Mr. Delgado, Your predictions for 2008

[ehemaliges mitglied]

Boris,

that is an interesting theory about how fakers could or may bring down prices of vintage watches. So in that case, for vintages watches one wants to keep it would be advisable to get Rolex authentication asap and keep it.

One thing that is for sure, even though it is driven by speculation, there is a natural shortage of vintage Rolexes since they are not produced any more. This is one big difference compared to the housing market, or the internet bubble. And it is driven primarily by demand (or to be more precise, by demand superceding supply based on rarity and age and the fact that they are not produced any more).

It will be interesting to see where this will go in the coming years. There is one factor I thought about why the demand for vintage Rolexes is so strong: all major currencies experience higher than usual inflation. In order to avoid buying power, people flee either into Gold, or other tangibles such as watches, antiques, art. Usually, as inflation rises, prices for these goods rise as well.

Rolex has an amazing reputation worldwide, and not in all countries is the reputation as favorable as it is in Asia and the US. However, even though the reputation is in some countries "different" (I am trying to refer to Germany where many people look at certain Rolexes as Pimpwatches), yet the demand is strong there as well.

Well, once a white Rolex Submariner 1680 costs 20k, I am out of the game, and so will many other people.

Cheers, Boris

[jholbrook]

Are the factors which could severly destabilize the financial value of the vintage market, the very factors which could save it for the enthusiast?

I think Boris_Koch is absolutely correct on two critical points:

-At some point, perhaps within the next 20 years, critical spare parts will be depleted from Rolex.

--At some point, perhaps within the next 20 years, Asian manufacturers will have the capacity to completely duplicate, in a cost effective maner, a complete Rolex movement.

Am I the only one that sees potential providence here?

Unless Rolex does a complete 180 degree turn and decides to start producing parts for the vintage market, vintage Rolex owners will have no choice but to accept non-Rolex replacement parts if they want a functioning watch. If I'm correct that Asian manufacturers will be able to produce parts indestinguishable from authentic Rolex parts, I can't imagine that prices for vintage Rolex watches will do anything but plummet.

Good for the enthusiast, bad for the speculator.

[Boris_Koch]

John, I think you are very optimistic when you say Rolex will be running out of stock of critical parts sometime in the next 20 years.

Most of the vintage watches we're interested stopped being produced before 1985. With that in mind, I believe it will be, at best, another 5-6 years before Rolex stop servicing these models.

Time will tell, I guess.

Boris

[jholbrook]

Originally posted by Boris_Koch
John, I think you are very optimistic when you say Rolex will be running out of stock of critical parts sometime in the next 20 years.

Most of the vintage watches we're interested stopped being produced before 1985. With that in mind, I believe it will be, at best, another 5-6 years before Rolex stop servicing these models.

Time will tell, I guess.

Boris

Quite possibly. It's also possible that Asian manufacturers will be capable of producing flawless Rolex parts cost effectively in that time frame as well.

5 years or 20....the question remains the same.

[ehemaliges mitglied]

One thing I am not sure about is though, will Rolex let prices fall? Falling prices in the vintage market mean falling prices in their new model lines. Sofar, they have worked hard to keep prices going up. They have been a very secretive company, they also work hard on keeping their brandname strong. Only the future will tell what really will happen. What is sure, is that nothing keeps on going up forever. But it just just be a dip before going higher... like it does sometimes with stocks...

[Boris_Koch]

With all due respect, I think you're way off the mark on this one.

You are suggesting that the price increase in the vintage market has something to do with a conscious decision by Rolex. I'm thinking hard, but I do not see how they could in any way set the price for vintage pieces since they are not carried out at official resellers, but on the second hand market. So it is set by supply / demand on that market, which is independent from Rolex.

As for the relationship between the price of new models and vintage ones, it's non-existent as they cater to largely different audiences. Example: the Rolex Daytona, a speculative watch if ever there was one. In the past 5 years, I've seen the price of a good condition steel 6263 (without papers) going from probably K 15-17 EUR to K 25. Meanwhile, a modern 116520 was about K 6 EUR list, and about K 8.5 -9 EUR on the second had market. The price for the 116520 has not varied much despite the steep increase in the 6263. And I would bet it would remain stable even if the 6263 was going back to K 15 EUR. I could decline this example on Submariners, GMT Masters, Explorer II's etc.

If anything at all, this vintage craze has turned into a massive pain in the neck for Rolex. They have had a massive increase in the number of people coming to their Service Centers asking to authentify vintage watches. Up until a couple of years ago, they would do this free of charge. Now, faced with this ever increasing demand, they refuse to do it if you do not leave the watch for service. Another hint that they are not pleased at all of what is happening on the vintage market can be found in their policy regarding spare parts. Up until 2 years ago, if you requested so, the Rolex SC in Paris would give you back the pieces they had to replace. Now, they categorically refuse to do so in order not to fuel the traffic taking place on spares. I've even read some accounts, still in Paris, that Rolex had to press charges against some employees who were smuggling used vintage spares out of the Service Center.

