Thursday, April 7, 2016

Survival... Rolex?

Hi Fernando,
Whats your experience with rolex watch?  Will it hold value in SHTF?  Decrease, increase?
If I remember correctly, you mention in your first book, but I am traveling and do not have it with me to look up what you said about it.
I have some savings which I am using to purchase precious metal coins. However, in one of the shops, I came across a (genuine) 18k gold ladies oyster perpetual president made in the early 80's for US $3,800 and it got me to thinking.
1) It is my understanding is that I could walk into any major city in the world and be able to convert it easily into cash.
In your experience, would that be accurate?
I am always on the go---traveling somewhere---both around the US and international.  I like the concept of a rolex because its subtle.  It is seen as a personal item and would never get counted towards the $10K cash limit.
Since it is an older model, if anyone ever asks about it, I will say it belonged to my grandmother and was passed down to me.
We have problems now in the US with police officers confiscating (stealing) your cash and monetary instruments claiming its suspicious for "drugs" even if you have committed no crime and have never touched a single drug in your life.
As opposed to bullion, it is highly unlikely that a rolex worn on your wrist would ever be confiscated by police or customs.
Other questions/concerns:
2) The scrap value of the gold in the watch is only about US $1200 compared to its asking price of $3,800.  In terms of holding its value, is it better to stick to bullion coins? Or would it be reasonable to expect that a genuine gold Rolex would hold/increase its value in bad times?  
3)  I am a single female and usually solo.  How much danger am I putting myself in by having and wearing a gold rolex? 
I am automatically on "yellow" alert whenever in public, and practice situational awareness at a level much higher than most.
For the time being, I'm sticking to "1st world" countries, although who knows? That could change.
I have done a lot of internet research about this model of watch and the price. Retail price for the same or similar watch in the US right now is between $7,000-$12,000.  This caused me to be suspicious of the seller, so I went back and examined the watch closely with gem magnifier, and it is definitely authentic.
I asked the shop owner why this piece is priced so low.  He said that most of the merchandise are things he purchased and re-sells.  But that this particular piece he is doing on consignment for a friend and she needs the $$.
He confirmed everything I had researched online about how, in the USA, this watch would sell for $7,000 +;
He said that here in Canada (quebec), there just aren't many buyers for rolex because Canadians don't have money like Americans do.  And that most of his rolex customers are actually Americans who come over the border to make purchases.
Thank you so much for everything you do!  Love your stuff, and Im just bummed that I didnt bring your book with me!
Hello Angela,
In most countries that I’ve been to form USA to Argentina and here in Europe, the advertising seems to be the same: “We buy your gold, silver, diamonds and Rolex”.
You have to keep it mind though that the selling price is nothing like the buying price. In general you are lucky to get half of what a potential customer is willing to pay once the dealer flips the watch. Now if you can get it yourself for such a low price then you could probably sell it elsewhere without losing money or maybe even making some on top.
In general yes, Rolex do hold their value pretty well, same as quality jewellery. The trick is knowing your trade, knowing how to avoid counterfeit items, and of course avoiding the ridiculously low offers you come across sometimes and sticking to serious people.
I was talking with a jeweller today and he was showing me how to grade diamonds, which imperfections are acceptable and which are not. Its all very interesting stuff. Again, the selling price is often not as good as the buying one so you do lose some, but Rolex watches hold on nicely. The nice thing about bullion is that market price is fixed so there’s less room for excuses. Try talking with the shop owner. Ask him, honestly, how much would be pay for a similar item if he was buying so as to get a reasonable profit margin himself. That will give you somewhat of an idea of how much you can get for it.
So, answering your questions.
1)Yes, in most city centers around the world you will be able to sell your Rolex for good money. Some dealers may haggle worse than others but you will walk out with a wad of cash. The trick is buying a quality item, paying as little for it as possible and then asking around to get a good deal when it’s time to sell.
2)For protecting money, I think precious metals is the way to go because as I said before, it has a given market price and there isn’t much to debate about. Pure gold is just that. Watches, antiques and even numismatic coins have a certain value as well and they may well be good investments and ways of moving around a lot of cash. I doubt the average TSA agent knows what a Mercury Dime 1916 D is, but the thing is worth $135,000 in  MS67 condition. Having said that, its not as reliable in terms of knowing the specific price as checking the daily given value of gold and silver. The same coin can be worth $100, or $100.000 depending on its grade, and the difference between Fine condition or Very Fine condition can be hard to tell. Even experts may have a difference of opinion. This kind of problem doesn’t exist with precious metals.
3)I would say the risk is pretty high. In a place like Argentina its downright suicidal. I’m not exactly a “soft target”, yet for some time I stopped wearing my gold wedding ring, replaced it for a silver one like lots of other people did back in the day. Now in first world countries this may not be that much of a problem. In most European capitals and large cities you see women with very expensive jewellery. Still, I would say a gold Rolex is pretty noticeable and pretty tempting. In moderate to high crime areas I would keep it out of sight. If you just want to keep it with you then it would just be a matter of being careful and when you know you are in more troubled areas just put it in your purse.
Stay safe!
Fernando “FerFAL” Aguirre is the author of “The Modern Survival Manual: Surviving the Economic Collapse” and “Bugging Out and Relocating: When Staying is not an Option”.


