The preamble from the 2nd part of this small but fundamental & important series holds true for this 3rd part as well: Preamble: Almost two (now 3) years ago I published the first article (here) in what will over time become a small series -- Gold & Watches, #GoldPlusWatches -- and you can find it here. If you have not yet read it, then I suggest to do it now and if you read it one or two or even three years ago then... let me put it like this: reading or re-reading it is probably not the ten minutes you spent worst this week -- and I claim that, even I probably dont know you and I am not promoting a change in your time-management. Haha. So, why reading it makes sense? It outlined in short the price development aka price-explosion in gold that took place in the ten years between 1970 (USD35) and 1980 (>USD800) and to have this in mind is essential to understand the big lines, the trends and moves in horology and the following text.

The price development of gold in these ten years is probably one of the two most important single factors to understand the changes and dynamics in the watch-industry: the other being quartz. And when you ask me whether quartz or the gold-price had a more sustainable and more relevant effect on the watch industry I am quite sure it was the gold-price explosion -- just to put it into relation. Even more, without taking it into account, one stands with wide open eyes but clueless in front of the industries history in its most vibrant and revolutionary phase -- the 1970s and 1980s -- and is completely prone to folklore and romantic tales in a boutique, watch fair or horological club. Indeed, taking the gold-price into focus allows to understand horological-history and -developments without using colorful (historical) marketing-material and anecdotes. One may be surprised how much explanatory-power this simple single-factor (price of gold between 1970 and 1980) has. And even more one may be surprised why it was not yet taken into account like this, before.

So here is Part 3: I will outline the basic three reactions of watchbrands to the goldprice-explosion from USD35 (1970) to +USD800 in 1980 (+2'200%). In general there are obviously three possible reaction-schemes and we can find each of these schemes used by one or more brands in this era.

• the reaction could be passive: you simply dont change anything at all in your manufacturing and product-portfolio (Strategy A);
• the reaction could be shy or diffident: you scale back the usage of gold by changing your manufacturing and change your catalogue to significantly reduce the impact of the goldprice-volatility (Strategy B);
• the reaction could be aggressive: you change your products to increase the usage of gold and thus amplify its price-impact (Strategy C);

Sure, thats it. And at least for the last option (Strategy C) one might be wondering what should be the reason for that and who could have acted this way -- lets say there was one company, for sure.

The first strategy was prominently used by Patek Philippe and that doesnt come as a big surprise. They used usually gold for their watches and just in exceptions cases were made of steel -- although they added the steel-luxury ref3700 Nautilus to their portfolio in 1977 -- but with fine and elegant cases with just a few grams of gold and premium-prices for their products that are not prone to gold-arbitrage the impact of the explosion in the resource was something that could have been absorbed with a smile and some slight adjustments to the catalogue-prices.

The second strategy was used by the majority of brands: Rolex, Audemars Piguet & Omega to name the most prominent. The 1970s and early 1980s were the time when these brands replaced their top-lines with steel-luxury-watches (sporty, yeah!), introduced the accented steel-gold combination and simply reduced the weight of their existing models: smaller cases, thinner bracelets. The Rolex Midas-series is a popular example: the original ref9630 and 2nd-series ref3580 (200g) were replaced with the 3rd and later series in 1975, which were significantly lighter (less than 140g) thanks to the thinner bracelet -- although dimensions of the case were initially left unchanged, what leaves no doubt about the attempted deception. It took not much time and they were presented even on a leather strap (ref4017 etc, 1977ff). Audemars changed the bracelet design of the medium Cobra to get down the weight from +150g to less then 100g and Omega made its heavy icons in the late 1960s and some last in the early 1970s but not later.

Part of this strategy was also the hasty call- / buy-back of heavy goldwatches already in the authorised dealers shopping-windows -- by the brand. Yes, not just a few gold-watches were called back by the manufacturer to smelt them to generate a cash-flow in a complicated (inflation, recession, quartz & heavy competition) environment. A very brightening and interesting topic and something for a later post.

The 3rd strategy -- the most surprising and even more surprising: the most successful (!sic) -- was to my knowledge only used by one brand: Piaget. It was the only brand that used more gold and made more heavy watches and so exposed its products counter-intuitively even more to the price-jumps. But not without reason: Piaget had acquired the best of the best of the Geneva goldsmith' in the late 1960s (Ponti Gennari) and they were able to create the most artistic pieces from that material. So, besides some other products throughout the 1970s it introduced the heavy Piaget Polo in 1979 -- a time when goldprice seemed to be completely without ground control (peak in 1980 USD840) -- and it was boldly advertised: "The most expensive watch in the world." A high risk move (see details here) but a move that made the Polo the Royal Oak & Nautilus of the 80s (here) and Piaget the number one brand in that era: #makePiagetGreatAgain.

In short thats it. There might be another or one more post for any aspect in detail but as usual in-depth research might be interesting for others but will not be my work on this topic. I think there are at least a handful of very interesting and promising research-fields quite obvious on the table: smelt-rates, detailed analysis of brands and their actions / reactions in this era, development and usage of CNC of steel in parallel, ways to market (ie. marketing) steel-luxury-watches, decline of traditional arts of craft (case-making etc), implications for todays watchmarket (primary & secondary) and collections.