Will you be smelting your Apple Watch edition within the next 10 years?

gold-apple-watchWould you be better off melting down your precious?

As is the case with any precious metal, the price of gold goes through massive fluctuations each and every year. So, what does that mean for that fancy Apple Watch Edition you’ve just forked out $21,000 AUD for? What will it be worth in 10 years? $21? $210,000? We’re going to take a look at how the value of gold (and Apple products) has fared over the last decade, so you know when to cut your losses and sell your Apple Watch to Gold Buyers.

The rise and fall of gold

In the decade between 2001 and 2011 the value of gold was, with the exception of a few slight dips, continuously on the rise. In that time, the value of gold went from approximately $550 AUD an ounce in August 2001, to it’s peak at about $1,776 AUD an ounce in August of 2011. The value of gold nearly quadrupled in one decade. That’s epic. So surely, surely, if you bide your time you’ll be able to make $21,000 back by smelting your Apple Watch, right?

Well, probably not. Though the value of gold reached its summit back in 2011, it's been slowly, but steadily declining since September 2012. At the time of writing, gold trades for $1,498 AUD. While nowhere near as low as it was back in 2001, that’s still a 15% decrease over five years. Many predicted that gold would start out weak in 2015, due to the Federal Reserve (the US equivalent of our own Reserve Bank of Australia) upping their interest rates, and gain strength as the year closes out. Others weren’t so optimistic, and are expecting the stronger US dollar to continue in 2015 and push gold prices down as low as $1,330 AUD. As of now, the Federal Reserve has put off raising interest, and the value of gold has experienced a pretty smooth ride throughout early 2015, but when the Federal Reserve decides to up rates, the price of gold will certainly take a hit.

If this five-year trend continues its slow descent over the next five years, the value of gold could potentially drop to at least $1,200 AUD an ounce by 2020.

Did you know?

The Reserve Bank of Australia (RBA) is Australia’s central bank. They issue the nation’s currency, conducts monetary policy, and works to maintain a strong financial system. In addition to this, the RBA also manages Australia’s gold and foreign exchange services.

What does this mean for the golden Apple Watch?

With 55 grams of 18-karat gold in the Apple Watch Edition, the gold alone would cost you around $1,965 AUD. It’s obvious there’s a huge markup on the Apple Watch Edition (given the technology and brand involved), and selling it for it’s gold in 2015 would be a really bad move (apologies for stating the obvious). Keep in mind that Apple has patented a metal matrix, that’s speculated to consist of a much lower gold content (on a volume basis) than standard 18-karat gold (some are estimating as little as $811 AUD worth of actual gold).

But, you had to know going into the purchase that your $20,000 splurge wouldn’t retain that value for long, after all it’s the first run of a new gadget, and will undoubtedly be superseded in no longer than a year. Naturally, the price of Apple’s products correlates with their relevance and functionality. Think about the iPhone 5S, released in 2009, it’s only a fraction ($40 AUD) cheaper than it was at launch. But, the 5S still works, it’s got the A7 chip, M7 motion co-processor and 8MP camera with dual-tone flash– it’s very close to Apple’s latest release. The iPhone 3GS, however, now that’s a different story. Releasing in 2009, the 3GS launched at $879 in Australia. Skip forward six years to 2015, and the 3GS is, firstly no longer available in retail, and secondly, selling brand new for around $110 AUD on eBay. That’s roughly about 12% of it’s original retail price.

What’s our verdict?

Let’s forget for a second that Apple’s trademarked mix of ceramic and gold already decreases the value of the Apple Watch’s gold. Say the gold content really is worth $1965 AUD, with the current downwards trend of gold value, that pittance could depreciate to $1,670 AUD by 2020 . Okay, so the gold from your Apple Watch isn’t going to save you from the next GFC. But, the watch itself? You paid $21,000 for it, surely you sell it in another five years, and at least make enough back for $10,000 home loan deposit.

Nope, sorry. With the likelihood of Apple releasing another, better Apple Watch every year ranging from high to I’ve-never-been-more-certain-of-anything-in-my-life, the first-run Apple Watch is likely to suffer a harsh decline in value over the next five years. Being generous (again) let’s say the Apple Watch is worth 15% of its current retail cost in 2020, that would reduce it’s resale price to a pitiful $3,000 AUD. Ouch.

Of course, we’re being dramatic here, and if Apple does commit to the Apple Watch and to the consumers who purchased it, they could stretch it’s lifespan by maintaining a healthy flow of compatible software updates. But, do we really think they’d be so kind?

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