Rare Rolex Sells for $5 Million

rolex bao dai 5 million Five million dollars is a lot of money to spend for anything. For most people, they’d expect to get real estate for that kind of money, and probably a lot of real estate, at that.

In this case, we’re talking about $5 million spent for a single wristwatch, the so-called “Bao Dai” Rolex.  This watch bears the name of its first owner, Bao Dai, who was the last emperor of the Nguyen dynasty in Vietnam.  He purchased the watch in Paris in 1954.

Officially, the Bao Dai Rolex is a Rolex Reference 6062.  The timepiece features a gold case with a black face, and is one of only three such models sold.  Making this one unique is that it’s the only one of the three that had diamond markers on the even numbers around the face.  The watch is a certified chronometer with a sweep second hand, a moon phase indicator, and a display that shows both the day of the week and the month of the year.

The $5 million is the most money ever paid at auction for a Rolex, and this isn’t the first time that this particular watch has held the title.  It previously sold in 2002 for a then-record $369,000.

While watch collectors seek out pieces that are unusually rare or which have unusual features, they’re also attracted to models that have unusual provenance.  Watches with famous previous owners usually fit into that category, and this one is no exception.

This sale continues the trend of unusually high priced watches selling well in a market that is slowly growing a bit stagnant.  That’s not to say that the market is sluggish, but it’s sluggish in the mid-to-somewhat-high-priced range.  It’s not stagnant in the upper end of the spectrum, as the people who would buy such pieces have finances that are likely to remain stable over time.

Watches like this one also rarely come to market, so the opportunity to buy them is equally rare.  In those case, buyers always seem to find the money to pay for them.

While a number of bidders were at the auction to bid in person, the ultimate bid was placed over the phone by a buyer whose name remains a mystery.

Though the $5 million price is a record for a Rolex, it is not a record for the most expensive watch ever sold at auction.  That belongs to a Patek Philippe Reference 1518 that sold for more than $11 million in 2016.

That’s a lot of money for anything, even for a one of a kind Rolex.

Why Smartwatches Haven’t Taken Over

A few years ago, the smartwatch made its debut, and people who follow such things were concerned that it might destroy the Swiss watch market, which has been thriving for at least a century.

Those concerns weren’t entirely unwarranted, as a similar watch crisis had occurred just a few decades ago when quartz movements first came to market.  In the end, the traditional model learned to survive along side electronic watches, and a few high end makers manufacture both mechanical and electronic watches today.

smartwatchThe smartwatch was thought to present a different kind of problem, in that many people thought they’d replace traditional watches altogether.  A lot of people don’t even wear watches anymore, as they get the time from their phone.  Smartwatches work with a smart phone to provide some functionality that you’d never get from a mechanical timepiece.

Adding to the problem is that a few companies, such as Apple, even introduced high end smartwatches that were intended to attract the interest of the well heeled watch buyer.

As with the quartz crisis of the 1970s, a few traditional makers have jumped on the bandwagon to make smartwatches alongside their mechanical models, but…

…three or four years later, the noise has mostly died down, and no one seems to be particularly concerned about the smartwatch destroying the market for mechanical wristwatches.

The Swiss watch industry is not without its problems, and there has been somewhat of a downturn in business.

But those issues have more to do with a lack of well-funded buyers for high end models than it does with a lack of interest in the product itself.

The smartwatch problem has largely gone away, however, because the industry has discovered something that should have been obvious from day one – people who buy high end mechanical watches and people who buy smartwatches are two entirely different groups of people.

High end watch people are fans of watches.  They like the mechanics.  They like the attention to detail.  They like the attention to quality.  But the people who buy smartwatches are a different type of consumer.  They like what a smartwatch does, and that’s about it.

That the two groups don’t overlap at all was made perfectly clear when Apple made the decision to discontinue their high end 18-karat gold Apple Watch, which was priced between $10,000 and $17,000.

Sales of that particular model were so poor that the company removed it from their product line and their Website, and they’d prefer that the public at large forget that it ever existed.

People who want smartwatches weren’t going to pay five figures for one, and people who want to pay five figures for a watch want one with moving parts.

traditional watchA few hybrid models are trying to bridge the gap between the two worlds, but they’re staying fairly close to the smartwatch price range, which tends to run between $100-$500 or so.

People buy high end watches because they’re built well, they’re built to last, and they’re the sort of things that you can wear for a lifetime and hand down to future generations as an heirloom.

While first generation Apple watches may reach collectible status, as early iPhones have, they’re not likely to attract the sort of buyers who would rather buy a Audemars Piguet or a Patek Philippe, and the people who make those high end watches are no longer concerned (if they ever were) about losing market share to the likes of Samsung or Apple.

Is the Watch Market Due for a Correction?

The rare watch market, particularly as it concerns mechanical wristwatches, is an odd duck as collectibles go.  Most people don’t even wear wristwatches anymore, as they have their smartphones to tell them the time.

Despite this, and the decades-old trend towards quartz movements in the timepiece industry, the market for rare and unusual timepieces seems to be insatiable.

Just a few years ago, during the Great Recession, watch manufacturers were concerned about going out of business due to the lack of demand worldwide.  In less than a decade, this has changed dramatically, and makers such as Rolex, Patek Philippe, Breitling and others are suddenly churning out tremendous numbers of watches.

Many of these are limited editions, with unusual features – moonphases, a tourbillon, lots of gold, lots of diamonds, and often with production numbers that are well under a hundred pieces.

Some of these also have prices that are well north of $50,000.  A few even have prices that go into seven figures, as seen below:

One would think that the market for such things would be saturated by now.  Everyone has but two wrists.  You can only store so many watches in your case.  The limit for the number of $10,000+ timepieces that someone might want to own would seem to be finite.

Yet production continues, and people are snapping up the limited edition items as fast as they can come off of the assembly line.  Much of this is due to the explosive growth of the economy in China, and people there are quick to want to show off their success.  One way to do that is to show people that you have “Western” symbols of success, and expensive automobiles and luxury watches are a great way to do that.

Rolex Cellini

Because of this, a surprising number of these expensive watches have found their way to Asia, and that does leave some people in the industry concerned.  If all of those watches are over there, what happens if there’s an economic collapse?

Another issue is that there is a seeming glut of vintage pieces for sale right now.  You might flinch at the price that you’ll have to pay for a brand-new Rolex, for instance, but you can buy one from the 1970s or 1980s that’s in great shape and which still has the Rolex pedigree for a lot less money than you’d pay for a new one.

Savvy collectors know this, but the newly wealthy in Asia don’t care…today.  That may change if the market gets a little shaky.

There are a few other factors that suggest that a market correction may soon be in order:

  • Anti-corruption laws in China now make it difficult to bribe public officials, and high-end watches used to be the currency of choice for that.
  • As sales have increased, so have prices, and a lot of would-be buyers are starting to balk at prices that have doubled or tripled in recent years.

It’s hard to say if the market is going to collapse, or fade, or just quietly slow down.  But as anyone in manufacturing can tell you, double-digit sales booms don’t last forever.

Sooner or later, and possibly sooner, there’s going to be a downturn in the high end watch market.  The biggest driver of this, of course, will be the overall economy, and if there’s a global slowdown in the stock markets, then the luxury goods markets will soon follow.

Now might be a good time to start investing in vintage timepieces, rather than limited edition new ones.