Another evidence that they do not care about the market price of vintage pieces can be found in the way they service these models. Rolex will now insist that they change old tritium hands with new superluminova ones. If you refuse the change, they refuse to service the watch, fair and square. So you might get away (on request) by not having your old dial changed, but the hands will be swapped in any case. Non-matching hands and indexes are one of the biggest bugbears of most vintage collectors, and instantly put a dent in the price one would generally pay for a vintage model. Conclusion: their insistence to swap hands show they could not care less about the value of those watches. They try to restore the functionality and reliability of those watches, regardless of the impact on market value.

I have a good anecdote about this, that a reputable second hand dealer in Montreal told me when I was on vacation there. One day, a customer gets in his store, desperate to find a dial for a red Sea-Dweller. The guy had a red Sea-Dweller in original condition, but at the time he got it, he did not realize the differential in price between a red a a white 1665. So, unsuspecting, he gave his watch to the Rolex Sc to service. They changed everything, hands, dial, etc. to service spares in superluminova. Only a few months later did he learn that a red 1665 was commanding twice the price of a white one. He went back to Rolex SC and make a big fuss to get the dial back. Rolex refused, pointing that they were servicing watches on an exchange basis for the pieces that needed to be changed. So his only option now to restore the condition and value of the watch was to spend a fortune getting a red 1665 dial and matching tritium hands on the market.

Lastly, let's not forget that it is infinitely more profitable for Rolex to sell a new model than to service a vintage one.

[ehemaliges mitglied]

Well, just picking the "bubble", I would not compare it to the houses or new economy stocks but rather to vintage cars.
In the 80s these rose high up just to be cut by partly more than 50%. After some years the old level has been superceeded.

If this happens also for the vintage Rolex the traders will loose a lot of money, because they mostly put in money they would need within some time, while the collectors remain untouched, because for them it doesn't matter if the watch looses 50% of the value if they can be sure that it will superseed the old value after 15 years...

On the Rolex vintage strategy, I hope they do as come automotive manufacturers did and encounter the marketing possibilities of the old models. Why did Rolex re-use the Name Milgauss and the flash-hand?
This might point to some change we could hope for.

And I thinkt to all being in contact with Rolex officials, they should wear the oldest Rolex they own to show that they are worth to protect!

If they don't accept even watches which are restored by a free watchmaker within a time of less than 5 hours to an excellent state because of "so bad condition that we would have to replace movement, case, bottom, glass, dial and hands, what would be a reconstruction of a new watch" there is actually some kind of ignorance!

With vintage service Rolex could also earn money - ok, in the times of resource shortage in Switzerland the service devision could not easyly grow as may needed for this.
But for example if a vintage service is only possible in Geneva and at double cost for each working hour as the modern service, Rolex would earch sufficent percentage to enable this kind of service AND provide the needed vintage service for the old timepieces.

Bye

Marko

[mike 1675]

Originally posted by Boris_Koch
With all due respect, I think you're way off the mark on this one.

You are suggesting that the price increase in the vintage market has something to do with a conscious decision by Rolex. I'm thinking hard, but I do not see how they could in any way set the price for vintage pieces since they are not carried out at official resellers, but on the second hand market. So it is set by supply / demand on that market, which is independent from Rolex.

As for the relationship between the price of new models and vintage ones, it's non-existent as they cater to largely different audiences. Example: the Rolex Daytona, a speculative watch if ever there was one. In the past 5 years, I've seen the price of a good condition steel 6263 (without papers) going from probably K 15-17 EUR to K 25. Meanwhile, a modern 116520 was about K 6 EUR list, and about K 8.5 -9 EUR on the second had market. The price for the 116520 has not varied much despite the steep increase in the 6263. And I would bet it would remain stable even if the 6263 was going back to K 15 EUR. I could decline this example on Submariners, GMT Masters, Explorer II's etc.

If anything at all, this vintage craze has turned into a massive pain in the neck for Rolex. They have had a massive increase in the number of people coming to their Service Centers asking to authentify vintage watches. Up until a couple of years ago, they would do this free of charge. Now, faced with this ever increasing demand, they refuse to do it if you do not leave the watch for service. Another hint that they are not pleased at all of what is happening on the vintage market can be found in their policy regarding spare parts. Up until 2 years ago, if you requested so, the Rolex SC in Paris would give you back the pieces they had to replace. Now, they categorically refuse to do so in order not to fuel the traffic taking place on spares. I've even read some accounts, still in Paris, that Rolex had to press charges against some employees who were smuggling used vintage spares out of the Service Center.

