With gold prices continually on the rise, luxury brands like Patek Philippe are hedging against rising gold prices by purchasing gold futures. According to the brand’s SA Chairman Thierry Stern, the trend poses a big threat to the luxury goods industry. This is especially true since a significant material in the production of watches involve precious metals.
Around 80 percent of Patek Philippe watches, for example, requires gold and platinum. If the trend continues, it is very likely that customers will see an increase in the already high price tag for luxury timepieces. The effect will be felt throughout the industry, especially brands that make extensive use of precious metals.
Patek Philippe was able to sell around 42,000 timepieces per year with a price range of $9,500 to as much as a million dollars. It is the fourth-largest watchmaker but like many other luxury brands, it is also looking at Asia for growth. China together with Hong Kong, he says, has already surpassed the United States as the largest market for Swiss watches. This doesn’t mean, however, that the brand is forging ahead without knowing the risks. Patek Philippe has been family-owned for generations as the current owners want it to remain that way.