Vintage Watch Polishing: Investment Impact

Investment Thesis: Financial Impact of Polishing Vintage Watches (Unpolished vs. Polished Valuation)

Executive Summary and Thesis Overview

The vintage watch market has evolved significantly, shifting from a niche hobby to a recognized alternative asset class. This transformation has fundamentally altered valuation mechanisms. Historically, a timepiece's value was tied to its functionality and aesthetic perfection. However, the contemporary market prioritizes architectural originality, making the preservation of factory geometry—regardless of surface wear—the most critical factor for investment-grade status.

This report provides a data-driven analysis of the financial impact of polishing on vintage watch valuation, specifically focusing on blue-chip manufacturers like Rolex. By analyzing over fifteen years of market data, auction results, and dealer inventories, we establish a quantifiable "Unpolished Premium" and a corresponding "Polishing Penalty." The research indicates that metal removal through polishing permanently impairs capital, eroding value by 20% to 50%, depending on the rarity of the reference and the severity of material loss.

Our analysis defines the "Value Erosion Curve," charting depreciation as a timepiece transitions from "New Old Stock" (NOS) to "Over-Polished." We also explore the disruptive influence of laser welding technology and its complex reception within the collector community. The conclusion is clear for investors: the "unpolished" characteristic functions as a scarcity multiplier in a deflationary supply environment.

This report details the mechanics of this attrition and provides a strategic framework for capital allocation, arguing that acquiring unpolished assets, despite their higher entry cost, offers superior liquidity, lower volatility, and higher long-term capital appreciation compared to their polished counterparts.

Section 1: The Macro-Economic Context of Vintage Horology

1.1 The Shift from Commodity to Asset Class

Understanding the financial impact of polishing requires contextualizing the vintage watch market within the broader spectrum of alternative investments. Over the last two decades, vintage horology has decoupled from the pricing dynamics of used consumer goods and aligned itself with the mechanics of the art and antiquities markets. In a functional goods market, restoration typically commands a premium; in an art market, it often creates a discount.

Market data supports this transition. Between 2010 and 2025, the secondary market price for key benchmark references, such as the Rolex Submariner Ref. 116610LN, appreciated significantly, outperforming inflation. This shift highlights the evolving perception of vintage watches as investment assets.

1.2 Comparative Performance: Hard Assets vs. Regional Equities

The resilience of the vintage watch market is evident when contrasted with regional equity indices. Using the Philippine Stock Exchange Composite Index (PSEi) as a benchmark, we observe significant volatility and periods of stagnation, highlighting the "store of value" characteristics of investment-grade watches.

In stark contrast, the "Submariner Index" demonstrated a different trajectory. While the PSEi struggled to regain its 2018 highs by 2026, the Rolex Submariner 116610LN continued an upward trend. This "beta" of the watch market is not distributed evenly. The capital appreciation is heavily weighted toward specific tiers of condition. The "unpolished" segment captured the majority of the upside, while the "polished" segment functioned more like a commodity, suffering from higher liquidity risk during downturns.

The comparative data suggests that while equities rely on earnings growth and economic expansion, vintage watches rely on scarcity and preservation. Polishing directly attacks the scarcity factor, thereby degrading the asset's performance relative to the broader market index.

1.3 Inflation and the "Real" Value of Originality

The argument for unpolished watches is also an argument for inflation hedging. As monetary supply expands and fiat currency purchasing power erodes, investors seek assets with irreproducible qualities. A modern Rolex can be manufactured; a vintage Rolex with 50 years of natural patina and factory-sharp chamfers cannot be reproduced, only preserved.

Data from 2010 to 2025 illustrates how inflation impacts retail versus secondary pricing. The delta between the inflation-adjusted retail price and the market price is the "collectibility premium." This premium is extremely sensitive to condition. A polished example might trade closer to the inflation-adjusted floor, while the unpolished example captures the full speculative upside.

Thus, the financial impact of polishing is not merely a reduction in sale price; it is the destruction of the asset's ability to act as an effective inflation hedge. By polishing the watch, the owner converts a "collectible" (which outpaces inflation) into a "used luxury good" (which merely tracks it or depreciates).

