The Unintended Consequence of Apple Watch Success

From early reports, mostly from Apple enthusiasts, it appears that Apple may have another hit product with the Apple Watch. What has me concerned is the potential of the Apple Watch Edition, the gold luxury version that will be aimed at the international market.

If the Watch establishes itself as a winner, many observers expect a run-rate of one million Edition gold watches a month (with some low estimates of only 100,000 a month).

The million-a-month potential is fascinating. At that rate, this device would add $120 billion to Apple's revenues. God knows how high the stock would move. Investors should know that the Apple Watch requires an iPhone for all its features to work properly, so factor in more handset sales.

More interesting, though, is the possibility that a million per month would result in Apple buying 30 percent of all the gold produced in the world, according to Mining.com, based on a pre-rollout estimate of 62.2 grams of gold in each watch.

Apple Watches actually contain 69 grams of 18-karat gold, which equals 51.75 grams of pure gold. At a million per month, that's a little over 57 tons of gold per month, or 684 tons of gold a year! That's a lot of gold-buying for a tech company, and puts a serious dent in newly mined gold.

While 100,000 a month seems more likely to the majority of observers—that's only 5.7 tons of gold a month, or 68.4 tons a year—it's not outside the realm of possibility that the elites of the world will be on board with the watch and push it higher. After all, pricey Rolex watches, many of which go for for $30,000 or more, sell between 400,000 to 600,000 per year. That is the real competition for the Apple Watch Edition. Rolex sales have been going and going for decades.

The counter trend, of course, is the falling popularity of the wrist watch since the advent of the mobile phone. I haven't worn a watch in 15 years except as occasional decoration, and then I go with an original minimalist Movado museum watch.

If I was to wear a watch today it might be my gold Fairchild LED watch I got at a garage sale for $5, for irony's sake. Anyone who has read these columns long enough already knows my answer to the question, "Are you going to buy an Apple Watch?"

While I may find the current rollout of numerous electronic smartwatches silly and essentially useless, I can assure you that, at least in California, I am in the minority.

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Listen to tech podcasts; pretty much everyone talking tech already has one or two of these watches, usually a Pebble and one of the many Android watches. They all expect to be buying an Apple Watch, though nobody seems to be going for the Edition gold watch because they cannot afford it.

In the U.S., the Apple Watch Edition will probably be sold to anyone owning a Tesla, Silicon Valley types, and venture capitalists who will think it is hip. Or to people that believe $10,000 is not a lot to spend on a badge of honor among a certain executive class. Most of these people will never figure how to use all the features.

This whole watch phenomenon will shake out by Christmas. If Apple is very successful, the consequences will be extreme. Not much will change if it is a flop.