What’s happened to the supply of used watches referred to as vintage or antiques? Several different situations have affected the supply.
With the today’s market dynamics, I’m at a loss to explain why prices for Hamilton vintage watches fell 40% in the last two years. It seems odd that long-held economic principles of supply and demand don’t seem to apply to this market.
When a commodity’s supply diminishes, something is odd. When prices remain stable or go down. It begs one to address this issue. I want to know why a highly sought after product like a 1938 Hamilton Martin could sell for less than it did two years ago.
First, here’s the caveat. The fair price of an item is that to which a buyer and seller agree. The assumption is that both parties have equal knowledge of the item’s value. Even Aristotle wrote a lot about the “willing buyer and the willing seller.” Get this: even his rules don’t apply to the market right now.
Online sites like eBay have created something we call liquidity. Watches used to sit in drawers and jewelry boxes, and we didn’t have a place to sell them. With the Internet, buying and selling occur within an electronic marketplace. That timepiece, no one in the family wanted, will have a willing buyer if you list it.
That leads to another concept, which we call an efficient market. In such a market, people are assumed to have equal knowledge about a commodity whether it’s stock, bonds, corn, wheat or antiques. Today, that’s not the case with vintage Hamilton watches, but it should be!
The watch market isn’t a stock-market. I can look at an auction listing and know more about the product than 95% of potential buyers. That means the market isn’t efficient. If I have more information than someone else, I can earn a premium.
In the stock market, that’s called cheating. In the watch market, that’s the way of the world. No one regulates hard assets. The only thing we have is liquidity and some honest sellers.
What about the uninitiated?
New collectors of Hamilton will find that a very high percentage of watches available on the Internet come out of estates and garage sales. A backlog of old watches doesn’t exist, generally speaking. Several factors have dented the supply of old wristwatches.
Gold smelters in the 1970’s destroyed in excess 98% of all wind-up vintage watches. If you see a “production” figure of say 2000 units for an individual model, then maybe and I mean perhaps, 20 of that model remain. They’ll be in various conditions from worn-out and failed to ticking and in good shape.
My grandfather, uncles, and father participated in this activity. They owned Guild Jewelry Stores beginning in 1902. They sold many Rolex watches among other watches. If a customer came in for a newer 1960-70 watch, they took a trade-in of his old watch and tossed them in barrels. You read that correctly.
When the gold smelting began, they had employees haul those barrels to Southwest Smelting and had the gold leached out. My folks made a lot of money. As a side note, they smelted their entire Christmas inventory when gold reached $60, then again when it went into the $400 range and then the $800 ran – briefly.
Why did they do that to their customers? Because they could. I understood it even though I didn’t agree.
People have and continue to buy many vintage watches for parts. It’s difficult to find parts for old watches, and many watchmakers only know how to change parts. They don’t know how to fix parts. That means a drain on supply. I understand it. I buy parts watches as often as I can.
Collectors and hobbyists have also grabbed up as many items as possible. In 2012, the available inventory from estates and antique malls had started to disappear. You’ll also see churning, which in this case means buying, selling and then buying back. We’re dealing with a diminishing supply of watches with swings in demand based on the economy.
The first sellers of vintage Hamilton watches had an inventory purchased at NWCCA chapter meetings. An efficient market for vintage watches didn’t exist. Once eBay got started, people were in a quandary of how much to ask and how much to bid. The first sellers didn’t value their watches high enough considering demand. In the early days, 1948 Boulton models sold for about $25-$35. After a year, they began to sell for over $100. Now, they sell for $50-6$60 depending on visual condition.
What’s that watch worth today?
As of May 2018, I posted an article explaining how to find current prices of Hamilton wristwatches. Insurance Appraisers use a similar approach by looking up comparables and basing the value of an estate item. Prices have changed since the retro fade (1990 – 2011). You can find the article here or look it up in the May 1, 2018 post on this site.
