Demand for Apple Watch could use up third of world’s gold

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Apple
38mm rose gold Apple Watch Edition. Photo: Apple
Photo: Apple

We’re still waiting for the final pricing details on the Apple Watch, but if recent reports that Apple plans to sell one million gold Edition units a month are true, Apple Watch could wreak havoc on gold prices and do who knows what to the global economy.

Josh Center at TidBits has done some math on Apple Watch and estimates that if production rumors are correct, Apple will be bidding for a third of the world’s annual gold supply to make enough gold watches to meet demand.

To put those numbers in perspective, Apple needs so much gold it could turn the all 7,000 metric tons of gold stored at the Federal Reserve Bank of New York — you know, the one from the plot of Die Hard 3 — into gold watches in less than a decade.

Assuming the Apple Watch Edition contains 2 troy ounces of gold (2 troy ounces equals 62.2 grams), Centers estimates Apple would need 24 million troy ounces of gold per year for its watches. Or roughly 746 metric tons. About 2,500 metric tons of gold are mined per year, so if Apple uses 746 metric tons they’ll need about 30% of the world’s annual gold production.

Of course there’s a big ‘if’ here, and that’s whether the WSJ got production numbers right in its report claiming Apple aims to sell nearly one million Apple Watch Edition models per month. Those numbers sound suspect considering Rolex only sells 600,000 watches a year for an estimated $4.7 billion in revenue.

The price of gold is currently $1,200 per ounce, which would make Apple’s annual gold needs somewhere around $28.8 billion. Apple would need to store more gold per year than Rolex makes in sales. The annual sales of high-end Swiss watches was about 27 million in 2013. Apple would have to takeover 45% of the entire luxury watch industry to hit its mark. If history is any indication though, there’s one company that can completely dominate an old tired market despite pricing, and it’s Apple.

Even if you cut the projections in half the numbers are still mind-boggling. Hopefully Apple’s already working on a Scrooge McDuck sized vault to store all its gold.

Source: TidBits