Four-and-a-half years ? Where does the time go! I’m not exactly sure either,i but regardless, it’s been exactly that long since we used fine art auction results instead of CPI to give us a sense of the real rate of inflation, so it’s high time we take a fresh look at the rate at which our dollars are decreasing in value.
While interest rates today are virtually identical to what they were in May 2014, they all but bottomed out to zero in the interim in a globally concerted effort to stimulate consumerism so as to minimise the blatant and brazen breaking of oh so many political promises.ii As we well know, the way that inflation is typically advertised, ie. the CPI/PPI basket of goods methodology, is intentionally if not outright maliciously flawed so as to obscure the shadowy mountains of debt being everywhere accumulated.
Those with eyes that do seeiii can’t help but notice the market impacts of this rapidly degrading purchasing power in the realms of fine art, fine automobiles, and others, but let’s take a year-end review of the dollar-denominated state of affairs for 2018. Our case study is, what else, but very, very nice watches!iv
Having just taken delivery of Osvaldo Patrizzi and Guido Mondani’s “Collecting Nautilus and Modern Patek Philippe Wristwatches,”v which was originally published in 2004 but updated in 2016, it’s nothing short of astonishing just how much prices have changed since the most recent update. While the 5711 gets most of the airtime these days, in less than three years, the O.G. Nautilus 3700vi and even the considerably less desirable “mid-size” 5800 have “done an air-cooled” and utterly
exploded assploded in value. Comparing the Patrizzi/Mondani estimates from 2016 with current data from Chrono24, Christie’s, Sotheby’s, and premium brokers,vii this little table emergesviii :
Of course, you know me, so it’s no surprise that I snuck Bitcoin in as a frame of reference, but an inflation rate of 53% since 2016 is still a fuck ton! Any collector worth their salt would be tickled pink to have ridden this most recent Nautilus wave, and would find themselves the talk of the town for it,ix but there’s still an opportunity cost to overcome, if too a social and emotional aspect of the equation.
But regardless, as with art and automobiles, there are still a functionally unlimited number of dollars chasing a very small and very limited number of wrist-wearable Genta-designed masterpieces named “Nautilus,”x so this isn’t so much a “bubble” as yet another example of the same phenomenon we looked at almost half-a-decade ago : dollars are plummeting in value.
And how! These kinds of figures (53%!!) will never show up in the tightly regulated baskets of tightly regulated goods that make up the CPI and PPI, but the dizzying oceans of cash floating around the fiat world can’t help but funnel themselves into every manner of unregulated durable good, be they Picassos, Porsches, Pateks, or… Bitcoin, and with increasingly accelerated speeds.xi Dollars have to move. It’s in their nature.xii
The question is : if you’re going to take a bath, why not strap on a Nautilus ?
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- ARGGHGHRHJ!1!! TIIIIME?!!!?!! ↩
- More than just political promises, you might argue, but social contracts too. *SNAP* right over the knee. ↩
- Y’know that old Corbu line… ↩
- Noooooooooice. ↩
- The three-volume set was early Chrismukkah gift to myself alongside a similar three-volume set for Rolex and a single-volume Daytona book. The deep dive continues! ↩
- The Nautilus was designed by Italian master Gerald Genta to resemble the porthole of a yacht, and indeed the 3700 was constructed thusly – in two hinged parts with the movement entering from the dial-side. This was not only challenging to produce but also to service, so later versions switched to a more conventional three-piece case while retaining the same 120m water resistance.
- eg. A Collected Man, Steve Hallock. ↩
- Since it’s very nearly 2019, the per annum (p.a.) inflation rates are calculated over a three year period instead of two. This gives some allowance for discrepancies between the time of writing and the time of publishing of “Collecting Nautilus” as well as the benefit of the doubt to the beleaguered dollar.
Also, since the 2019 “unworn” numbers were estimated to be proportional to the 2016 numbers because it’s almost impossible to even find unworn examples for sale, the museum-quality safe queens changing hands privately as they must, the inflation p.a. figure ends up being the same, so only one is listed.
Second-to-lastly, the bracelet and case “Materials” are encoded : S=Steel, YG=Yellow Gold, WG=White Gold, and YG/S=Two-Tone Yellow Gold/Steel. If I was being really French Swiss about it, I’d have labeled them, A, J, G, and AJ, respectively, but let’s give some respect to the international lingua franca, eh ?
Lastly, a note on the importance of “box and papers” from Patrizzi and Mondani : would-be collectors can’t ignore that “papers” consisting of the original warranty card and Certificate Of Origin are vastly more valuable than the Extract From The Archives that we frequently see constituting “papers” on eg. Chrono24. Caveat emptor!
- The “town” here is, of course, not the entire city where the collector lives. Their garbageman and barber don’t care. But their RedBar / Instagram buddies sure do! ↩
- Exact Nautilus 3700 production figures are known only to Patek but this happens to be a very good estimate :
- Recall that I estimated the inflation rate from 2012-2015 at 41.5%, and now 2016-2019 is 53%. That’s more than a 20% in the annual rate. It doesn’t take a math genius to figure out that Voltaire was indeed onto something all those years ago. ↩
- Contrariwise, it’s in the nature of Bitcoin not to move. In fact, miners even used to priviledge the movement of older coins by incorporating “coin age” alongside miner fees when creating mempool hierarchies. Alas, those days are but a distant memory now. ↩