguet
New two-tone Audemars Piguet

They say that what goes around comes around and when it comes to anything related to fashion, that’s often the case.  No, we’re not expecting to see bell bottom trousers return anytime soon, though we can’t rule out their return at some point in the future.

Just as children’s names cycle every few generations, so do fashion designs.  Things become popular, people buy them, people grow tired of them, they go out of style and something else is “in” for a while.  Then, the cycle repeats, as people get tired of that, and want something new.

Eventually, you run out of new things to offer, so you dust off something old that they haven’t seen in a while, and you present it as new.  Then they get excited and buy it.  Of course, when this happens, the people who do remember them from the first time around will scold you and point out that the “new” thing you’re buying isn’t really new, but that’s how fashion works.

That’s why we’re seeing two-tone watches again.

Two-tone watches were introduced at this year’s Baselworld exhibition and a number of watchmakers are beginning to offer these models, which are seen by younger buyers as being edgy and more daring.

In recent years, makers have opted for a single color model, which might be all yellow gold, or all platinum, or all white gold, or all stainless steel.  New models are now combining one metal with another or one of various other materials (composite; carbon fiber, or ceramic) to give a busier look to their wares.

One advantage is that a watch that’s made of part steel and part yellow gold is more affordable than one that’s all gold, yet it has the distinction of offering a different look and one that’s now eye-catching, given that two-tone watches have been absent from the marketplace for quite a while.

Of course, they’re still available on the second hand market, and even in high end models, it’s not too hard to find, say, a two-tone Rolex from the 1980s.  They’re out there, but as the trend continues, even the second hand market is likely to dry up in the near future.  Plus, as styles change and more people start to embrace the two-tone look, those vintage models that have up until recently been bargains are going to start getting a bit more expensive.

A vintage two-tone Rolex
A vintage two-tone Rolex

Regardless of your taste, if you’re looking for something that’s a bit different today, you might want to look at a two tone watch.  We wouldn’t recommend waiting, however, as by this time next year, everyone is likely to be wearing two tone watches.  At that point, you’ll likely be starting to look for something new and different.

At that point, watchmakers will come up with something new.  Or they’ll dust off something old, give it a new name, and present it to you as something you haven’t seen before.  Or at least, haven’t seen since the 1990s.

That’s the way fashion works.  What’s here today is gone tomorrow…and back again in a couple of decades.  What goes around comes around, and it works that way with watches, too.

 

A Coin With a “P” Mint Mark

2017 P Penny
2017 P Penny

Each of the mints that produce U.S. coins have long put a letter, or mint mark, on their coins to indicate to the public and to collectors where those particular coins were made.

While current production comes from three mints – Philadelphia, San Francisco, and Denver, and West Point there were previously minting facilities in:

  • Carson City, Nevada
  • Charlotte, North Carolina
  • Dahlonega, Georgia
  • New Orleans, Louisiana

All of these locations have always used mint marks on their coins, though the Philadelphia mint traditionally did not.  Collectors generally knew that any coins that did not have a mint mark were produced at the Philadelphia mint.  An exception was Jefferson nickels produced there from 1942-1945; those did have a fairly large “P” on the reverse side of the coin.  Another exception was the 1979 Susan B. Anthony Dollar.

Since 1980, coins produced at the Philadelphia mint have had a “P” mint mark, with the odd exception of the penny.  For whatever reason, that coin, and that coin alone, did not have a mark.

That’s going to change in 2017, as the Philadelphia mint is celebrating its 225th anniversary.  As part of that celebration, the mint is using the “P” mark on all of its coins, including the cent.

1944 Philadelphia nickel
1944 Philadelphia nickel

Ordinarily, collectors would rush out to buy these pennies, and chances are that many people are hoarding at least a few.  After all, the mint has announced that this is a one-off aberration, and that in 2018, we’ll likely see pennies coming from Philadelphia that lack a mint mark again.

That sounds like a great opportunity for the opportunistic, with just one problem – the 2017 pennies being produced at the Philadelphia mint aren’t rare.  In fact, they’re quite common, as the mint has produced nearly two billion of them through the end of May, 2017.  At that rate, there might be 4-5 billion of them in circulation by the end of the year.

