Friday, February 27, 2015

Wanna Own Some Gold? - Just buy an Apple Watch (18k gold version)

The internet is abuzz with speculation about the new Apple watch coming soon. Apparently there will be a solid 18k gold version available. The Wall Street Journal says Apple is gearing up to make 1 million of the gold watches per month. How much gold would be in each watch? This is where speculation is running wild. Some say very little. But some estimates are as high as 2 ounces per watch. If there is even 1/2 ounce per watch, Apple is going to become a huge gold buyer alongside India and China.

Below are some articles popping up around the internet speculating about it:


Wall Street Journal - Apple Orders More than 5 Million Watches for Initial Run

"Orders for Apple Watch Edition – the high-end model featuring 18-karat gold casing – are relatively small in the first quarter but Apple plans to start producing more than one million units per month in the second quarter, the person said. Analysts expect demand for the high-end watches to be strong in China where Apple’s sales are booming."
"The Apple Watch Edition might be Apple’s most unusual product in years. Questions abound about the 18-karat gold smartwatch."  . . . . "But I have a broader question: how will it affect the world’s gold supply?"  

"Every time I write about the gold Edition models of Apple Watch being priced at $5,000 to $10,000, I get flooded with emails telling me I’m off my rocker. Here’s the thing. Gold has cost well over $1,000 per ounce for the last several years. Right after the 2008 recession it shot up close to $2,000 per ounce. Apple has stated that the Edition models of Apple Watch are not gold-plated — they’re solid 18K gold. The cost of the gold alone will be several thousand dollars."

"Technology giant Apple (NASDAQ:AAPL) may soon buy up one third of the world’s gold in order to meet the demands of its highly anticipated Apple Watch, according to reports.
Interest in the high-end model, featuring 18-karat gold casing, is picking up and the firm is already taking the necessary steps to have enough of them in stock. According to, Apple plans to start producing more than one million units per month in the second quarter of the year, anticipating high demand from Asian markets, mainly China."
My added comments:
This is one of those fun stories. It does not look like the new watch will have more than a half ounce or so of gold to me (even if not gold plated). But Apple does seem to sell things like this in the millions (or even tens of millions). So who knows how much gold they will be buying to make these watches? Gold actually did pretty well price wise in 2014 around the world. Perhaps this buying will help it out in terms of its price in US dollars going forward.
Some fun thought questions: 
Will Apple become a top 10 buyer of gold in the world exceeding most of the nations on earth in gold buying and inventory? 
Will millions of Americans finally become gold owners by accident?
What happens to a gold Apple watch when version 2.0 comes out? Do you just chunk the old one in a drawer and have to buy a new one to have the latest updated software version?
If each watch contains one half ounce of gold and Apple sells 20 million of them, how many tons of gold will they have to buy? 
We'll give the answer to that last one. It's over 300 tons of gold. That amount of gold would put you in the top 20 gold holders in the world. And if there were an ounce of gold in these things? That would put you right near the Top 10 in the world. 600 tons of gold is more than 20% of the entire annual gold production in the world. Regardless, it looks like Apple is going to be buying a lot of gold in coming months and years.

Added note: This story certainly attracted a lot of interest. Many think the watch will only be gold plated and not use nearly so much gold. But here is a link to the guy who says he asked Apple directly and they confirmed the case is solid 18k gold. I don't know, but it will be fun to see how it turns out. Here is a quote from this link:

"There should be no confusion on that last part. The Apple Watch Edition is solid 18-karat gold, not gold-plated. I confirmed this with Apple last week. You can feel it when you try one on: the stainless steel watch is noticeably heavier than the aluminum Sport one, and the gold Edition models are noticeably heavier than the stainless ones."

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