Two years ago, I bought a 1938 wristwatch for $135 plus shipping. That was considerably higher than the same model in the same would have sold for in an auction. I liked the watch, and with a 14-day return policy, I took a risk. I still think the watch was worth it. Someone serviced the movement; it has a new dial, clean and shiny hands and numerals, no nicks or scratches or wear of any kind. It even polished up nicely.
I did a little research. For example, I checked with Fast Fix Jewelry, and they wanted $395 plus parts to clean, oil and adjust the watch. They also wanted four months to turn it around. Price disparity? Yes.
In June 2013, I bought the same model for $45 and shipping was free. The watch was in mint condition. I ask myself how is that possible. I suggest it has something to do with the economy. Perhaps, the market has become more efficient and buyers more sophisticated than in the past. If so, bids are lower.
If I didn’t know how to work on the movement myself, I would have to add $400 to the purchase price. If I asked someone to buy, service and update the dial my total cost to restore the watch would have run approximately $585. That’s a decent estimate of the value for a working, restored 1938 Hamilton watch in 2010. Not today.
Gold Prices in the 1970’s
After the United States deregulated gold in 1971, prices increased markedly, briefly reaching more than $800 per troy ounce in 1980. From 1980 to 2007, the rate has remained in the range of $320 to $460 per troy ounce. The rising prices of the 1970’s encouraged smelting of anything with gold in it. That meant “gold-filled” watch cases. Why? Gold filled timepieces had gold in them; the precious metal happened to cover brass. Hamilton watches had more gold covering brass, and it was significant enough to go after.
Solid gold also lays over brass, but in higher quantities. A $20 used wristwatch became a $200 piece of gold in 1974. My grandfather’s jewelry stores would give a customer trade in allowance of $5 when the buyer surrendered their old watch for a new one. Those watches went into a barrel, and before 1971, like other Jewelers selling the Bulova Accutron, no one thought anything of it. People just wanted the newest toy.
Then came the on-rush. A firm called Southwest Smelting had a process for leaching the gold out of those watches. The barrels full of watches made their way to downtown Dallas, Texas. Vintage watches began to disappear. Who knew? If I could look into the future, I would have held on to my “used” 1957 Chevy.
Unless you just want a real vintage watch (and many people do), then consider a new Hamilton watch. Make sure it has a mechanical movement. Otherwise, you’ll pay $450 -$750 and get a $30 quartz movement.
Let’s take a look if the decades have been fair to Hamilton wrist watches:
If you bought a watch in 1938, for example, and it cost $90 it would have a $1410 impact on your purchasing power. Using a hypothetical situation, Mr. Robert Dahl goes to Zales and finds two watches he likes. Use the first two below. The hit to his check book in 1938, would feel like a hit to our check book in 2016 as such:
In later years, you could use a hypothetical example similarly.
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| Hamilton Chronometer |
You’ll need to look at some recent sales from eBay, to find a buyer-seller gauge for the value of your watch. Some prices, in my opinion, are not representative of a typical exchange, but that’s irrelevant. Hamilton wrist watches have not been a “good investment”.
If you want one, then buy it for its novelty. Some of my Hamilton wrist watches are fine watches even today. With new technology, the improvements made in sealing cases and servicing the movements, some Hamilton watches are as good and in some cases better than watches costing ten times as much as those sold today. Hamilton watches often run beautifully even after 100 years.
Now let’s consider things from which to look when considering a purchase
Condition of the Movement
Does the movement run?
When was the last service?
Do you see any rust on the movement?
Does it have a popular caliber of movement, for example, a Hamilton 987?
Are parts available?
How long does the watch run on one winding? – (Condition of the mainspring.)
Case
If gold-filled, has any of the gold rubbed off? (Brassing)
How clean does the watch look?
Is the crystal clear and minus scratches? (Look to see if replacement crystals are available.)
