GOLD BREAKS $1,300 mark

[ParisDakarBmw]

Gold hit $1,301.30 on the weak dollar.

http://www.kitco.com/charts/popup/au3650nyb.html

compare this to the chart below

http://www.minus4plus6.com/PriceEvolution.htm

This should answer people's question on the price increase

[BarkMaster]

Amazing.

[JohnEaton]

An old post...

Originally Posted by JohnEaton

I saw $1174 USD for Gold this morning... I have been saying for years now that gold will hit at least $1500 USD, and could go to +$2000 USD... I still stand by that.

BUT tnt, I agree there are stocks and businesses that will and are becoming gold, and I got in five months ago on a killer one; and will be expanding effort and resources in that business.

Gold is a fantastic hedge in case the bottom drops out of everything... BUT one must ALWAYS keep their eyes and mind open.

Today's 1300 was expected. I say you ain't seen nothing yet

[wantonebad]

Originally Posted by ParisDakarBmw

Gold hit $1,301.30 on the weak dollar.

http://www.kitco.com/charts/popup/au3650nyb.html

compare this to the chart below

http://www.minus4plus6.com/PriceEvolution.htm

This should answer people's question on the price increase

Some folks expect gold to fall in the not to distant future and I doubt Rolex will be lowing MSRP after it does.

[BarkMaster]

Originally Posted by JohnEaton

An old post...



Today's 1300 was expected. I say you ain't seen nothing yet

You'll impress me if you predict the timetable!!

(those are glasses with sugar-free margaritas, of course!)

[ParisDakarBmw]

Gold should correct soon, but the value of gold, Rolex, and the value of a dollar seem to be in line.

Just trying to figure out the basic indicators of the Rolex model prices.

[Zed Homme]

Originally Posted by ParisDakarBmw

Gold hit $1,301.30 on the weak dollar.

http://www.kitco.com/charts/popup/au3650nyb.html

compare this to the chart below

http://www.minus4plus6.com/PriceEvolution.htm

This should answer people's question on the price increase

It doesnt explain the price increases on their steel watches.

Gold is a good hedge, and investers are scared. However, I think its price is being driven by speculation more than anything else... Afterall with sub 3% yields on bonds, there arent too many places to go.

[snowbird]

Interesting and it certainly has some effect on prices. However the markup on gold on Rolex or any luxury watch is pretty high . . . for example a PP Calatrava on a leather strap has let's say $1,000 worth of gold at current prices but sells for around $20,000.

[BarkMaster]

Originally Posted by snowbird

Interesting and it certainly has some effect on prices. However the markup on gold on Rolex or any luxury watch is pretty high . . . for example a PP Calatrava on a leather strap has let's say $1,000 worth of gold at current prices but sells for around $20,000.

On the other hand, the higher price for gold may entice some to scrap less desirable models.

[snowbird]

Originally Posted by 777

On the other hand, the higher price for gold may entice some to scrap less desirable models.

Yes, there are some used gold watches out there from mid-tier brands where it could make sense to melt them, especially if they're not running.

[R1@160@alltimes]

WOW!!

I have a hefty WG chain and pendant that I never wear anymore. Now may be a good time to scrap it.

[JohnEaton]

Originally Posted by 777

You'll impress me if you predict the timetable!!

(those are glasses with sugar-free margaritas, of course!)

Thanks and back at you

The timetable is constantly in flux as I certainly cannot predict what is happening politically...

[JohnEaton]

Originally Posted by Zed Homme

It doesnt explain the price increases on their steel watches.

Gold is a good hedge, and investers are scared. However, I think its price is being driven by speculation more than anything else... Afterall with sub 3% yields on bonds, there arent too many places to go.

If we are looking at the price of gold only, then No it does not explain the price increase of steel only.

In my opinion Rolex is looking at the price of gold as a "thermometer" of USD value.

It's much more difficult to "print" a Rolex than to print a Federal Reserve Note.

[rmfnla]

Originally Posted by ParisDakarBmw

Gold should correct soon, but the value of gold, Rolex, and the value of a dollar seem to be in line.

Just trying to figure out the basic indicators of the Rolex model prices.

Considering that stainless steel hasn't gone up much in price I'd say materials cost is only a minor consideration in price increases.

I, for one, think their board of directors gets drunk and takes turns daring one another to set more and more outrageous prices.

[Zed Homme]

Originally Posted by JohnEaton

If we are looking at the price of gold only, then No it does not explain the price increase of steel only.

In my opinion Rolex is looking at the price of gold as a "thermometer" of USD value.

It's much more difficult to "print" a Rolex than to print a Federal Reserve Note.

I disagree simply because Rolex is just another manufacturer and the Swiss economy is not on the gold standard. Rolex is pushing their prices up for reasons other than raw material costs or inflation. My prediction is that they want Rolex to go more upmarket so they can farther develop their more "affordable" Tudor brand.

[skypilot]

Originally Posted by JohnEaton

If we are looking at the price of gold only, then No it does not explain the price increase of steel only.

In my opinion Rolex is looking at the price of gold as a "thermometer" of USD value.

It's much more difficult to "print" a Rolex than to print a Federal Reserve Note.

