Gold prices affecting price increase?

Hi all,

At the start of August I received a letter from my AD warning me of the imminent Rolex price increase. The letter explained that TT and YG watches would likely be increasing in price more than the SS models because of an increase in gold prices. This was confirmed to me when I went into the store and questioned them on the matter.

This makes sense to me in a way but obviously SS models of all Rolex watches are generally more desirable. Does anyone think there is any truth to this suggestion or is the AD trying to shift some old TT stock?

Cheers

Ben


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Originally Posted by RolexGuyUK

Hi all,

At the start of August I received a letter from my AD warning me of the imminent Rolex price increase. The letter explained that TT and YG watches would likely be increasing in price more than the SS models because of an increase in gold prices. This was confirmed to me when I went into the store and questioned them on the matter.

This makes sense to me in a way but obviously SS models of all Rolex watches are generally more desirable. Does anyone think there is any truth to this suggestion or is the AD trying to shift some old TT stock?

Cheers

Ben


Sent from my iPhone using Tapatalk

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Gold prices do affect watch prices for sure. I remember AP reducing their GOLD pieces a few years back due to gold tanking. So wouldnt be surprised if this happens in reverse.

Gold price has increased around 30% since Dec-15, so would make perfect sense for them to put the prices up if they think that it's going to stay at this level.

Steve

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Originally Posted by RolexGuyUK

At the start of August I received a letter from my AD warning me of the imminent Rolex price increase.

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I'm intrigued that he put this in writing given that all we've had to date are various rumours. How did he actually word it? Just curious...

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Originally Posted by gary1064

I'm intrigued that he put this in writing given that all we've had to date are various rumours. How did he actually word it? Just curious...

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This.

It would certainly make me think they're struggling to sell TT / PM models tbh

It does make sense, but it doesn't always follow that an increase in the price of a commodity leads to an increase of a product using that commodity, especially straight away.

The majority of companies will hedge, or fix, the price of significant commodities a year in advance and sometime further, this is as they are trying to protect profits vs budget. Note the point about 'significant'. If the value of the commodity in your final price is small, frankly a change in the price of that commodity is not going to make a big impact on your profit. It becomes more important as the price of the commodity makes up a bigger percentage of the price of the final product.

In such cases, whether the company increases prices immediately or at some point in the future depends on the elasticity of demand. If they increase the price, how many prospective customers will that cause to not buy the product, or seek out an alternative or substitute? Does the increase in price offset the loss in sales?

But in short, if gold increased in price today, unless a company is taking advantage of this I would not expect that to have to feed into prices for 6-12 months. Note this is a similar argument when prices decrease. A company may have fixed the price they pay at the higher price for a certain period, so their scope to reduce product prices immediately (without impacting profits) is limited.

I wouldn't expect a dealer to know all the economics going on in the manufacture of the watches they sell, so the letter you received looks more like a marketing approach (buy now as prices might go up in future) than a cast iron certainty and guarantee of future price increases.

Someone trying to sell you something wrote you a letter (our of the kindness of their heart) advising that prices were about to go up, you then went to the place where the letter came from and asked them if it were true, surprisingly they said it was, so it must be true. :grief:

Was the letter hand written and with kisses at the end ?

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Originally Posted by -Ally-

Was the letter hand written and with kisses at the end ?

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Can't recall those details off the top of my head but I will check for you when I get home.

Cheers

Ben


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Originally Posted by phil h

Someone trying to sell you something wrote you a letter (our of the kindness of their heart) advising that prices were about to go up, you then went to the place where the letter came from and asked them if it were true, surprisingly they said it was, so it must be true. :grief:

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Thanks for the insightful reply.

Cheers

Ben


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Oh look another thread about Rolex prices going up lol. In reality the value of the precious metal in a full gold or plat Rolex or similar is in the ballpark of £2-3K depending on the model and if the list price is, say, £25-40K then of course changes in the price or raw materials cost does impact on their bottom line but not by as much as you may think, a few % at most so they may or may not decide to ride out precious metal price changes. The currency shift is a much bigger issue for them, by a nearly an order of magnitude.

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Originally Posted by gary1064

I'm intrigued that he put this in writing given that all we've had to date are various rumours. How did he actually word it? Just curious...

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Here is original letter...

http://uploads.tapatalk-cdn.com/2016...a5ecfa7d96.jpg


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Originally Posted by RolexGuyUK

Here is original letter...

http://uploads.tapatalk-cdn.com/2016...a5ecfa7d96.jpg


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Its a very small letter you would think Rolex could afford A4 paper, but I did hear from Rolex that paper prices have increased massively recently

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Originally Posted by vulcangascompany

Its a very small letter you would think Rolex could afford A4 paper, but I did hear from Rolex that paper prices have increased massively recently

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Haha enjoyed that. They did in fact stretch their resources to send me an A4 sheet. However I have cropped the photo so the AD name does not show.


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The letter indicates if you pay a deposit now the price is guaranteed?

Seems good news to me. Suggest we all order a few BLNRs and 116500s and flip them straight to WF when they arrive, long after the price increase.

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Originally Posted by RolexGuyUK

Here is original letter...

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Thanks for posting the letter. He's carefully worded it, but when you analyse it he's just speculating (like the rest of us). The imminent price rise is only anticipated...

Of course, it may well pan out exactly as described. In that event the option to secure current retail pricing with only a small deposit does seem like a very good offer as noted above.

You could argue that since the Rolex price increase in 2012 that gold is 20% down, so even due to the recent rise it's still cheaper than then.

No doubt there are many variables that we wouldn't know to consider, one being how much precious metals do they actually have in their vaults.

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Originally Posted by vulcangascompany

Its a very small letter you would think Rolex could afford A4 paper, but I did hear from Rolex that paper prices have increased massively recently

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Ha ha :la:

In other breaking news, water is wet