Does the face have more spots in one area than the others? (Probable leaking of the case seal.)
Does it come with a band and is it new? (You will discover that some watches like the Hamilton Cushion need very thin bands.)
Are the hands clean and without any rust?
Model
How popular is the watch? (For example, the Hamilton Martin is plentiful, which means an oversupply).
How detailed is the description? (Unless you are a restorer or know you models – you might be buying a $5 flea market special.)
Pricing and Value
Have you compared prices?
Is it a Buy It Now? (If so, it is more likely than not – overpriced and in worse condition than it appears in the photos.)
Does it have a high first bid? (Many buyers avoid high first bids so you might be able to buy the watch cheaply at the last moment.)
Have you checked the seller’s ratings?
Did you first see it at the last minute and want to jump on it? (Don’t do that.)
Overall
Is the watch customized? (Has a seller changed the original appearance? For example, did someone have the dial painted colors the watch never came with? )
Has the seller given a date? (Ask where he or she got the information.)
Is the model name or number accurate and where did the seller find that information?
Research
Have you done a Google search and looked at the images on the browser tab?
Check out forums about the watch – you will find a great deal of information.
My advice is to know what you are doing and make sure the seller knows what he or she is doing. The chances are that they don’t. Try not to go with your gut feeling. Vintage watches are often fragile and don’t survive shipping. Add up to $300 plus parts to get it serviced.
Now let’s summarize:
1. The supply of Hamilton wrist watches has not gone up in market value even though the supply has almost disappeared.
2. Prices in 2013 are lower than most collectors would expect – myself included.
3. Value-in-use far exceeds any appreciation you will probably ever see in price.
4. Use a checklist to determine the condition of a vintage watch you’re considering for purchase.
What’s my opinion of Hamilton wrist watches?
I don’t even consider this a loaded question. Backing up from 21st-century technology – I consider some Hamilton wristwatches as the best watches ever made. I don’t consider that self-serving.
I have bought, sold, serviced and restored a variety of vintage watch brands. The Hamilton 979, 897 series and the 989 movements are incredible. When working on them, everything fits.
One of the standards of watchmaking says that one should always (and I say always) attempt to save the original parts. I agree with the exception of the Hamilton movements I mentioned above for wrist watches and all of the Company’s pocket watches. I find it amazing that the Hamilton Watch Company never made a watch with less than 17 jewels. That makes an important difference to a watchmaker that only works on vintage watches.
Don Sauers in his book, Time for America, mentions an experiment where several watch manufacturers disassembled a number of their watches and put them in a container. Supposedly, the parts should exchange since everyone claimed they used the American Manufacturing System and their parts were standardized. Watchmakers could make a watch from random Hamilton parts, but could not with the makes or models. That’s a performance and service issue.
Next, I look at the cases. Hamilton never made their own cases, but they gave case manufacturers specifications to high standards to meet. If the cases didn’t live up to standards, Hamilton didn’t use them.
I have yet to see another watch manufacturer’s cases hold their own when compared to a Hamilton. Hamilton cases have no equal because they are made stronger, with more gold and fit tight. The tight fit keeps environment elements out of the cases.
When I consider style, I put myself in the era when the watch was made. I look at furniture, architecture, automobiles, clothing, prices, the environment and read about life in that year. Hamilton styles were not only appropriate, but other watch companies copied Hamilton. Elgin, for example, offered watches that resembled Hamiltons the year after release. Hamilton didn’t copy other manufacturers. Instead, the Company set the standards for the industry.
During the railroad days, Hamilton owned 56% of the market. That left 44% of the market for two dozen other companies to fight over. In the wristwatch business, Hamilton never went after market share. Instead, the Company went after quality. They owned the quality market.
Empirically speaking – Hamilton is the best of the vintage watches to own and collect. Then, there’s the subjective side. I love ’em.
One last piece of advice:
If you just want a quality retro-looking watch, visit the Hamilton Company website.
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