BINGO !!! Well explained Mr Eaton. I was trying to explain inflation to a friend last night and asked him what a bottle of CocaCola cost when he was in school and what one costs now. Is it because a bottle of Coke is worth more now or because the money being used to buy it is worth less? I've got some gold for which I paid $300/ounce and I'm sure not going to sell it yet.

[sleddog]

All I can say is is, I'm happy!!



Gold shares are doing well.....

[BarkMaster]

Originally Posted by sleddog1000

All I can say is is, I'm happy!!



Gold shares are doing well.....

And the rest of the markets in general, too!

Something to make with the gold:

[ParisDakarBmw]

Originally Posted by skypilot

BINGO !!! Well explained Mr Eaton. I was trying to explain inflation to a friend last night and asked him what a bottle of CocaCola cost when he was in school and what one costs now. Is it because a bottle of Coke is worth more now or because the money being used to buy it is worth less? I've got some gold for which I paid $300/ounce and I'm sure not going to sell it yet.

Inflation was the intended example. Rolex has very little to do with the cost of gold contained in the watch.

It seems that Rolex has a set price channel for it's models. The watches cost the same as they did back then, but the dollar is worth less......

I'll leave this explaination to someone else, but in the short of it, Fuel prices, DOW market, Gold Spot price, and the value of the USD should be put on an overlaping chart, and they would be close to each other.

It seems that Rolex has a fixed value (except the pure gold, or diamond studded ones) for the watch, and need to adjust for inflation.


It has little to do with steel, or gold = to the cost of the watch, but the Gold standard moving at the same rate as the dollar, and the dollar adjusted on your watch for the inflation...

Someone feel free use your college education to word this better.

I tried, but made an ass of myself I think!

[Zed Homme]

Originally Posted by ParisDakarBmw

Inflation was the intended example. Rolex has very little to do with the cost of gold contained in the watch.

It seems that Rolex has a set price channel for it's models. The watches cost the same as they did back then, but the dollar is worth less......

I'll leave this explaination to someone else, but in the short of it, Fuel prices, DOW market, Gold Spot price, and the value of the USD should be put on an overlaping chart, and they would be close to each other.

It seems that Rolex has a fixed value (except the pure gold, or diamond studded ones) for the watch, and need to adjust for inflation.


It has little to do with steel, or gold = to the cost of the watch, but the Gold standard moving at the same rate as the dollar, and the dollar adjusted on your watch for the inflation...

Someone feel free use your college education to word this better.

I tried, but made an ass of myself I think!

This seems to be the reoccurring theme in this thread, but as someone who has worked in the financial services industry through the good times and the current bad, this is not accurate. There are simply too many holes and anomalies in this theory.

Let's start with inflation and the price of rolexes. Inflation has been historically low especially considering the weakening of the dollar. Over the past five years we have seen the price of the submariner double although inflation has barely broken 2%. The same has been true in other western economies. Rolex watches are a manufactured good, not a commodity. Rolex pays it's bills and runs its business in the same paper economy that you and I live in. Contrary to the tone of this thread, Rolex does not pay their watch elves with gold ingots. This is why other manufactured goods have barely increased in price over the past decade. In fact, deflation is now a much bigger concern. We don't want a lost decade like what the Japanese economy is now coming out of. However, in this environment, rolex has managed to double the price of their subs.

You mention the price of fuel. Oil is little over half the price it was three years ago. Sure in the US demand has tapered off, but global consumption continues to rise. Even with the fiasco in the gulf we have had very little upward pressure on the price of a barrel. I cannot recall the last time I heard the term "peak oil" as the frenzy has passed. The fact of the matter is that speculators artificially increased demand much like las Vegas real estate. The bubble that formed popped and the prices came crashing down.

Well we are at it again, and gold is the next bubble. In trying economic times and political irresponsibility (please let's not go political on this thread, both sides are guilty) small US investors are panicking. They hear news of the decline of the dollar and soaring unemployment. However, US companies' earnings are solid and in time they will start rehiring again. Gold seams like a safe hedge as it always has and will have some intrinsic value. The bond market is overflowing with demand and yields are as low as I or most anybody else has seen them. Family investors have lost faith in the US stock markets and are running to gold. The vast majority of the metal's rise that we've seen has come in the form of demand for gold etfs. People are swearing by them and yet no firm from jpmorgan to Goldman sachs is making any large buys. The Swiss firm that I work for isn't buying either. The dollar is weakening (as it has for decades) but not nearly at the rate that the value of gold is rising. This is one of the reasons why gold's cousin platinum is $600/oz of it's peak from just a short while ago. Eventually unemployment will come down (Americans are already saving a lot more and tAking on less debt) and confidence in our economy (and our markets) will return. At this point those same small investors will sell of their gold in their quest for greater stock dividends. Then the price of gold will decline rapidly. We saw this with all the tech money that was relocated into the real estate market after the tech bust and 9/11, we saw this with oil in 2007, in fact we saw this with gold in the early 1980s. Of course I have no idea exactly when it will happen, but the faster we inflate the bubble the quicker it will burst.