It’s times like these that the oddities may turn up.  Perhaps the mint has (or will) accidentally produce a few cents that lack a mint mark.  In this case, as with the 1944 steel penny, it’s the exception that generates the appeal among collectors.

 

Watch Cases are Getting Interesting

carbon fiber watch case
Carbon fiber case on a Rolex

When it comes to collecting watches, most people are interested in what the watch does.  A lot of attention is paid to the movements of watches, and that’s not surprising, really.  The movement is the part of the watch that tells time, after all, so it’s not at all unusual for collectors to spend a lot of time focusing on the movement.

Lately, however, collectors and makers have been focusing on the watch case.

That’s a bit strange, at least to the layman.  The case is just the part of the watch that holds the movement, right?  Why would anyone care about the case?

For years, few people did care about the case; and watch cases were usually made from stainless steel.  Stainless steel is durable, rust resistant and relatively inexpensive.  For more expensive watches, that stainless steel might get swapped out for gold or platinum, though both would have to be used in alloys, as both are too soft to use as a watch case on their own.

That was pretty much it; you had either steel or gold.  Both had their advantages and disadvantages.  The disadvantages of steel are that it’s somewhat heavy, and not very sexy.  Who wants to pay $10,000 (or $200,000) for a watch with a steel case?

That’s why makers have recently been turning to other materials to make their watches either lighter or more exotic, both of which offer additional appeal to potential buyers.

Lots of makers are working with carbon fiber now.  It’s both ultra-strong and ultra-lightweight, though carbon fiber tends to lend itself best to use in sports watches, rather than high end luxury models.  That’s just because, for all of its merits, carbon fiber isn’t particularly attractive.  Sure, it’s light and strong, but it’s not as pretty as gold or platinum.

Along similar lines, a few watchmakers are working with ceramic.  We’re not talking about the pottery that your grandmother used to make; these ceramics are high-tech, super-strong, space age materials.  Ceramics offer many of the benefits of carbon fiber and similar drawbacks.  They look nice, but they don’t look elegant.

Hublot has experimented with using a special mix of ceramic and gold to produce a durable, super-strong, highly attractive and scratch-resistant case, and that may be the magic solution that provides the best of all possible worlds…at a price, of course.

sapphire watch case
Sapphire watch case

Hublot has also (with a few other companies) made a few watches using sapphire.  This sounds great on paper; who doesn’t like sapphire?  It’s edgy, it’s expensive-sounding (and expensive for real) and it looks really good.  The downsides are significant, however.  The material is really expensive.  The material is really difficult to work with; you can drill it for hours, be nearly done, and then have the material shatter or crack on you, forcing you to throw it all away and start over.

Perhaps the worst part about ceramic is a problem for the marketing people – the finished product often resembles clear plastic, even though the watch is priced as though it were a house.

At least one maker is simply taking stainless steel and giving it a twist.  Damascus steel is an Old World steel technique that was used to make swords 1000 years ago.  It has an interesting swirled texture to it and looks great.  On the downside, it is still steel, and the deep, dark secret is that the actual recipe for making Damascus steel was lost 150 years ago and no one really remembers how to make it.  The result now is something that looks like Damascus steel but is likely priced more like gold.

All of these things are a lot more interesting than plain old steel or plain old gold, however.  We’ll expect to see far more experimentation coming down the road with watch cases.

 

 

Coins Better Than Stocks?

http://img.mf.cz/728/495/www-aperiomarketing.net.jpgPeople collect things for all manner of reasons; there is no explaining why people collect any particular item.  With coins (or watches, for that matter) people choose to collect them because they find them interesting, but no two collectors may agree on exactly what interests them.

The scarcity?  The beauty of the piece itself?  The investment potential?

Most collectors probably don’t collect for investment reasons, but the markets for any collectible will have investors in them.  That’s just the nature of anything valuable – art, automobiles, wine, watches, coins, stamps – you name it.  Over time, rarities in all of these fields have gone up in value, and when this happens, people notice.

When people notice, investors get involved.  Collectors tend not to like that, as the presence of investors in any hobby will necessarily drive the prices up.

One may expect that to get even worse in the coin field, as the Economist recently published an article pointing out that over the past en years, investments in coins were up nearly 200% (195%, to be exact.)  This compares to smaller, but still substantial, returns for art (139%,) stamps (133%,) and the S&P 500 stock market (a mere 58%.)