Section 2: The Anatomy of Value – Defining "Unpolished"

2.1 The Geometry of Investment Grade

To quantify the value erosion caused by polishing, one must first define what is being eroded. In the context of vintage Rolex, specifically sports models like the Submariner (Ref. 5513, 1680) and GMT-Master (Ref. 1675), the value is derived from the Oyster Case geometry. When a case leaves the factory, it possesses specific architectural features created using specialized lapping machines.

These features include:

• The Chamfer (Bevel): This is the angled edge that transitions between the satin-brushed top of the lug and the mirror-polished side of the case. On vintage models, these chamfers are wide, distinct, and reflect light in a uniform manner.
• Lug Thickness and Symmetry: The lugs should be thick, even, and symmetrical.
• Crown Guards: On models like the Submariner, the crown guards protect the winding crown. In their original state, they are thick and square.
• Lug Holes: Vintage Rolex cases have drilled holes through the lugs for the spring bars. In an unpolished case, these holes have crisp, sharp edges.

2.2 The "Unpolished" Spectrum

The term "unpolished" is often binary in casual conversation but exists on a spectrum in professional valuation.

• True NOS (New Old Stock): A watch that has never been sold or worn, retaining factory stickers. This is the theoretical maximum value but is statistically negligible in the market.
• Unpolished / Honest Wear: A watch that has been worn daily but never subjected to a buffing wheel. It will have scratches, dings, and "flea bites" on the chamfers. However, the lines remain razor sharp. The transition from brushed to polished surfaces is abrupt and defined. This is the Target Asset Class for serious investors.

The market places a premium on this "honest wear." A scratched-up vintage Submariner that has never been polished will always command a higher price than a pristine-looking example that has been refinished. The scratches are evidence of originality; the shine is evidence of material loss.

2.3 Visual Diagnostics of Erosion

Valuation experts use specific visual cues to identify polishing, which directly correlate to price deductions:

• "Soft" Lugs: When a case is polished, the sharp transition lines are the first to disappear. The lug takes on a rounded, organic shape often described disparagingly as a "bar of soap".
• Thinned Lugs: To remove deep scratches, significant metal must be removed. This results in lugs that are narrower than factory specifications, altering the watch's stance on the wrist.
• Spring Bar Protrusion: As the lugs are polished down, the lug holes become shallower. In extreme cases, the spring bar ends stick out beyond the case metal, a catastrophic condition issue that renders the case functionally compromised and financially devastated.

Section 3: The Mechanics of Erosion – Polishing Physics

3.1 The Subtractive Nature of Restoration

Polishing is inherently a subtractive manufacturing process. It does not smooth metal; it removes the metal surrounding an imperfection until the surface is level with the deepest point of the scratch.

When a vintage Rolex is sent to a service center (RSC) or an independent watchmaker, the standard operating procedure for decades was to return the watch to a "like new" aesthetic. This involved:

1. Grinding: Using abrasive wheels to remove deep nicks.
2. Buffing: Using softer compounds to create a mirror finish.
3. Brushing: Re-applying the satin grain to the lug tops.

The conflict arises because the original factory finish was achieved using distinct tooling (lapping machines) that creates flat, planar surfaces. A handheld buffing wheel, by contrast, introduces curvature. It is physically impossible for a buffing wheel to maintain the perfect flatness and sharp angles of the original factory geometry. The result is "rounding".

3.2 The Service Center Factor

A significant portion of value erosion in the vintage market can be attributed to the manufacturers themselves. Rolex Service Centers (RSCs) prioritize the "new" look over historical preservation. A vintage GMT-Master Ref. 1675 sent to RSC in 2010 would likely return with its chamfers polished away and replaced by a modern, generic rounded edge.

