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March 9, 2015

Apple's New 18k Watch Could Consume 1/3 of World Gold Production??

Image Source: Apple.com
The gold market may soon have an ally from an unlikely source. Technology giant, Apple, known for its innovative and stylish products plans on entering into the gold market in a big way.
As recently announced, Apple plans on entering the ever more popular “smart watch” arena. A segment of the industry that is seeing incredible growth, due the increased capabilities and functionality of having a small computer around your wrist.
As always, Apple’s line of products looks sleek, stylish and are greatly anticipated by its almost “cult-like” following of customers. Customers who seem willing to pay just about any price to have the latest and greatest Apple product.
Although these products are interesting in and of themselves, it is not simply the fact that Apple is creating a new wave of products that has the precious metals community abuzz, it’s in the finer details.
Apples most high-end version, in which they simply call the ”Apple Watch Edition”, will consist of an 18k gold casing. It is estimated that each special edition of this watch will consist of 62.2 grams of gold each. That’s roughly 2 troy ounces per watch. At current market value, that’s roughly $2400 of real wealth around its owner’s wrist!
Granted, this means very little to the gold community if only a small number of these watches are to be released, but that’s not the reality. Apple is reporting that the demand for these ultrahigh-end watches is incredible.
Taking estimated sales figures into consideration, Tidbits calculate that roughly 746 tonnes of gold per year will be needed in order to meet demand. That is a truly staggering number, as it means Apple will have to consume roughly 30% of golds annual production!
Another fact that has to be considered is that Apples estimated numbers are typically much less than what actually unfolds, as they are masters of the Wall Street strategy, “under promise, over deliver”, a method used to increase share value.
Not surprisingly, the majority of the demand for these watches is being reported as coming from China, where the people still respect and recognize the true value of precious metals, particularly gold.
Moreover, the wealthy in China have a deep craving for the finer things in life, and will pay the undoubtedly very steep price that Apple will be requesting for these new luxury watches.
Could this be the tipping point that gold has been waiting for? Will Western Central planners allow Apple to enter the markets and accumulate such a staggering quantity of gold?
Perhaps there is nothing Central planners can do about it. Apple has an incredible influence given their success and popularity, in which case, gold could be moving much much higher
Courtesy Sprott Money Blog

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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