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In which the Wall Street Journal asks Otto Rock for advice on the Apple iWatch

You people out there are mad. A little story of how things snowball coming up.

So last week Ralph Rushton of Focus Ventures (FCV.v) mails me to show me a link to a very, very stupid story about how Apple will apparently need one third of the world's mined gold per year for its new gold iWatch. It was total BS and by way of reply (which took about five minutes of searching for the numbers, part of which you see below) I did a bit of calculation to get to just over 9 tonnes instead of the incredibly stupid 746 tonnes estimate being made by morons who like hits on their articles more than facts.

As it happens Ralph sent our mail exchange thoughts to a friend of his who works at a shop called Ambrian in London UK. Fair enough. And Ambrian used the exchange and mentioned my name in the piece sent to clients as part of their own debunking. Also not a problem.

Here's the point---> This morning i have the freakin' Wall Street Journal on my ass, wanting to know all about the iWatch! Here below is the mail from the WSJ reporter:

Hi – I’m a reporter with The Wall Street Journal in London and we’re taking a look at the furore over Apple’s gold watch, and how much gold it will actually use. Apparently you’ve had some interesting comments on this topic, and I was wondering if you might be able to send me your thoughts.

Specifically the questions we’re addressing:

-          Will Apple need 746 tons of gold per year?
-          Will Apple be able to sell 1 million gold watches a month?
-          Do you envisage any impact on the gold market from the Apple watch?

Any help would be much appreciated!

The world's obsession with AAPL writ large...seriously, don't these people have anything better to do? Anyway, here's what I sent as a reply:


If by "interesting" you mean to sadsack Apple worshippers with nothing better to do than obsess over the gold mkt for the first time in their acne-strewn lives because Tim Cook has decided that shiny is the new future then yes, it's interesting.

-          Will Apple need 746 tons of gold per year?

No. See below.

-          Will Apple be able to sell 1 million gold watches a month?

My opinion is no, nowhere near. The price point differential between a "normal" steel case ring and a gold one is going to be enormous, while the difference in functionality is zero. This isn't the market. We already see how gold iPhones/gold plated Samsungs etc etc designed for the rich in mind are ignored. The thing with phone tech /handheld tech etc is that once you have the top thing (let's say for argument's sake the best iPhone) very very few people are interested in an enhanced status symbol, even the megarich (who have their Ferrari parked outside, something that will make a better statement any day).
The act of status here will not be to wear gold Apple, it will be to wear Apple. There's no need to waste money on the superficial appearance.
My best guess on gold iWatch...and i mean most optimistic guess, is 50,000 units a month if AAPL does meet its market guesses and shifts 5m/month in total. It may well be less for the gold version, but I stress that I have no idea for overall sales figures apart from "Apple will sell oodles".

-          Do you envisage any impact on the gold market from the Apple watch?

No, none The Rolex President Gold has:
  • Case ring 18.5 grams. Contains 13.875 grams of pure gold. 
  • Case back 7.21 grams. Contains 5.41 grams of pure gold. 
  • Bezel  5.3 grams. Contains 3.98 grams of pure gold
  • The bracelet 68.85 grams. Contains 51.64 grams of pure gold.
  • Total weight: 99.86 grams. Contains 74.905 grams of pure gold

That's a touch over* 2 1/2 ounces of gold. Have you seen one recently? You can see somebody wearing one of these things from two blocks away. If the Apple Gold gets to 15 g 24KT Au I'll be surprised. It's only going to be the case ring, perhaps the bezel. So, let's call it half an ounce and be generous. (note: one Troy ounce of gold has 31.1 grams).

Then "reports" have Apple estimating 20% of sales to be for the gold watch. On 5m units per month. Are these people out of their freakin brains? A million a month? If they shift 50k gold watches a month i'll be impressed (see above) but again to be generous, let's go for my 50k/month guess.

So, 293,000 ounces of gold a year. Or just over 9.1 metric tonnes. That's one medium sized gold mine's output in a year. Zero issues.

Best, O

*I now see my mistake, as that's a touch under, not over. Bite me

UPDATE: Iwnattos over at Market Narrative adds his tuppence worth on the subject because...well, because he's quite good at doing that. Read that slice of fruity prose right here.