This creates a paradox where a "fully serviced by Rolex" watch may actually be worth less than a watch with no service history. The service papers confirm mechanical reliability, but they also often confirm that the case has been "refinished" according to modern standards, destroying the vintage character. Eric Wind, a leading vintage dealer, explicitly describes the polishing room of a service center as a place where "beautiful bevels" are destroyed, likening the process to his "personal hell". This sentiment is echoed across the collector community, where "RSC Polish" is often a derogatory term in valuation discussions, signaling a case that has lost its unique vintage architecture.

3.3 The Financial Quantification of Metal Loss

We can quantify the financial cost of this metal removal. Data suggests that heavily refinished examples suffer a value reduction of 30% to 50%. On a vintage Submariner valued at $15,000 (unpolished), a heavy polish that rounds the lugs can strip $4,500 to $7,500 of equity from the asset. This loss is non-recoverable through traditional means. Once the metal is gone, the "originality option" is expired. The asset moves from the "Collector" tier to the "Wearer" tier, a permanent downgrade in investment class status.

Section 4: Quantitative Valuation Analysis

4.1 The "Unpolished Premium" Matrix

By synthesizing data from appraisers, auction results, and grey market listings, we can construct a valuation matrix that isolates the condition variable. The following table illustrates the percentage impact on market value for various condition states relative to a baseline "Average Polished" example.

Table 1: Financial Impact of Condition on Vintage Watch Valuation

Condition Tier | Description | Valuation Impact (vs. Baseline) | Implied Value (Ref. 5513) | Source

Museum / NOS | Unworn, stickers, pristine geometry | +50% to +100% | $20,000+ | 3

Unpolished / Honest | Visible wear/scratches, but original geometry | +20% to +30% | $16,000 - $17,000 | 1

Baseline (Polished) | Average wear, polished 1-2 times. Clean. | 0% (Base) | $10,500 - $12,000 | 13

Over-Polished | Rounded lugs, loss of chamfers, thin metal | -20% to -40% | $7,000 - $9,000 | 1

Laser Welded | Restored metal (Disclosed) | Variable (-10% to +10%) | $11,000 - $13,000 | 4

4.2 Case Study: The Rolex Submariner Ref. 5513

The Rolex Submariner Ref. 5513 serves as the ideal control group for this analysis due to its long production run and high volume of liquidity.

• The Unpolished Asset: Recent market data indicates that unpolished examples of the 5513, particularly "Meters First" variations, consistently trade above the $16,000 mark. Collectors actively hunt for specific geometric details—such as the specific angle of the chamfer used in 1960s production—that certify the watch has never been touched.
• The Polished Liability: In contrast, polished examples struggle to break the $12,000 barrier. Listings for polished 5513s often sit on the market for weeks or months, whereas unpolished examples sell within days. The spread of ~$5,000 represents the "capitalized value of the metal" that was removed.

4.3 Case Study: The "Hulk" (Ref. 116610LV) Volatility

The financial impact of condition is also visible in modern "neo-vintage" models, although the dynamics differ. The Ref. 116610LV "Hulk" experienced a massive speculative bubble, peaking at nearly $35,000 in April 2022 before correcting to ~$23,000-$26,000 by 2023. During this correction, the "quality spread" widened.

• Mint/Unpolished: Unworn or unpolished examples held their value best, stabilizing around the $26,000 mark.
• Polished/Used: Examples that had been polished to look "retail ready" saw the steepest declines, dropping toward $21,000-$23,000.
• Insight: In a bull market (2020-2022), "a rising tide lifts all boats," and even polished junk sold for high prices. In a bear market (2023-2025), buyers become discerning. The unpolished attribute acts as a volatility dampener, preserving capital when the broader market softens.

4.4 High-End Auction Disparities

The premium for unpolished cases becomes exponential at the highest end of the market. Analysis of Phillips and Christie's results reveals that "unpolished" is the single most powerful adjective in a catalog description.

• Rolex Ref. 6062 "Stelline": An unpolished example sold for over 1.2 million CHF. Comparable polished examples often fail to achieve half of that valuation. The difference is not mechanical; it is purely based on the preservation of the case profile.
• Paul Newman Daytona: The record-breaking $17.75 million sale of Paul Newman's own Daytona was driven in part by its raw, honest, unpolished condition. Had that watch been polished by a dealer to make it look "shiny," millions of dollars of value would likely have been erased.