So what is rolex thinking? Well they are trying to cash in on the fact that the middle class and upper class are expanding and gaining wealth extremely rapidly if we look at the entire globe instead of just the US. Also please consider that rolex raised their prices not just in the US, but also in Japan (who's currency has been kicking ass as of late), Europe, China, and elsewhere. The rolex price hike has little to do with pessimism in the dollar.

Rolex is trying to raise their brand, not keep up with inflation or metals costs. Other luxury brands are dramatically lowering prices even though they exist in this same economic mess. Just a little food for thought for you guys, and to the gentleman who bought at 300/oz, I'd start thinking about selling, this bubble won't last forever....

[BarkMaster]

Chris, I know that took a while to type and I appreciate your doing so.

[walds11]

I've owned some precious metal mutual funds since 2003. Sold some during the beginning of the last crash a few years ago. I basically took my initial investment off the table, made a nice profit and letting the rest ride. More than doubled my money with what's left. Not sure if it's a good time to take profits again or let it ride some more.

[CoopJr]

Originally Posted by Zed Homme

Contrary to the tone of this thread, Rolex does not pay their watch elves with gold ingots.

You mean they don't?

Great post Chris.

[skypilot]

"Over the past five years we have seen the price of the submariner double although inflation has barely broken 2%. "" --- I have no doubt that you can quote a lot of sources for this assertion, that it is well documented, but I don't think anybody that goes to the store and shops regularly believes it. I could give anecdotal evidence of this but so could everybody else.

[HL65]

One point to consider: The difference between gold and other so called bubbles of the past is that countries do not go out and purchase internet stocks or other asset classes to back currencies. Also--Keep in mind that while the price of gold is high, it's supply is actually quite limited--less than two metric tons worldwide--or in visual terms--barely enough to fill two olympic sized swimming pools. So--could go gold go a lot higher--sure it could. Could it correct--of course...One thing I do know is that a lot of smart people like John Paulson are betting it goes a lot higher in the long run--and I would not want to be on the other side of that bet. So--having a 5% allocation or so in gold is not such a bad idea. What kills people in most so called bubbles is concentration in an asset class--so be prudent with moderation in mind--and if it does go a lot higher--great--and if not--so be it. In the end--Rolex and other companies will keep adjusting their prices slightly higher to keep in line with the growth of their expenses--and we as watch enthusiasts --will keep on buying!!

[ParisDakarBmw]

I was just pointing out the prices of fuel (like $.25 a gallon in the sixties) ans getting a Coke for a nickel.

No matter what the item, the prices have all changed, and yes the dollar has declined.

I think the dollar, spot gold (as an indicator), fuel, and the DOW have a simular incline consistant with the prices of Rolex.

As far as speculating on precious metals, that is completely different. I wouldn't buy right now unless I was selling it for a set % the next day. Don't buy high.

Rhodium is a metal that does well during economic streingth. This is because it's uses are for vehicle exhaust systems, and the jewelry trade. It's fairly low right now, but should go up as the demand increases. Gold on the other hand is a hedge, and shouldn't be your primary investment, and now isn't time to buy it due to the bubble mentioned above.

[Zed Homme]

Originally Posted by SteelerFan1965

One point to consider: The difference between gold and other so called bubbles of the past is that countries do not go out and purchase internet stocks or other asset classes to back currencies. Also--Keep in mind that while the price of gold is high, it's supply is actually quite limited--less than two metric tons worldwide--or in visual terms--barely enough to fill two olympic sized swimming pools. So--could go gold go a lot higher--sure it could. Could it correct--of course...One thing I do know is that a lot of smart people like John Paulson are betting it goes a lot higher in the long run--and I would not want to be on the other side of that bet. So--having a 5% allocation or so in gold is not such a bad idea. What kills people in most so called bubbles is concentration in an asset class--so be prudent with moderation in mind--and if it does go a lot higher--great--and if not--so be it. In the end--Rolex and other companies will keep adjusting their prices slightly higher to keep in line with the growth of their expenses--and we as watch enthusiasts --will keep on buying!!

Good advice you're spot on. However I disagree about gold's rarity. Two metric tons would barely fill a hot tub, let alone a pool. I've heard of platinum talked about that way, but about 200 tons of the metal are mined annually. Gold is much more commonplace and it is estimated that around 2300 tons were mined last year.. 2107 tons come in the form of etfs.

Fwiw central banks hold the following amounts of gold. USA 8133.5 tons, Germany 3406.8 tons, IMF 2966.8 tons, Italy 2451.8 tons, France 2435.4 tons

China recently passed south Africa as the number 1 producer. Since almost all gold eventually gets recycled, it is noteworthy that total production of all time hovers around 160,000 tons. A metric ton is around 1.1 US tons

[HL65]

Let me clarify my statement. I am referring not to the actual weight of gold but to the size of it if all the gold in the world was gathered and melted down it would be the equivalent of two Olympic sized swimming pools filled up or the equivalent of 1/3rd of the size of the Washington Monument. I stand by my original statements which are the most important take away in my original post which you agree with anyway! With that make it a great day! Cheers from the Pittsburgh airport.

[Zed Homme]

Cheers Ken, have a great flight!

[HL65]

Thanks!