Will the Launch of the Apple Watch Edition Help Gold Miners in 2015?
This April, Apple is expected to unveil the latest wearable gadget, the Apple Watch. Although the company is light on details, it’s anticipated the smartwatch will be capable of performing all sorts of high-tech functions such as receiving text messages and monitoring the wearer’s vitals.
For the mining sector, the real news is the company’s high-end luxury model watch (the Apple Watch Edition), which will be encased in 18-karat gold and priced at $4,999. According to the Wall Street Journal, Apple is expecting to produce one million units of this model per month. Which means one thing: lots and lots of gold will be used.
To put things into perspective, annual gold production is 2,500 metric tons. If Apple makes one million Apple Watch Edition units every month, that equates to roughly 746 metric tons per year, which will consume 30 percent of the world’s annual gold production. That is potentially huge for the gold market.
“Many speculators believe that 2 troy ounces of the commodity will be used per smartwatch. In this case, Apple would have to buy an incredible 750 tonnes of gold a year to keep up with production. This is a game-changer, as the amount of gold mined globally each year is around 2,500 tonnes, making Apple the consumer of one third of the world’s gold,” according to Business Review Australia.
The upside is huge because of Apple. Gold moves higher because Apple is a huge source of demand. Even if the effect isn’t as strong as predicted, the new watch will still increase gold prices, which could reenergize another bull market in gold. The watch is expected to do particularly well in China, where there’s large amount of demand for both Apple products and investing gold.
Although this is all speculation, if the launch of the luxury version of the Apple Watch does well, chances are gold will benefit, which means the gold sector is in for a wild ride in 2015.