Section 5: The Value Erosion Chart

To visualize the investment lifecycle of a vintage watch, we have developed the Value Erosion Chart. This tool allows investors to categorize assets and forecast potential depreciation risks associated with restoration.

Chart: The Vintage Watch Value Erosion Curve

Tier | Condition Status | Value Index (Base=100) | Investor Action / Liquidity Profile

Tier 1 | New Old Stock (NOS) | 120 - 150 | Speculative Hold. Extremely rare. Liquidity is lower due to price premiums. The "Museum" standard.

Tier 2 | Unpolished / Honest | 100 | Strong Buy. The "Investment Grade" baseline. High liquidity. Best balance of risk/reward. Scratches present but geometry perfect.

Tier 3 | Lightly Polished | 70 - 80 | Hold / Sell. The "Retail" standard. Visually appealing but lacks the scarcity premium. Liquidity is moderate.

Tier 4 | Average Polish | 60 - 70 | Avoid. Lugs are thinned. Chamfers are soft. The asset behaves like a commodity. High volatility exposure.

Tier 5 | Over-Polished | 40 - 50 | Do Not Buy. "Bar of soap" geometry. Spring bars may protrude. Value is limited to intrinsic parts/movement value.

Tier 6 | Laser Welded (Disclosed) | 60 - 75 | Speculative Buy. Can represent value if bought at a discount. Represents a "restored" asset class.

Tier 7 | Service Case | 40 - 50 | Utility Only. The original case was replaced by Rolex. Vintage value is eliminated. Purely a wearable object.

Analysis of the Erosion Curve:

The most critical takeaway from this chart is the steep "cliff" between Tier 2 and Tier 3. A single visit to a polishing wheel moves an asset from an Index of 100 to an Index of 75. This represents an immediate 25% impairment of capital. This erosion is instantaneous and irreversible.

For the investor, the strategy is clear: acquire assets in Tier 2. While they may command a 20% premium over Tier 3 at the time of purchase, they retain 100% of the "collectibility" equity. Assets in Tier 3 and 4 have already suffered the depreciation event and are unlikely to ever regain the premium valuation of Tier 2, regardless of market movements.

Section 6: The Laser Welding Disruption

6.1 The Technological Shift

The vintage watch market is currently grappling with a technological disruption known as laser welding. Unlike traditional polishing, which removes metal, laser welding uses high-powered lasers to melt matching alloy (steel, gold, platinum) into dents, scratches, and worn areas. This allows a skilled lapidary to effectively "rebuild" a case that has been over-polished.

This technology challenges the linear nature of the Value Erosion Chart. Theoretically, a Tier 5 ("Over-Polished") watch can be laser welded to look like a Tier 2 ("Unpolished") watch. This creates an arbitrage opportunity for dealers but a significant risk for investors.

6.2 The Ethics of Restoration and Disclosure

The market's reception of laser welding is divided.

• The Bull Case: Laser welding is a legitimate restoration technique, similar to re-lining a canvas in the art world. It saves watches that would otherwise be structurally compromised. It restores the aesthetic beauty of the original design.
• The Bear Case: It is a form of deception. A laser-welded watch is no longer "original." It is a "Cyborg" or "Frankenstein" creation. If the work is not disclosed, it is fraudulent.

6.3 Valuation Implications of Laser Welding

Market data suggests that disclosure is the pricing variable.

• Disclosed Welding: A watch sold with full disclosure of laser restoration typically trades at a discount to a true unpolished example but at a premium to a battered, over-polished one. It occupies a new "Tier 6" in our chart.
• Undisclosed Welding: This is the primary risk factor. Leading dealers like Eric Wind warn that "many watches are being destroyed" or deceptively restored. An investor who inadvertently pays Tier 2 prices for a laser-welded watch has overpaid by 30-40%. The discovery of undisclosed welding can render an asset illiquid in the serious collector market.