Another evidence that they do not care about the market price of vintage pieces can be found in the way they service these models. Rolex will now insist that they change old tritium hands with new superluminova ones. If you refuse the change, they refuse to service the watch, fair and square. So you might get away (on request) by not having your old dial changed, but the hands will be swapped in any case. Non-matching hands and indexes are one of the biggest bugbears of most vintage collectors, and instantly put a dent in the price one would generally pay for a vintage model. Conclusion: their insistence to swap hands show they could not care less about the value of those watches. They try to restore the functionality and reliability of those watches, regardless of the impact on market value.

I have a good anecdote about this, that a reputable second hand dealer in Montreal told me when I was on vacation there. One day, a customer gets in his store, desperate to find a dial for a red Sea-Dweller. The guy had a red Sea-Dweller in original condition, but at the time he got it, he did not realize the differential in price between a red a a white 1665. So, unsuspecting, he gave his watch to the Rolex Sc to service. They changed everything, hands, dial, etc. to service spares in superluminova. Only a few months later did he learn that a red 1665 was commanding twice the price of a white one. He went back to Rolex SC and make a big fuss to get the dial back. Rolex refused, pointing that they were servicing watches on an exchange basis for the pieces that needed to be changed. So his only option now to restore the condition and value of the watch was to spend a fortune getting a red 1665 dial and matching tritium hands on the market.

Lastly, let's not forget that it is infinitely more profitable for Rolex to sell a new model than to service a vintage one.

Excellent post Boris, with some very salient points.

[ehemaliges mitglied]

Hi everybody,

I have been contemplating what possible developments we could see in 2008. What I have noticed as of lately, is that a lot of Rolex paraphernalia is achieving pretty steep auction results on the bay. I am thinking that the reason behind this is that watches have reached a price level that is so high, that many colelctors have decided to go after the paraphernalia instead of the watches? I would think that this trend will keep on during 2008. At the same time as many vintage Rolexes reach higher and higher price levels, I would imagine that some not so expensive not yet vintage Rolexes will be reaching higher prices at auction in the near term, if not in 2008, but soon. These models will include Subs 16800, 168000, GMTs 1675, 16750, 16760, 16700. Compared to the Sub 1680 and Seadweller 1665 they are still "cheap".

Well, these are just my two cents for what its worth.

Happy 2008, Boris

[Boris_Koch]

Hi Boris,

I agree with your views, especially when it comes down to the 1675 and 16750. Right now, they are the best value for money in the vintage sports models. Can't help but thinking they will go up in value, if I judge what happened recently to the 5513.

Cheers

[GeorgB]

Hi Boris & Boris,
I agree 100%. We can experience first forerunners of your GMT 1675 prediction. We see allready big (!) price jumps with the early 1675 thin case models.

Happy 2008

[jholbrook]

Originally posted by redsubmariner
Hi everybody,

I have been contemplating what possible developments we could see in 2008. What I have noticed as of lately, is that a lot of Rolex paraphernalia is achieving pretty steep auction results on the bay. I am thinking that the reason behind this is that watches have reached a price level that is so high, that many colelctors have decided to go after the paraphernalia instead of the watches?

I tend to believe the market for Rolex related collectibles and goodies is rising simply because of rising interest in Rolex in general, not because people can't afford the watches. Buy a Rolex, and suddenly you want a pen or a knife or a shirt that says Rolex.

[ehemaliges mitglied]

John, you are right, once people get bit by the Rolex bug, they want a pen, a knife, a booklet, and they start paying more and more as demand surges while supply for vintage paraphernalia is stagnant. I saw some vintage anchors go for close to 1000 bucks. That is impressive. A friend of my parents gave me a Rolex anchor around 35 years ago when I was a child to play with. I wish I knew where it is now??? Probably thrown away not knowing what it would become worth one day...

Boris, I see a 5513 hitting close to 10k without papers on the bay right now. That is crazy. But they wont get cheaper anytime soon.

Boris

[jholbrook]

Originally posted by redsubmariner
John, you are right, once people get bit by the Rolex bug, they want a pen, a knife, a booklet, and they start paying more and more as demand surges while supply for vintage paraphernalia is stagnant. I saw some vintage anchors go for close to 1000 bucks. That is impressive. A friend of my parents gave me a Rolex anchor around 35 years ago when I was a child to play with. I wish I knew where it is now??? Probably thrown away not knowing what it would become worth one day...

Boris, I see a 5513 hitting close to 10k without papers on the bay right now. That is crazy. But they wont get cheaper anytime soon.

Boris

There's one the 'bay right now going for over 300 in bidding.