Anonymous said...

I would think that the watch or expensive jewelry definitely would cause trouble in either being confiscated or stolen by airport security at some point unless its worn. In which case a criminal may decide to rob or kidnap you hoping for a big pay day.

In either case, definitely adds danger.

Anonymous said...

A Rolex is not the worst thing to own but it is not a travel investment.

Your sell price at a pawn shop or jewelry store will be 1/3 to 1/2 your purchase price. I would rather sew a pair of gold eagles into the bottom of my coat. The will still go for $1000 each at a pawn shop which is better than 1/3 of $5000 Rolex.

$2000 cash can get you a hotel room and a week of meals in just about any city in the world while you wait for travel assistance from your consulate.

A watch is the first thing to get stolen after your wallet/purse and cell phone.

Anonymous said...

Hi Fernando thanks so much for your response!

Thanks for talking about the difference between the "buy" and "sell" price. I didn't mention that in my email because I didnt want it to get too long, but I completely agree with you--It only seems to make sense if you are able to purchase a genuine rolex at a 15-30% discount off of what the normal resale price would be, because you do have to be prepared when selling to take the dealers margin into consideration. The same principal is true for gold, silver, jewelry---anything, really.

I always try to keep those discounts and premiums in mind before I buy, so that I understand exactly where my "stop-sell" limits are at any given time. Apmex is a great website for making those calculations because on the "sell to us" page, they let you know exactly what they would pay you for your xyz coin today, and next to it is listed how much they are selling it for today.

A said...

I have 1 further question based on what you said.

In a situation where the gold price goes up---is it your observation that the resale value of a gold rolex increases at the same rate as the gold?

To be more specific; say the watch contains 2 oz of 18k gold. Today, the scrap price of 1 oz of 18K is US$929, so that would be US$1,858 of gold.

So, in a watch that is being sold for $3,700; $1858 of that is the scrap value of the metal alone, and the remaining $1,842 is the value of the rolex plus dealers commission.

Lets say the gold price rises up and 18K gold is now US$1500/oz

Would the watch now be worth $1500 x 2 oz + value of the watch itself (lets say $1842 to make it easy)? ($4842)

Same question for if the price of gold goes down

Lets say price of 18K gold drops to 500/oz. So, the same watch now has $1,000 worth of gold in it. Is the watch now worth less by the same amount? $1,000 + $1,842? ($2,842) Or is the watch still going to be considered a $3,700 watch?

I guess what Im asking is, do you know whether or not the rolex itself maintains its value separate from the fluctuating price of gold?

Berneck said...

A watch is largely a bad investment. You have to really know what you are doing, and even then you will likely lose money. If the watch is gold, you at least have a floor on how much you can lose. It's certainly worth its weight in gold content for the most part.

I have seen the idea of using a Rolex as a prepper item in the past. Mostly for reasons like bribing a border agent, getting through customs without claiming value, getting cash easily, etc. While I understand the rationale, you will likely lose a tremendous amount of money in the end. I think the idea is more "romantic" than reality. Like using a prized family heirloom to pay your way to freedom, that mostly happens in movies.

These gold watches only have about 1-3 ounces of pure gold in them. At a maximum that would be about $3500, and most of them probably have about $1800-$2200 worth of gold in them at best, given current prices. I would argue it is just as easy to hide one or two gold coins, or carry a combination of gold and cash. The cash and gold can be hidden in different places and not all together. The amount of money you would be carrying would not really set off any alarms either. Not to mention, that if you did have it all stolen from you, you only lose the cash value, not the premium a Rolex carries in addition. And, like Ferfal said, a Rolex on the wrist is going to draw unwanted attention.

A note on that dealer. When I hear things like, we're selling it low because it's on consignment and Canadian's don't spend that kind of money, it raises red flags. The Rolex market is pretty unique to most other watches and they do tend to hold resale value better. If it was really worth more, that dealer would have sold it on eBay already. A best case scenario is that the case and bracelet may be authentic, but the movement inside is not. Or, it is a counterfeit. The counterfeit market is so good that even pros have a very difficult time telling a difference with them side by side!!!

If you do decide to purchase the watch, ask to bring it to an authorized Rolex dealer first and see if you can have it appraised. That should give you a good idea of what you are dealing with. And, if it checks out, buy it because you like it and want to wear it knowing that it does have some "real value" to it, but not because you think it's going to save you from a shtf situation. In a not so urgent situation you can likely get more than the gold content value for it, IF it's authentic and serviced regularly.