Consequently, the rise of laser welding increases the due diligence burden. Investors must now rely on UV analysis and high-magnification inspection to detect the subtle tell-tales of welding (porosity, heat signatures) to ensure they are not buying a "rebuilt" asset at "original" prices.

Section 7: Market Psychology & Expert Perspectives

7.1 The "Eric Wind" Doctrine

The philosophy of the modern market is heavily influenced by thought leaders and scholars like Eric Wind (Wind Vintage). His perspective, widely cited in investment circles, is that "mint" condition is often a red flag. He argues that a watch showing "honest wear"—scratches consistent with 50 years of life—is preferable to a watch that looks new. The logic is that the "new" look is likely the result of aggressive intervention.

Wind's "personal hell" analogy regarding polishing rooms underscores the severity of the issue. For the expert, polishing is not an "improvement"; it is vandalism. This psychological shift has permeated the buyer base. Ten years ago, a buyer might ask, "Can you polish out these scratches?" Today, the educated buyer asks, "Has this ever been polished?" and walks away if the answer is "Yes".

7.2 The Auction House Effect

Major auction houses like Phillips, Christie's, and Sotheby's play a pivotal role in setting these standards. Their catalog descriptions are the benchmark for valuation language.

• "Probably Unpolished": This phrase in a Phillips catalog is a signal for aggressive bidding. It suggests that the specialist has inspected the watch and believes the geometry is untouched.
• "Polished": When this appears, estimates are generally lower.
• "Sharp": A middle-ground term that often implies "polished but done well."

The realized prices at these auctions consistently show that the "Unpolished" designation commands a premium that defies standard depreciation models. For example, a "Submariner 5512" with a verified unpolished case can achieve results 2x or 3x higher than the average market price, driven by the competitive fervor of investors seeking to secure one of the few remaining "honest" examples.

7.3 The Liquidity Premium of Originality

Beyond raw price, the "Unpolished" attribute confers a liquidity premium. In financial terms, liquidity is the ease with which an asset can be converted to cash without affecting its market price.

• High Liquidity (Unpolished): There is always a bid for an unpolished vintage Rolex. Dealers will buy them for inventory; collectors will buy them for safe-keeping.
• Low Liquidity (Polished): Polished watches are commodities. In a soft market, dealers stop buying them because they are harder to move.

Therefore, the unpolished watch offers a superior "exit strategy." Even if the market corrects, the unpolished asset is the first to sell. The polished asset may become "stuck capital".

Conclusion

The data unequivocally supports the investment thesis that polishing is a value-destructive event in the vintage watch market. The financial erosion caused by polishing ranges from 20% to 50% of the asset's potential value. This erosion is driven by the irreversible loss of metal, the destruction of factory geometry, and the elimination of the "originality option" that is highly prized in an increasingly efficient and knowledgeable market.

While the broader market for vintage watches has shown resilience against inflation and traditional equity volatility (as evidenced by the Submariner Index vs. PSEi comparison), the "alpha"—the excess return—is concentrated almost entirely in the "Unpolished" and "Honest" condition tiers.

Strategic Recommendations for the Investor:

1. Strict Acquisition Criteria: Limit capital allocation to Tier 1 and Tier 2 assets (NOS and Unpolished). Reject Tier 3 and 4 assets regardless of the apparent "value" price; they are value traps with limited upside.
2. Zero-Tolerance Polishing Policy: For existing holdings, enforce a strict "movement service only" protocol. Explicitly prohibit polishing, refinishing, or component replacement during maintenance.
3. Authentication of Geometry: Due to the prevalence of laser welding, due diligence must extend beyond dial authenticity to include a rigorous inspection of case geometry. Verify chamfers, lug width, and surface finish against known factory standards.
4. Leverage Scarcity: Recognize that the supply of unpolished watches is deflationary. As time passes, the premium for these assets will likely expand non-linearly, offering a compounding return on the "patience" to hold an unpolished asset.

In the final analysis, the most profitable action a vintage watch investor can take regarding the condition of their asset is simply: nothing.

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