If you’ve invested in furniture, you likely lost money, as furniture was down 31% during the past decade.

The problem with investing in collectible items is that they’re not entirely liquid.  Bulk gold or silver coins, purchased for their bullion value, rather than their date, condition, or mint mark, may be relatively liquid, but rare coins purchased for date, mint or condition are not overly easy to part with in a pinch.

You’ll have to sell them to a dealer at a discount, sell them on sites such as eBay (and give them 10%), or sell them at auction.  There, the buyer will pay the premium, but these things all take time, making even coins, which represent actual money, surprisingly illiquid.

They’re more liquid than paintings or furniture, to be sure, but getting rid of a collection of rare coins is going to be more time consuming and more costly than selling stocks, even if you did make more than three times as much money on them.

$10 gold pieceWhat collectors don’t like about investors in their hobby is that the investors don’t particularly have any interest in what they’re buying.  They’re buying a widget, and they expect that widget to become more valuable with time.  They don’t care what the widget happens to be, where it came from, what it looks like or what kind of condition it may be in.  All they want is to be able to sell it for more money tomorrow than they paid for it today.

Collectors, on the other hand, tend to cherish the items in their collection.  They know the difference between one item and the next and they know why their different and why Item A might be more desirable than Item B.

They also know that Item A will likely cost them more to acquire now that investors are buying in.

This has been an issue for a long time, but if coins are returning a lot more money over time than other investments, you can rest assured that more people will be buying into rare coins in the future.

This trend isn’t entirely new, however, as this video from three years ago indicates:

Putin’s Patek Philippe for Sale?

Putin's Patek?
Putin’s Patek?

Vladimir Putin is a man who is well known to most people, and he’s certainly been in the news a lot in recent years.  What’s unusual, however, is to see him in the news in matters related to watches.

It turns out that Russia’s leader is actually a collector of fine watches and he reportedly has a collection of both size and repute.  We didn’t know this, but then again, most people who collect world-class examples of rare watches rarely make themselves known.  In fact, more often than not, when a super-rare watch comes up for auction, both the seller and the eventual buyer are usually reported to be “anonymous.”

This week, however, a site called Antiquorum has reportedly listed for an upcoming auction a watch whose owner is reportedly Vladimir Putin himself.  That might seem to be a fraud, but the watch is a rare Patek Philippe, and the company usually insists on recording the name of the buyer for their more unusual timepieces.

Furthermore, the timepiece in question is an unusually rare model, the reference 5208P grand  complication.  These watches aren’t sold to just anyone, and you likely have to be famous (or suitably wealthy) to the extent of a Vladimir Putin to even be permitted to buy one in the first place.

It’s a lovely watch that cost roughly $1 million new, and it features:

  • A platinum case measuring 42mm
  • Black leather alligator strap
  • Self-winding automatic model
  • Minute repeater
  • Mono-pusher chronograph
  • Minute repeater with two gongs
  • Chronograph has 60 minute and 12 hour counters
  • Moon phases
  • Instantaneous perpetual calendar with day, date, month, leap year and day/night indicator

This is a nice watch, and as we pointed out, it sells for roughly $1 million when new.  Obviously, it’s a used example of a watch that is currently available if you have the money and are well-known enough to have the company sell one to you.  On the other hand, the current owner is a well known celebrity (or despot, depending on your point of view) and that alone could dramatically affect the sales price when the watch is sold in July.

Part of the question for all potential bidders is this one – Is this actually Putin’s watch?  At the moment, there is not a lot of indication on the auction company’s site about this, but perhaps at some point in the future they will offer something in the way of provenance to indicate whether this watch belongs to the Vladimir Putin, someone else by that name, or someone who simply used that name to register the watch when they initially purchased it.

Watches that belong to famous people have often sold for tremendous amounts of money, so it’s likely that a lot of eyes will be on this one.

Regardless of ownership or provenance, this Patek Philippe is a beautiful watch with an incredible number of complications and not one that is often seen for sale anywhere.   One can rest assured that there will be plenty of bidding and the off-chance that it might be previously owned by the Russian leader will certainly keep both interest and bids high.